REGIONAL — For the nearly 170,000 Minnesotans who currently buy their health insurance through the MNsure marketplace established by the Affordable Care Act, the beginning of the 2026 enrollment season on Saturday is likely to generate a bad case of sticker shock.
A combination of premium increases, along with the anticipated phaseout of enhanced premium tax credits, are expected to bring sharply higher premiums for those who’ve qualified for the federal help. Some will no longer qualify for the federal help at all, which is expected to send their premiums skyrocketing.
As a result of this and other federal changes, MNsure officials expect that nearly half of Minnesotans who obtain insurance through their program will no longer be able to afford their coverage and will have little choice but to go without.
The enhanced credit, implemented as part of the 2021 American Rescue Plan backed by President Biden, greatly expanded eligibility for what are known as the advanced premium tax credits established in 2014 by the Affordable Care Act, also known as Obamacare. At the same time, the legislation increased the size of the credit for most individuals who qualified. In Minnesota, residents seeking to take advantage of the premium tax credits can do so by purchasing private insurance plans offered through the state-run MNsure website, Minnesota’s health insurance marketplace authorized by the Affordable Care Act.
The enactment of the enhanced premium tax credits brought a surge in new enrollments through MNsure. About 30,000 additional residents were able to obtain health coverage as a result of the enhanced credits, according to Libby Caulum, MNsure’s CEO, who spoke to the Timberjay back in August.
Among other things, the enhanced tax credits eliminated the so-called “eligibility cliff,” where advanced premium tax credits phased out for individuals earning more than 400 percent of the federal poverty rate.
That opened up tax credits to a much broader base of middle-income Minnesotans who didn’t have health insurance through their jobs and who didn’t otherwise qualify for public health care programs like Medicare and Medicaid. Enactment of the enhanced credits helped reduce Minnesota’s uninsured population to a record low.
But that progress is now in question due to the pending phaseout of the enhanced credits, as many families and individuals are facing much higher premiums, likely beyond what many can afford.
Large hikes in premiums
The impact of the changes will vary, depending on family size and household income. On average, however, the phaseout of the enhanced credit will add about $186 to the monthly health insurance premium for more than 13,000 residents of northeastern Minnesota who buy their coverage through MNsure. Some will face much larger increases, notes Caulum, since the phaseout will mean some families will lose their premium tax credit altogether, which could add several hundred dollars a month to their insurance costs.
Last year, the average household in the Eighth Congressional District paid $330 in monthly premiums for private insurance coverage through MNsure. The phaseout of the enhanced tax credit is expected to push that average monthly premium to $516 starting next year. That’s according to data released by MNsure earlier this year.
But that increase doesn’t reflect the impact of premium increases, which weren’t settled at the time that MNsure calculated the effects of the loss of enhanced tax credits. Statewide, premiums are expected to spike an average of 22 percent, which will further add to the financial pain that Minnesotans who rely on MNsure will experience.
Working Minnesotans would be the hardest hit
Caulum said that it is average working Minnesotans who stand to lose the most if the enhanced credits are allowed to expire. Caulum notes that many Americans get their health coverage through their workplace, while many others get coverage through public programs like Medicare and Medicaid. She notes that it’s folks in the middle who had traditionally been left to fend for themselves when it came to health insurance coverage.
“Those are the people we serve,” said Caulum. “Anyone who doesn’t have health insurance through an employer. These are folks who work hard for their livelihoods, people like farmers, small business owners, folks in the gig economy, the people who cut your hair. There are so many jobs that don’t get health insurance directly from their employers.”
She notes that the enhanced premium credits, now set to expire just two months from now, had provided a helping hand to a portion of the workforce that hadn’t enjoyed financial assistance for health coverage in the past.
“It’s going to be a different picture for these folks when these credits disappear,” she said.
A few examples help to illustrate the new reality for residents of northern Minnesota if the enhanced credits aren’t extended.
“A family with one child in St. Louis County, with combined income of $115,000 per year, will see their premiums jump by more than $400 per month, from under $800/month today to $1200/month next year—a 57 percent increase,” said Mary Robinson, a MNsure spokesperson. “If this family stays in the same bronze plan, they will need to find an extra $5,200 in their household budget to stay covered next year. Under current law, they will see this increase because their household income puts them above the limit for tax credit eligibility and they will lose all access to financial help — unless Congress acts.”
A married couple in their early 60s, earning $85,000 a year, will see their premiums go up by $1,200 per month, from under $500/month today to $1,700/month next year — a 265 percent increase in what they pay, for the same reason as the family above.
“But this doesn’t just affect higher-income families,” notes Robinson. “If the enhanced tax credits expire, a single 41-year-old in St. Louis County earning less than $34,000 per year and currently enrolled in a silver plan will see his monthly premium increase by 99 percent next year. He’s paying $132/month today and his estimated premium for next year is $263/month.” While a $130 difference might not sound like a lot compared to the families above, that’s a monthly electric bill or a week of groceries for a person in such a scenario — and these types of cost increases could mean some tough choices for many Minnesotans.”
MNsure officials worry that such increases could prompt many younger, healthier Minnesotans to drop their MNsure coverage, which could undermine MNsure’s insurance pool.
“It’s critically important that younger, healthier residents stay covered for overall market stability,” said Robinson. Unfortunately, as rising premiums push healthier people to go without coverage, it raises the costs for everyone else’s and can quickly create a spiral that can collapse an insurance market.
MNsure officials note that the pending elimination of the enhanced credits isn’t the only change likely to impact Minnesotans.
“Other federal policy changes will shorten our annual open enrollment period, introduce new red tape and paperwork burdens for Minnesotans, and make health insurance harder to get and maintain. Taking all of these policies together, we estimate that 62,000 Minnesotans could drop coverage over the coming years — as much as 45 percent of MNsure enrollees,” said Robinson.
Tax credits at the heart of shutdown politics
It’s against this backdrop that Congress remains stymied a month into a partial federal government shutdown. For months, Democrats in Congress have pushed for renewal of the enhanced premium tax credits, yet as the minority party they’ve had little leverage during budget discussions. When the so-called One Big Beautiful Bill, passed by Republicans in Congress and signed by President Donald Trump back in July, was enacted, it failed to include an extension of the credits.
The Democrats eventually opted to use their one point of political leverage, the need for 60 votes in the Senate to pass new spending bills, to push for renewal of the tax credits, but Republicans have, to date, refused to discuss that possibility. Some Republican House members, well aware that many of those benefitting from the tax credits are in their districts and could well be angered by hefty increases in their premiums, have expressed a willingness to negotiate with Democrats over an extension of the benefit. But GOP leaders have insisted they won’t discuss the matter unless Democrats approve a GOP-crafted spending bill that currently doesn’t include the tax credits.
Recent polling has found strong support among Americans for extension of the credits, with more than 80 percent of Democrats and Independents expressing support for the extension, while even a majority of Republicans say they want the credits extended.