Health insurers propose hiking Minnesota prices between 9% and 26%

Health insurance may get a lot more expensive in Minnesota next year.

The four largest carriers in the state’s individual health insurance market are seeking double-digit percentage rate increases for 2026, according to preliminary figures released Tuesday by the Minnesota Department of Commerce.

On the surface, the jumps would be limited to a relatively small slice of the state’s health insurance landscape — the market where people who don’t have job-based coverage and don’t qualify for Medicare or Medicaid benefits shop for insurance, including through “Obamacare” exchanges.

Yet these individual market rates often serve as a bellwether for pricing trends in the wider market for health insurance, where costs of care have been growing quickly.

Commerce announced proposed average increases by Medica (+26%), Blue Cross and Blue Shield of Minnesota (+16.6%), UCare (+14.8) and HealthPartners (+12.1 to +14.5%).

“They are the largest proposed rate increases we’ve seen, on average, since 2017,” Julia Dreier, deputy commissioner of insurance at the Commerce Department, said in an interview. “The health insurance companies are assuming that the risk pool is going to be sicker, on average, than it has been in the past.”

The annual rate release from the Commerce Department also covers health plans for small businesses, where the largest insurers in the market are seeking average increases that range from 9% to 17%.

One key factor driving health insurance cost increases is the higher cost of medications, said Lucas Nesse, the chief executive officer of the Minnesota Council of Health Plans, a trade group for the state’s nonprofit health insurers.

In addition, Nesse said, state lawmakers have adopted new requirements and health plan regulations in recent years that are adding costs. The trade group says Minnesota has passed 13 coverage mandates in the past two years with a cumulative estimated impact of up to 5% on premiums.

“These changes, although well-intended, have created the need for even higher premiums for 2026,” he said in a statement.

About 202,000 state residents are covered through small group health plans, while 187,000 Minnesotans buy individual health insurance policies.

Despite its relatively small size, the individual market is closely watched because it provides public data on annual rate increases that often point to cost issues in larger markets. That includes the millions of Minnesotans with employer-sponsored coverage, where rate increases are projected via national surveys — not public data releases in most cases.

Last fall, for example, the New York-based human resources consultant Mercer projected based on survey results 2025 would be the third consecutive year of health benefit cost increases above 5%, following a decade of cost increases averaging only around 3%.

Mercer’s annual report found significant utilization increases in areas including behavioral healthcare and GLP-1 medications for weight-loss and diabetes, but said higher prices were a bigger driver of the trend. Health care providers were demanding higher prices to address staffing shortages, Mercer said, while exerting market power via consolidations.

Finally, Mercer said that “spending on prescription drugs remains the fastest-growing component of health benefit cost.”

Across the country thus far, proposals for double-digit percentage increases in 2026 have been common in the individual market, according to a report earlier this month from California-based health policy analysis nonprofit KFF. One driver is the expected expiration of enhanced federal tax credits available to individual market shoppers, which accounts for about 4 percentage points of growth across insurers.

The subsidies, which were created during the early years of the COVID-19 pandemic, have been extending tax credit eligibility to people with higher incomes. Minnesota estimates that, without the enhancements, about 19,000 people in the state’s individual market will lose all access to financial help, while thousands more will see some reduction in assistance.

“It’s a perfect storm that will make health insurance more expensive for Minnesotans: higher rates coming just as enhanced federal tax credits that have helped keep premiums more affordable will expire,” Libby Caulum, the MNsure CEO, said in a statement. “Without congressional action to extend those tax credits, almost 90,000 hardworking farmers, small business owners, working parents and their children will pay ... more every month for coverage.”

The subsidy changes and proposed federal rules to tighten sign-up periods and increase income verification rules mean the individual market’s status this year as bellwether is somewhat diminished.

“Obviously health care costs continue to increase, and that’s included in these calculations,” Dreier said of the rate proposals released Tuesday. “There are a lot of extenuating circumstances in the individual market this year, in particular, due to proposed federal changes.”

The primary set of tax credits to purchase insurance on the individual market, contained in 2010’s Affordable Care Act, will continue next year. That means consumers at more modest income levels generally won’t see the full rate increases proposed Tuesday, since tax credit values grow in tandem with premium increases.

“Rates are subject to review and approval by the [state] and the final approved rates may vary from these proposed rates for many reasons,” the Commerce Department said.

Final rates will be released by Oct. 1 for coverage starting Jan. 1, 2026. Open enrollment for individuals begins Nov. 1.

While individual market rates are poised to jump, they would be rising even more but for action by Minnesota lawmakers this spring to extend a program called “reinsurance,” which uses taxpayer funds to tamp down premiums. The program was created back in 2017 when insurers were threatening to abandon the individual market altogether amid runaway cost increases.