This story was originally published by the Timberjay.
REGIONAL— Tens of thousands of Minnesotans, including more than 13,000 in the Eighth Congressional District, are facing hefty increases in their health insurance premiums beginning in January.
That’s because of the phaseout of what’s been known as the enhanced premium tax credit, which was first enacted in 2021 as part of the American Rescue Plan Act. The enhanced credit greatly expanded eligibility for the advanced premium tax credits established in 2014 by the Affordable Care Act, also known as Obamacare, and 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.
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 Americans 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.
The disappearance of the enhanced credits at the end of 2025 is likely to reverse that trend.
“I would love to say that people will see the value of health insurance, but I know the reality of family budgets,” said Caulum, who acknowledges that the higher prices will likely lead some Minnesotans to go without coverage once again.
The impact of the change will vary, depending on family size and household income. On average, 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, however, notes Caulum, since the phaseout will mean some families will lose their premium tax credit altogether, which could add several hundred dollars, and even more, 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.
Higher rates could make matters worse
The cost increases experienced by many northeastern Minnesota residents could actually be substantially higher than the estimates cited above, since they only reflect the loss of the enhanced tax credits. Yet, Minnesota insurers have proposed substantial rate increases for next year, citing the uncertainty caused by the changes at the federal level. The rate increases range from 15 percent for UCare policies, which are widely purchased in St. Louis County, to 26 percent for Medica. United Health and Blue Cross plans are seeking increases ranging from 12 to 17 percent.
The Department of Commerce will issue the final rates on Oct. 1, and any increases, which would now appear almost certain, will come in addition to the impact of the phaseout of the enhanced tax credits.
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 in just over four months, 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.
Finding solutions
Caulum notes that Congress could still move to extend the enhanced tax credits, but that now seems unlikely following passage of the One Big Beautiful Bill, which enacted significant cuts to most health care programs. The state of Minnesota could potentially backfill some of the cost of the program, but Caulum noted that the state is already facing additional financial burdens from other federal cutbacks.
“I think it would be very difficult to make up the gap in federal dollars,” she said.
Altogether, the premium tax credit program saved Minnesotans about $328 million on their insurance premiums last year, according to Caulum. How much of that was attributable to the enhanced credits was not available as of press time.
MNSure CEO Caulum recently appeared on the KAXE Morning Show. Listen to the full conversation above.
