Beki Cook was diagnosed with hereditary angioedema in 2019, a condition in which her tongue can swell to the point where she can’t breathe.
Luckily for Cook, in 2020 the Food and Drug Administration approved the prescription drug Orladeyo, an oral capsule she now takes daily to prevent hereditary angioedema attacks.
“My tongue, lips, throat, hand and feet still swell but with the medication it is not usually as big of a deal,” said Cook, a West St. Paul resident and preschool office coordinator with two 18-year-old twins.
However, Orladeyo manufacturer BioCryst Pharmaceuticals sells 28 capsules for over $44,000 — about $1,600 per single pill.
Those costs get indirectly passed on to Cook, who pays a $1,000 monthly premium for a health plan she bought for herself and her twins on MNsure, the state-run health insurance marketplace that stemmed out of the Affordable Care Act.
Cook checked the MNsure website and said that next year her premium is set to shoot up to $1,400-a-month.
“We are fortunate that I do not have to choose between food and health insurance, but it does make it harder to help our children pay for college tuition,” said Cook, who talked as she peered at a spreadsheet of family finances. “Where does this new number come from?”
The short answer is demographics, drug prices and a sunsetting Covid-era federal subsidy, all of which have combined to cause MNsure enrollees’ projected premiums to skyrocket by an average of 57% next year.
The period to enroll (or reenroll) in a MNsure plan starts Saturday, Nov. 1, and ends Jan. 15.
The much discussed federal subsidy, whose Dec. 31 expiration strikes at the heart of the budget stalemate that led to the federal shutdown, is “only part of the answer” for mind-boggling health insurance hikes, said Jean Abraham, a professor at the University of Minnesota School of Public Health.
“Health care inflation has gone up. General inflation has gone up, and individuals are being asked to pay more,” said Abraham, especially for pricey drugs from Orladeyo to Ozempic.
Here is a look at why many of the 167,000 Minnesotans on MNsure may face a health insurance affordability crisis in 2026.
Who gets their health insurance from MNsure?
People are on the 12-year-old MNsure program because they do not get health insurance from their employer. They also make too much to qualify for Medical Assistance, the state’s Medicaid program, or MinnesotaCare, which offers health plans to residents who make less than 200% of the federal poverty level.
“Typically, the individual market enrollees include farmers, independent contractors or gig workers, small business owners and some of their staff, and early retirees,” said Grace Arnold, commissioner of the Minnesota Department of Commerce, at a Senate Subcommittee on Federal Impacts hearing earlier this month.
(Ultra-wonky note: “Individual market” is not exactly synonymous with MNsure enrollees. A few thousand Minnesotans each year directly get a health plan from an insurer instead of going through MNsure.)
Cook, for example, does not work enough hours to qualify for health insurance through her preschool, and the family plan offered through her husband’s employer “is ridiculously expensive,” she said.
So, she gets a gold plan from Minneapolis-based insurer UCare, knowing she will need to frequently use her health insurance and that the lower premiums but higher copays from the silver and bronze plans would cost her more.
MNsure enrollees choose between various gold, silver or bronze plans offered by five insurers, each of them nonprofits — BCBS MN, Health Partners, Medica, Quartz and UCare.
Why is what health insurers charge going up?
What MNsure customers pay on their monthly premium is the result of what can be roughly called a five-step process.
In the first step, insurers negotiate with pharmaceutical companies and health care providers on prices for prescription drugs and medical care.
Secondly, the insurers present the results of their dealmaking to the Minnesota Department of Commerce, essentially saying this is how much they need to raise their rates to break even.
Commerce officials review and ultimately approve these rates. Officials check on the accuracy of assumptions insurers made about the coming year’s health care economy.
Throughout the 2020s, MNsure insurers’ rates inched up yearly by single-digit percentage points. But the 2026 rate hikes Commerce approved average out to a startling 21.5% increase.
“The rate increases are really alarming and will have a significant impact on Minnesotans,” Arnold said at the Senate hearing. “These hikes will push real people to make really hard choices like paying for health insurance, rent or a car payment.”
Julia Dreier, deputy commissioner of insurance at the Commerce Department, said in an interview that Commerce nonetheless felt compelled to approve the rate leaps. Without the hikes, the rising cost of health care could cause the insurers to lose money and struggle to operate, Dreier said.
As to why health care costs rose so sharply in the past year, Drier gave a few factors. One is that MNsure enrollees are getting older. Many are early retirees waiting until they turn 65 years-old to enroll in Medicare.
“Minnesota’s individual market does skew a little bit older than a lot of the other individual markets across the country,” Dreier said.
Another reason is a national trend that affects health plans both on MNsure and other ACA marketplaces as well as employer-based plans: Prescription drug costs are soaring.
“There’s incredible cost pressure coming from for-profit pharmaceutical companies trying to charge as much as they can,” said Lucas Nesse, president and CEO at the Minnesota Council of Health Plans, a lobbying group for nonprofit health insurers.
Pharmaceutical companies ratcheting up the cost of health care is a tale as old as time. But there are specific drugs that have roiled costs in the past year. These include GLP-1’s like Ozempic becoming mainstream, and drugs for rare conditions like the one Cook takes.
“Prescription drugs are just a lot more expensive and more specific, so you have things like biosimilars and certain types of cancer treatments that are really driving up the costs,” Dreier said.
Dreier is referring to treatments like CAR-T cell therapy, which replicates a person’s immune cells. The price for the replicative cells alone is up to $475,000, according to the American Cancer Society.
Insurers must decide which plans will cover such a treatment, and, if it is covered, how to distribute the treatment cost across its pool of consumers.
“Insurance in its simplest form is trying to negotiate discounts in return for volume,” Nesse said. “But some of these products are very limited in nature.”
What turned this 21.5% higher insurance rate into a staggering 57% leap in monthly premiums?
Again, determining MNsure monthly premiums is about a five-step process. Steps three and four factor in state and federal subsidies.
“There’s the rate increases,” said Libby Caulum, CEO of MNsure, in an interview. “And there’s what people actually pay.”
The last time MNsure insurers had such a steep rate increase was 2017. In response that year, the Minnesota Legislature created a program called reinsurance, a fund that uses taxpayer money to cover pricey claims MNsure enrollees file with their insurer.
Specifically, the state pays around 80% of the cost for claims between $50,000 and $250,000. Insurers must pass the savings on to their overall consumer pool.
Reinsurance “helps to offset some of those expensive claims for carriers, and, then, as a result of that program, it helps to keep rates lower,” Dreier said.
Indeed, reinsurance means that while MNsure enrollees might see a monstrous spike in their premiums, marketplace enrollees nationally have it way worse. Nonprofit research group KFF projects a 114% climb in average monthly premiums for marketplace customers across the country.
This jump bakes in the swan song of a massive, four-year-old federal subsidy called the enhanced premium tax credit.
Since the dawn of ACA marketplaces like MNsure, there has been something called an advanced (not enhanced, advanced!) premium tax credit for enrollees. The Obama administration and Congressional Democrats responsible for the landmark ACA law figured they would need a subsidy to coax people to buy health insurance.
“It made the market more attractive and stable to enter,” Abraham said.
But amid escalating health care costs during Covid, the advanced premium credit was found wanting. So, Congress and the Biden administration passed into law an additional, enhanced credit in 2021. Biden then signed a law in 2022 extending this enhanced credit until the end of 2025.
(The more modest original advanced premium tax credit has no expiration date.)
The enhanced credit lifted the stipulation that households with income over 400% of the federal poverty line could not receive a subsidy. It also effectively limited yearly premium costs to 8.5% of a person’s annual income.
“A way to think about these tax credits is that they kind of protect people from the volatility of the [health insurance] rates,” Caulum said.
Between 2024 and 2025, the average monthly premium increase for MNsure recipients was a mere 5% (see accompanying chart).
If the enhanced credits expire as scheduled, 90,000 Minnesotans on MNcare will watch their premiums explode by an average of $2,000 next year, according to MNsure tabulations.
“The enhanced federal subsidies are so incredibly generous,” Nesse said. “We’ve been trying to raise the alarm bells” about their expiration.
Part of the alarm is that rising health care costs combined with diminished federal help mean that people will drop out of MNsure and stop getting health insurance entirely.
These could be people in poor health who later get emergency care, further driving up overall health care costs. Or, they could be younger individuals whose leaving the system raises the average health risk of enrollees.
“They’ll be people, healthy people, mind you, that drop out and create an even less stable insurance pool,” Nesse said.
What happens if Congress suddenly extends these enhanced subsidies? And what happens if they expire?
Consumers — and here comes the 5th and final step of their monthly premium determination — apply for a credit not while filing their taxes, but, instead, entering information about their income, geographic location and health condition on the MNsure website.
From that personal information, plus the insurer’s rates, plus applicable state and federal subsidies, MNsure spits out a monthly premium.
To repeat, Minnesotans logging onto MNsure will see a monthly premium that assumes the enhanced tax credits expire.
If Congress passes and President Trump signs into law an extension of the enhanced tax credit, or perhaps some new marketplace subsidy, Caulum and MNsure employees will scramble to recalculate premiums.
“MNsure is standing ready and we are working through all of our scenario planning,” Caulum said. “It will take us a little bit of time but our main focus will be on reducing consumer confusion.”
But the real mayhem might lie in the enhanced subsidy’s expiration. MNsure recipients who do not take action in the upcoming open enrollment period will be automatically re-enrolled into their current plan, no matter how much that plan’s premium goes up by.
For every enrollee like Cook that clicks through the MNsure website to compare their options, three recipients do nothing. According to information analyzed by the Center for Budget and Policy Priorities, a nonprofit in Washington, 75% of MNsure recipients automatically re-enrolled into their current plan this year.
“There is going to be no small amount of chaos,” said Jennifer Sullivan, director of health coverage access at the Center for Budget and Policy Priorities. “You will have a whole body of people who are automatically reenrolled. And then you will have people who log on and say, ‘Oh my God, what is this?’”
This article first appeared on MinnPost and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
