Big Picture
Last week, the Minnesota Department of Commerce released final health insurance rates for 2027.
About 203,000 Minnesotans who buy their own coverage will see average increases of 9.9% to 21.1%, depending on their insurer. About 184,000 people in small-business plans face increases of 10.6% to 21.4%. Commerce puts the average increase at 17.4%. That follows an average 21.5% jump in individual-market rates this year.
That is bad news. But the more important number is further down the press release. Without the state’s reinsurance program, Commerce says, the average increase insurers proposed would have been 57.9%.
Seventeen percent is what Minnesota’s individual market looks like with reinsurance. The program that holds it there expires after next year, and Minnesota needs both a plan and the leadership to save it.
Why Premiums Keep Climbing
Most of this year’s increase reflects forces Minnesota shares with every state.
Insurers nationally are seeking a median increase of about 15% for 2027, driven mainly by the rising cost of hospital care, physician visits and prescription drugs. Small-business plans, which reinsurance does not cover, are rising by similar amounts here, a reminder that underlying costs are the main driver. The Commerce Department pointed to the same drivers, while also noting heavier use of care and more for-profit companies in the system.
Washington made it worse when Congress let the enhanced federal premium tax credits expire at the end of 2025. As a result, MNsure enrollment fell 12% in a year, from about 143,000 to about 126,000.
When healthier people leave a market, the people left behind cost more to cover. Minnesota’s uninsured rate rose from 3.8% in 2023 to 5.8% in 2025, the highest in six years.
The Reinsurance Program Holding the Market Up: Minnesota Premium Security Plan
The individual market is where farmers, early retirees, the self-employed and people between jobs buy coverage. It is small, and a few very expensive patients can swing everyone’s premiums.
Reinsurance, formally the Minnesota Premium Security Plan, picks up part of the bill for the most expensive patients, so insurers don’t load those costs onto every policy. The federal government helps fund it through a waiver: it sends Minnesota part of the tax-credit money it saves when premiums are lower. The state covers the rest.
A Republican Legislature created the program in 2017; then-Governor Mark Dayton (DFL), skeptical of subsidizing insurers, let it become law without his signature. Later, Governor Tim Walz (DFL) and a divided Legislature extended it in 2022.
Commerce credits it with cutting premiums 15% to 20% a year from 2018 through 2022, and says 2026 rates would have risen nearly 70% without it.
The 2028 Reinsurance Cliff
The federal waiver and the state law behind reinsurance run through plan year 2027. Minnesota Management and Budget’s February forecast shows no reinsurance payments after that.
However, even the 2027 bill has been deferred. Lawmakers funded it with a one-time assessment of about $272 million on group health insurers – to be collected in 2028. Starting in 2029, those insurers can claim a state tax credit equal to what they paid. The state is still paying for reinsurance. It has just pushed the bill into the next budget.
The federal share going toward Minnesota’s reinsurance program is shrinking, too: it is tied to the tax credits Washington would otherwise pay, so smaller credits mean less help. MMB projects 2027 reinsurance payments of about $387 million, roughly $266 million of it beyond federal funds. Its February forecast showed a balance of just $377 million for the entire 2028–29 budget.
Republicans have been more united in support of the program while there has been reluctance among some DFL legislators to support its extension. Though, generally speaking, the program has enjoyed bipartisan support over the years.
Opponents have argued that reinsurance subsidizes insurers rather than patients and that a MinnesotaCare buy-in, or public option, is the durable fix. That is a serious argument. But no public option is ready for 2028, and ending reinsurance first would leave buyers with nothing in between.
The calendar is tight. Insurers build 2028 rates next spring, and a federal waiver takes time to approve. The 57.9% figure is a one-year comparison; Commerce’s longer-run estimate is that a lapse would add about 25% on top of normal annual increases.
A program that has held premiums down every year since 2018 is set to end not because anyone decided to end it, but because no elected leader has built the plan and mustered the political will necessary to save it - yet.
Bottom Line
Minnesota cannot control federal subsidies or national medical inflation but it can control whether its own premium protection survives. Reinsurance lowers the sticker price for everyone, including people who get no subsidy at all.
The next governor and Legislature should:
Commit to extending reinsurance for 2028 and beyond
Fund it in the budget, up front, instead of through deferred tax credits.
Put a price tag and eligibility rules on any new state premium credit.
Treat hospital and drug prices as the cost driver they are.
Keep the public option debate going, on a timeline that doesn’t leave buyers stranded.
Holding premiums to 17% is not a victory. Letting them climb toward 58% would be an irresponsible and harmful choice.
Senator Klobuchar has the most developed health care agenda in the gubernatorial race, which includes a commitment to “extend and strengthen Minnesota’s bipartisan reinsurance program.” She also has the skill this problem needs most: getting a divided legislature to yes.
If elected, Klobuchar will need to wield the legislative prowess that made her one of the Senate’s most productive members to extend Minnesota’s reinsurance program and keep premiums from increasing even more.
This outlet is betting she’ll find a way.