Burcum: Head off health insurance sticker shock in 2026

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Open enrollment, that late autumn/early winter window when consumers choose their health insurance for the coming year, kicks off Nov. 1 in Minnesota and runs through Jan. 15. It’s typically one of the busiest times of the year for insurance brokers like Derek Pickett of Bemidji, with consumers who buy coverage on their own seeking out his agency’s expertise to find the best deals for the year ahead.

But Pickett has more on his mind than usual as open enrollment for 2025 looms. He’s already worrying about open enrollment for 2026 — and for good reason.

Enhanced federal subsidies put in place during the pandemic temporarily lifted the income cap — previously set at 400% of the federal poverty level — to qualify for financial assistance through the Affordable Care Act. The aid instantly and often substantially discounts monthly premium costs for private health plans purchased on MNsure. That has greatly benefited consumers who buy insurance on their own and who had previously made too much to qualify for this aid but not enough to comfortably afford quality coverage. In Minnesota, this included many farm families or younger retirees, in my reporting experience.

Unless Congress acts, the enhanced subsidies regrettably sunset at the end of 2025. If that occurs, many consumers will face serious sticker shock next fall. Pickett is particularly worried about retirees who no longer have coverage through their jobs but are still too young for Medicare, the government-run program mainly serving those 65 and up.

Pickett has this message for lawmakers: “If you do not extend these policies, there are a lot of people that would go without health care” because they can’t afford it.

That’s not good for consumers, who may put off care until they get seriously ill. Nor is it healthy for the state’s health care system, with potentially uncompensated care costs exacerbating pressure on hospitals’ bottom lines. Adding to price shock worries in Minnesota: The state’s reinsurance program, which acts in a different way to cushion consumers from insurance cost increases, effectively ends after 2025, according to the Minnesota Council of Health Plans. MCHP is the trade group representing the state’s nonprofit health plans.

The looming double whammy is a critical Minnesota health care challenge that is unfortunately flying under the radar this election season. It should be front and center for voters. While only about 3% of Minnesotans buy coverage on the individual health marketplace, it’s a critical access point for entrepreneurs, consultants, farm families and others who are self-employed.

Extending reinsurance or finding an alternative will be an urgent order of business for legislators, something that voters should be aware of with the entire Minnesota House up for election this fall.

Reauthorizing or, better yet, making permanent the enhanced Affordable Care Act subsidies should also be a high priority for federal lawmakers early next year. Voters should note that as well, with all U.S. House seats and one of the state’s U.S. Senate seats on the November ballot.

U.S. Sens. Jeanne Shaheen, D-N.H., and Tammy Baldwin, D-Wis., have commendably introduced legislation to make the enhanced subsidies permanent. Minnesota’s two senators, Amy Klobuchar and Tina Smith are both cosponsors. “We cannot go backwards. Millions of people in this country rely on these tax credits to keep premiums low, and getting rid of them would be a gut punch to people just trying to go to the doctor and stay healthy,“ Smith said this week. “We need to extend these credits and give families peace of mind.”

But the coming election and crowded agenda create discomfiting uncertainty about doing so. Cost is also a concern, with a June 24 Congressional Budget Office analysis concluding that making the subsidy expansion permanent “would increase direct spending by $275 billion, on net, over the 2025-2034 period.“ At the same time, the analysis concludes that with permanent subsidies ”3.4 million more people would have health insurance in each year, on average, over the 2025-2034 period, than under current law.”

Additional MCHP data drives home the need for state and federal action. If the subsidies aren’t extended and if state lawmakers don’t reauthorize the reinsurance program, the insurance group estimates that the combination will result in premium increases upward of 50% for 2026 in Minnesota. “Absent action, as many as ninety-three thousand Minnesotans will find coverage unaffordable and become uninsured in 2026,” according to the RAND study provided by the council.

Pickett is just one of many Minnesota insurance professionals sounding the alarm about the expiring enhanced subsidies. Like Pickett, Jessica DeShaw, who works for Austin, Minn.-based CW Moline Insurance, worries about early retirees being able to afford coverage. But she also cautioned the impact of inaction will be much broader.

”The enhanced subsidies make it much more affordable for Minnesotans to purchase a quality health plan,“ DeShaw said. “Without them, we believe it would be more financially stressful for most middle-class families to be able to afford health care.”