Minnesota officials and advocates on Wednesday warned that without extension of a federal tax credit that lowers health insurance premiums — which are at the center of a dispute in Congress over government funding — thousands could see health care costs spike.
The credit, established in 2021 in the COVID-era American Rescue Plan, helps more middle- and lower-income families afford policies purchased through the insurance marketplaces established by the Affordable Care Act. But it’s set to expire at the end of the year and Senate Democrats want those subsidies extended as part of a government funding measure. Their support is required because of the 60-vote threshold in the chamber in order to move forward.
If the credits are not renewed, 90,000 Minnesotans will see an increase in their premiums, according to the Minnesota Department of Commerce.
Rates for Minnesotans covered through the individual market will see a rate hike of 21.5% and those in small group plans will see their costs rise by 14.2% in 2026.
“We had anticipated an increase, but what we’re seeing is a real gut punch,” Grace Arnold, commissioner of the department, said in a news conference Wednesday. “This goes beyond the numbers. These hikes push real people to make impossible choices.”
Republicans and Democrats on Capitol Hill are trading blame about who is responsible for the first government shutdown in nearly seven years. The House passed a continuing resolution in mid-September to keep the government funded at current levels until Nov. 21.
But both parties in the Senate failed to reach an agreement by the Oct. 1 midnight deadline, leaving hundreds of thousands of Americans in limbo.
There are roughly 18,000 federal workers in Minnesota, according to U.S. Office of Personnel Management data from September 2024. That doesn’t include active duty military or federal contractors. Almost all federal workers will go without a paycheck until Congress approves a funding plan.
“Everyone is now asking the question: How does this end? Well, it ends once the Senate Democrats pick up this bill passed by the House of Representatives and vote for it,” said Senate Majority Leader John Thune, R-South Dakota, Wednesday morning.
Neither the GOP’s or Democrats’ proposals to fund the government got enough support to pass Wednesday and there aren’t any additional votes scheduled until Friday.
“When it comes to people’s premiums, it’s not a December problem. It’s not a January problem. It’s a now problem,” Sen. Amy Klobuchar, DFL-Minnesota, said on Tuesday.
Arnold said the Affordable Care Tax Credits at issue largely impact middle class Minnesotans like farmers, small business owners and early retirees.
She noted the Minnesota Legislature’s extension earlier this year of the reinsurance program — which increases the affordability of the individual market — staved off steeper premium increases.
Gary Wertish, president of the Minnesota Farmers Union, said the higher health care costs come at a difficult time for farmers, more of whom are going into mediation than the previous two years combined. It comes as China, normally the No. 1 market, is not purchasing any soybeans from the U.S.
“A lot of farmers are going to be faced with a choice: buying a healthcare insurance policy versus making their loan payment to keep themselves out of foreclosure or, in some cases, putting food on the table,” he said.
Open enrollment for 2026 health coverage begins next month.
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