Walz raises a new health care tax to lower premiums, but rates skyrocket anyway

Individual Health Plans Jump up to 26%

Buried in the last-minute deal to prevent a government shutdown, Governor Walz and legislative leaders created a new tax on health plans to subsidize individual health insurance plans. The Walz administration and industry lobbyists had hoped the reinsurance plan would prevent huge increases in health insurance premiums in the individual market.

Unfortunately for policyholders, those rates will likely skyrocket, nonetheless. After the Minnesota reinsurance rescue plan was passed, Minnesota carriers announced the proposed rate increases for plans in 2026. The Commerce Department warned Minnesota farmers, small business owners and other consumers in the individual market to plan for rate hikes of up to 26%.

Insurer average rate change from 2025 to 2026

Blue Plus                                                      16.60%

HealthPartners, Inc.                                    12.14%

HealthPartners Insurance Company        14.49%

Medica Insurance Company                      26.03%

Quartz Health Plan MN                             7.15%

UCare                                                           14.79%

After the individual market in Minnesota collapsed after the introduction of Obamacare, a “temporary” injection of cash was created to make individual insurance plans viable in all 87 counties in Minnesota. That plan was somewhat controversial, but did in fact work to bring down the cost policyholders forked over for insurance premiums.

This June, after seven years of cobbling together funding from various sources, the legislature passed a new tax on health insurance and wrote a $140 million check from the MN Health Care Access Fund and millions more from a federal account, to fund a reinsurance plan to stabilize rates in the individual market. It did not work.

As state subsidies fail to bring down rates, the Walz administration turns its focus to Washington for more subsidies. MNSure CEO Libby Caulum bemoans “Higher rates coming just as enhanced federal tax credits that have helped keep premiums more affordable will expire.” Are more subsidies the only way to pay the bills when costs go up?

Cut cost first

Minnesota lawmakers and the Governor need to sober up to the fact that their policies are making care unaffordable to the fewer and fewer poor schleps who pay for their own health care. While taxpayers foot the bill for controversial health care services and insurance policies for people here illegally, Minnesota farmers and small business owners are going broke while going without care.

The focus in Minnesota and in all states needs to be on bringing down the cost of care and making the way we pay for it fairer. Even as the outgoing Biden administration detailed more than $1 billion per year in Minnesota health care spending on “improper payments” to Medicare and Medicaid, not a single substantive bill passed to cut down on waste and fraud in health care.