New insurance rates reflect increasing prices for health care,
pharmaceuticals and new state regulatory actions
ST. PAUL, Minn. (October 1, 2026) — The Minnesota Department of Commerce has approved double digit health insurance rate increases for 2027. The rates apply to the individual and small to mid-sized employer markets.
“Growing prices and high utilization of medical services and pharmaceuticals are driving premiums even higher,” said Lucas Nesse, president and CEO of the Minnesota Council of Health Plans. “In addition, an increase is directly attributable to the Walz Administration circumventing the legislature and shifting Medicaid costs onto the private market.”
Nesse said the action by the Walz administration forced Minnesota’s nonprofit health plans to adjust their filings which increased premium rates. Earlier this year, state legislators considered changing coverage requirements for these services but instead chose to study the issue further.
“Affordability needs to be a priority for the next legislature. We need an honest, fact-based conversation with policymakers and the incoming administration about how all parties can work together to slow down the rising cost of care,” Nesse said.
BACKGROUND
Key drivers of premium increases
- High utilization and medical cost growth
Health care service utilization has accelerated significantly, and medical cost inflation continues to outpace general inflation. High-cost pharmaceuticals continue to play a major contributor to premium growth. - State coverage mandates|
Since 2014, Minnesota has enacted at least 20 new coverage mandates—more than half of them in the last few years alone. Recent legislation has also restricted the use of utilization oversight policies, limiting the nonprofit health plans’ ability to appropriately manage care costs and enhance quality. - State regulator action
For 2027, a new state regulatory requirement redefines and expands in-home nursing care, shifting additional costs from Medical Assistance, Minnesota’s Medicaid program, into the private individual health insurance market. As a result, the new requirement adds substantial costs and increased premiums. Earlier this year, a change to quantity limits was considered by the legislature but instead it chose to commission a study on the issue before taking any further action. - Other factors
- In 2025, Congress ended enhanced federal premium subsidies, which helped lower premiums for millions of Americans.
- The brunt of the impact of not extending the subsidies occurred in 2026 but it continues to affect the 2027 market.
Policy solutions supported by the council
- Reinsurance program extension
The Council collaborated with the Minnesota Legislature to create the state’s nationally recognized reinsurance program, which effectively operates as a 25% premium discount on average in the individual market (47% impact in 2026). This program helps keep coverage affordable for thousands of Minnesotans who would otherwise go uninsured. The program has been extended multiple times by the legislature. - State mandate cost defrayal
Federal law requires states to defray certain costs associated with new mandates that apply in the individual and small group markets. In 2025, bipartisan support existed in the Minnesota Legislature to expand this requirement and broaden its application to include large group health plans. The proposal did not pass, and the Council strongly urges lawmakers to revisit this legislation to reduce coverage costs for Minnesotans.
- Efficient and Effective Care
According to the Journal of the American Medical Association (JAMA), 25% of health care spending—$935 billion annually nationwide—provides little or no clinical benefit. The Council advocates for policies to support responsible oversight of health care utilization and cost-effective care.
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