Healthcare costs are climbing and enrollments in healthcare insurance programs are dropping at unprecedented rates both in Minnesota and nationwide—but key reforms could help address the issue, advocates say.
A new North Star Policy Action (NSPA) report found that Affordable Care Act (ACA) marketplace enrollees in Minnesota are looking at a 54% average premium insurance increase this year, which can be directly attributed to the loss of ACA subsidies that the GOP refused to extend last year. On top of that, enrollments in the state health insurance program, MNsure, have decreased by 12% in 2026. NSPA said employee contributions to health insurance premiums in Minnesota have grown 67% over the last eleven years, outpacing the state’s 42% wage growth rate.
The math is simple: increased insurance premiums + wages not keeping pace with inflation + decreased enrollments = Minnesotans unable to pay for or receive healthcare. But, NSPA’s Research Director Aaron Rosenthal says Minnesotans aren’t powerless in facing these changes. Splitting the NSPA’s call for state-level reforms into two key areas, Rosenthal said Minnesotans need to “address prices directly” and “confront consolidation.”
Addressing price hikes
Jen Schultz, an economics professor at the University of Minnesota who co-authored the NSPA report, said Americans are on track to spend “nearly nine trillion dollars on healthcare by 2024,” which she noted is $3 trillion more than this year’s total expense is forecast to be. A Rice University report found that between 1999 and 2024, total health insurance premiums have risen 342%, while workers’ wages only grew 119%. Schultz said these rising healthcare costs have essentially eroded wages, as “many folks earn less today than 20 years ago in real terms, accounting for inflation and health coverage expenses.”
Employer-sponsored healthcare plans are by far the most common way most people are accessing health insurance, but the cost of these plans has grown over time. NSPA reports that in 2013, the average employer-provided family plan premium in Minnesota was nearly $15,000. By 2024, that number rose to over $23,500. Employers are on average paying up to 57% more for that plan, while Minnesotans are paying up to 67% more.
Most people blame insurance companies for the high premiums, and while this is partially accurate, Schultz said high hospital prices are another part of the problem. From 2011 to 2024, the National Academy for State Health Policy reported that total hospital operating costs in Minnesota increased by 87%, while charges for hospital services increased by 116%.
Rosenthal said we can address these price increases a few ways, and that includes “tying what hospitals get paid to a clear benchmark.” He said Minnesotans on commercial insurance plans pay three times more than someone on Medicare would pay for the same services.
“To deal with this, other states have tied what certain health plans will pay to Medicare rates, and they’ve saved real money. When Oregon did this for their state employees, outpatient prices dropped 25% and generated more than $100 million in savings in 27 months,” Rosenthal said, noting that he believes Minnesota could create similar Medicare-based caps for state employee health plans.
Another strategy would be creating a state purchasing pool for prescription drugs. NSPA said this would allow for the negotiation of lower prices for prescription drugs because they represent a larger component of the market. But, instead of being available only to public employees, it would be open to additional populations like school districts and small businesses.
Confronting hospital consolidation
Hospitals are buying up independent providers, slimming down the competition. This gives health systems and pharmaceutical companies more leverage in negotiations with insurers for services and medication prices. NSPA reports only 33% of hospitals were affiliated with a healthcare system in 2000. In 2023, it was 72%.
“Hospitals have been purchasing clinics because reimbursement rates are often higher for outpatient services when provided in a hospital setting as opposed to an independent physician office,” Schultz said.
Consolidation is good news for health systems and pharmaceutical companies, but it also leads to increased prices and monopolization, leaving rural Minnesotans with fewer healthcare options. The Minnesota Hospital Association says 31 nonprofit hospitals—almost exclusively in Greater Minnesota—are in financial distress, and eight are on the brink of closure.
Schultz admitted that hospitals–like Mayo Clinic–are usually the largest employers in Minnesota and that they provide community benefit. But, she added, “there must be some limits to hospitals’ ability to charge high prices, which pays executive salaries, and they really leave folks struggling with medical debt.”
In Minnesota, California-based Sutter Health is acquiring Allina–one of the largest health systems in the state–to create a $26 billion nonprofit healthcare system. Sammy Lerach, a hospice nurse at Allina Health, claimed he’s seen the company’s management increasingly care more about the bottom line than patient care, and he believes this merger will only exacerbate the issue. Over the years, Lerach said he’s “seen staff gutted by spreadsheet decisions,” as well as team members leaving due to burnout and the loss of facilities and nurses due to budget cuts.
“I worry that Sutter will further prioritize efficiency over outcomes or prioritize acquiring technology like AI instead of just acquiring better staffing levels with caring nurses,” Lerach added. “It’s hard to think that people halfway across the country who don’t even know our community can make good decisions about the vital work that we do.”
Rosenthal said the state is not powerless in facing up to this merger, as the state could make certain demands of the details of the proposed acquisition. He believes Attorney General Keith Ellison’s office should “ban anti-competitive contract terms that big systems use to lock in their advantage and drive up prices.”
“And we can require real transparency about who owns our hospitals and clinics,” Rosenthal added.
Keeping Minnesotans insured
Currently, the state’s uninsured rate is the highest it’s been in six years. Many Minnesotans who don’t have an employer plan instead get coverage via the state-based MNsure. Using data from the Minnesota Department of Employment and Economic Development, NSPA says 185,000 Minnesotans used this plan as of 2025. But, because of the expiration of the ACA tax credits, only around 125,000 are enrolled this year.
Those who still want to use Affordable Care Act coverage are expected to see another double-digit jump in premiums beginning next year. And more than 1 million Minnesotans get coverage via Medicaid, but 250,000 of them could lose coverage due to the $1 trillion in Medicaid cuts made as part of the One Big Beautiful Bill Act, according to KFF. Ultimately, Rosenthal and Schultz said this report makes clear how important it is for Minnesotans to have affordable insurance, so they can continue to get the care they need.
“Every person who loses coverage is not only placed in a difficult position to take care of themselves, but also drives up uncompensated care costs, which are then passed on to the rest of us,” Rosenthal said. “None of this is easy, but the worst thing we could do is treat rising healthcare spending as inevitable. Federal policy has put Minnesota in a tough spot, to be sure. Even so, we have the power to make healthcare more affordable for working families in this state, and we should use it.”
