For the second year in a row, Minnesota health insurers are seeking double-digit percent rate increases next year for coverage sold on the state’s MNsure exchange.

The proposed rate hikes, which regulators haven’t yet approved, are looking like a bellwether for medical cost trends across the broader U.S. health insurance landscape — including if you receive coverage through an employer or union.

Consulting firm PwC reported earlier this month that underlying health care expenses are expected to increase 9% next year for people with coverage through their employers, which is the most common type of health insurance in the U.S.

The factors driving medical costs include greater use of expensive medications and mental health services, as well as health care providers using AI tools and corporate consolidation to fetch higher prices per service, the PwC report said.

In recent weeks, insurers in 10 states have collectively proposed median price hikes of 13% for individual and family coverage, said Matt McGough, a policy analyst with California-based KFF.

“Increases in both medical pricing and utilization — this seems to make up the vast majority of the price increases," McGough said.

In Minnesota, Medica wants to increase premiums by an average of 13% on individuals who buy coverage via MNsure, according to data released this month by the Minnesota Department of Commerce.

Bloomington-based HealthPartners is asking regulators to approve an average 12% rate increase, while Eagan-based Blue Cross and Blue Shield of Minnesota is seeking a 10% increase.

Coverage sold to individuals and families is a relatively small slice of the statewide insurance market, with about 125,000 people buying coverage through MNsure as of last month.

Yet the trends driving higher insurance rates on MNsure are mirroring the broader insurance market, where proposed rates aren’t typically released publicly.

“Utilization continues to increase in intensity, pharmacy pricing has shown little relief in drug costs and provider cost inflation is a factor as their cost of delivering care has gone up,” said a statement from Medica, which is based in Minnetonka.

Hospitals in Minnesota say they’re struggling with increases in uncompensated care because more patients lack insurance and can’t pay some or all of their bills.

“This cycle of rising premiums pushing more people out of the insurance market, then more unpaid care driving up costs, will only end with less access for everyone,” the Minnesota Hospital Association said in a statement.

The trade group for the state’s hospitals says the top five U.S. health insurance companies reported nearly $27 billion in profits in 2025, down from nearly $32 billion the year before.

None of those big national companies sells individual market coverage in Minnesota, where Blue Cross, HealthPartners and Medica — the Big 3 on MNsure — are nonprofit groups.

Final MNsure rates will be released by Oct.1. They can, and often do, vary from initial rate proposals. Specific rates for consumers often differ from averages based on geography, age and eligibility for tax credits.

Regulators review rate filings to ensure proposed rates are justified by the data submitted by insurers. Minnesotans may submit public comments as part of the rate review process by emailing them to HealthInsurance.DivisionRequests@state.mn.us.

The proposed rate increases of 10% to 13% for next year apply in what’s called the individual health insurance market, which primarily consists of coverage sold via MNsure to people who don’t get coverage through an employer or a government program. The exchange was launched by the state government in 2014 as part of the federal Affordable Care Act.

Roughly half of those who sign up for policies via MNsure qualify for tax credits that discount premium costs. Because tax credits increase in value when premiums go up, consumers receiving subsidies won’t typically see their own costs go up if regulators approve the proposed increases.

Yet some who don’t receive subsidies could be priced out of coverage, since they will see the full impact of any rate hike.

At the end of 2025, Congress opted to not extend COVID-era enhancements to these tax credits, which increased the value of subsidies while expanding the number of people who qualify. Without those enhancements this year, MNsure has seen the number of people buying coverage decline more than 10%, from 143,000 in May 2025 to 125,700 last month.

MNsure officials point out that, even with the decline, enrollment this year is higher than in 2021, before enhanced tax credits were enacted. Yet, the loss of extra subsidies “has affected consumers’ abilities to continue their chosen plans, and more Minnesotans appear to be going without health care coverage,” MNsure said in a statement.

Even before the MNsure coverage decline this year, state officials’ best estimate for the number of Minnesotans who lack health insurance had climbed 55% from 2023 to 2025.

Going into this year, premiums on MNsure increased by alarming amounts, regulators said last fall, with the largest insurers in the market boosting average rates anywhere from 18.7% to more than 30%.

The increases proposed for 2027 are not nearly as high, but “they’re still significant,” said Julia Dreier, deputy commissioner of insurance at the state Commerce Department.

If approved, the proposed increases would be challenging for Minnesotans who are “already facing a lot of cost increases for everyday items like groceries and child care and housing,” Dreier said. “This is just going to be one more additional pressure.”

The pressure for higher rates comes in part from hospitals and clinics,where rising costs for supplies and labor have driven prices higher. Health systems also continue to grow by acquiring one another, and studies show larger hospital networks can extract higher prices from insurers.

Prescription drug costs are growing faster than medical care overall, PwC said, especially considering advances in specialty drugs and growing use of costly GLP-1 medications for weight loss and diabetes.

Meanwhile, behavioral health use has surged 62% from 2018 to 2024. And hospitals are deploying technological tools that increase their ability to submit more expensive bills.

“AI-enabled documentation and coding tools allow providers to capture greater specificity and reimbursable severity without proportionate increases in care intensity,” PwC said.

McGough of KFF said he’s hearing concerns about all those factors driving cost increases to varying degrees across health insurance markets.

The central dynamic is that hospitals and clinics, particularly those with tight margins, are trying to pass along increases in their labor and supply costs, he said, as patients simultaneously are obtaining more health care services.

“There’s a lot that we can extrapolate out from the individual market this year," McGough said.

Blue Cross of Minnesota said it expected underlying medical cost trends to continue next year from factors including “higher specialty drug costs and increased coding intensity resulting from the growing use of AI in provider billing.”

The Commerce Department news release this month of proposed rates for 2027 noted Medica will stop selling coverage next year under the UCare brand.

UCare, the Minneapolis-based health insurer that ran out of money and is being liquidated, sold its individual market business to Medica at the start of this year.

For this year, Medica sold its own plans plus those branded as “UCare” insurance. For 2027, it will offer Medica products to the 29,000 or so people enrolled in UCare individual products.

Neither the insurer nor state officials predicted what percent increase the UCare enrollees could face in 2027.

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