If the federal government fails to extend federal subsidies that offset healthcare premiums, Sen. Amy Klobuchar, as governor, would create a state tax credit to help with those skyrocketing costs.
Most Republican U.S. senators late last year blocked a Democratic bill to extend Affordable Care Act tax credits, essentially driving up healthcare premiums for millions of Americans.
The extra federal subsidies that Republicans blocked are known as “enhanced premium tax credits,” because they raised the income cutoffs at which people can receive subsidies.
The enhanced premium tax credits expired at the end of 2025, hiking up health insurance plan costs by 50% for a projected 89,000 Minnesotans, according to a 2025 release from MNsure — the state’s ACA marketplace.
Klobuchar, the Democratic-Farmer-Labor nominee for governor, standing in front of St. Paul College’s simulation center for healthcare students on Friday, said there’s a strong possibility that the federal subsidies will be extended after the November midterms if Democrats gain more seats in Congress.
But if Congress doesn’t take action, Klobuchar said she would create a state tax credit targeted at small business owners, self-employed workers and farmers who are hit hardest by the expiration of the federal subsidies.
“Millions of Americans have lost their health insurance because they can no longer afford premiums,” Klobuchar said. “Deductibles have risen, too, and prescription drug prices continue to skyrocket. As governor, I will reduce premiums to deliver immediate cost relief and value for Minnesota families, small businesses, farmers and those without employer coverage.”
Ten states offer state-funded healthcare subsidies, including California, Maryland, Washington and New Mexico — the only state to see ACA enrollment growth since Congress allowed the federal subsidies to expire.
Friday was Klobuchar’s first press conference since winning the DFL nomination for governor in Tuesday’s primary election. Klobuchar is running against Republican House Speaker Lisa Demuth, who on Friday said that Klobuchar has failed to reform healthcare in the 20 years she’s been a U.S. senator.
Klobuchar’s healthcare plan also includes creating a per-employee tax credit for small employers who fund their workers’ coverage.
Minnesota’s future budget outlook is uncertain, as state spending is expected to continue to outpace revenue in the next few years. Asked how she would deal with the cost of the tax credits, Klobuchar said she expects to find cost-savings in the top-to-bottom audit of state government she will do as soon as she takes office.
Klobuchar said that as Hennepin County attorney, she did the same thing to the state’s largest prosecutor’s office, analyzing the budget and determining areas where it could cut duplicative services or save money by moving employees around.
“If we’re going to spend some money to keep Minnesota growing and strong, we’ve got to look at the health insurance premiums as well as drug prices and things that will bring down the costs overall,” Klobuchar said.
