140K Minnesotans at Risk of Losing Medicaid Under New Law

Understanding the Impact of Federal Medicaid Changes on Minnesota

The recent federal changes to Medicaid have sparked significant concern among Minnesotans, with an estimated 140,000 residents potentially losing access to government-funded health care. These changes, signed into law by President Trump this month, are expected to affect about 12% of all individuals currently enrolled in the state’s Medicaid program, known as Medical Assistance (MA). This shift represents a major change for the state's healthcare system and raises questions about the future of coverage for low-income populations.

The Financial Implications

According to a preliminary analysis from the state Department of Human Services (DHS), Minnesota could lose upwards of $1.4 billion in federal healthcare funding over the first four years of implementing these changes. The new federal tax and spending package, often referred to as the One Big Beautiful Bill Act, aims to reduce Medicaid spending by nearly $1 trillion. This is achieved through various measures, including new work reporting requirements, twice-yearly eligibility checks, and other provisions that shift costs to states and hospitals.

One of the primary financial impacts comes from the work reporting requirements. DHS estimates that coverage losses related to these requirements alone will cut federal funding flowing to the state by $200 million annually. In addition, local state and tribal governments face an extra $165 million in annual administrative costs due to implementation. Hospitals could also suffer significant losses, potentially losing up to $1 billion annually under changes to the provider tax.

Perspectives from Officials

John Connolly, a deputy DHS commissioner and state Medicaid director, has expressed concerns about the law's impact on vulnerable populations. He highlighted that low-income adults without children, those parenting teenagers, and rural hospitals will be particularly affected. A major concern is that eligible individuals may still lose coverage because they cannot complete the required paperwork. Additionally, those who retain coverage might face higher out-of-pocket costs, which could deter them from seeking preventative care.

On the other hand, House Speaker Lisa Demuth defended the changes, calling them "common-sense work requirements for able-bodied adults without children." She emphasized that these changes aim to strengthen program integrity, ensuring only eligible individuals receive benefits. Demuth also pointed to a "massive fraud problem" in the state, suggesting that the reforms are a necessary step to protect Medicaid for those who truly need it.

What’s Next for Minnesota?

While officials are still assessing the direct impact on the state budget, Gov. Tim Walz has indicated that he likely won’t need to call a special session to address the fiscal implications. Many of the Medicaid changes do not take effect until 2027 or later. However, he warned that lawmakers will face "very difficult decisions" when they return to St. Paul in February.

Broader Effects of the Law

Beyond Medicaid, the 900-page law has far-reaching effects on Minnesotans. Low-income residents may experience cuts to federal food assistance, while owners of high-priced homes could see tax breaks. Other tax deductions are targeted at parents, workers who earn tips or overtime, and seniors. Changes to tax bills could also affect people who gamble, give to charities, or take out new car loans.

In an interview with HAWXTECH, Gov. Walz voiced concerns about potential increases in home electricity bills, reduced tax incentives for clean energy, and changes to tax credits for the sustainable aviation fuel industry—a key priority for the local business community. These developments highlight the complex and multifaceted nature of the federal changes and their potential long-term consequences for Minnesotans.