From Washington to Minnesota: The Medicaid Impact

The “One Big Beautiful Bill Act,” passed by Congress and signed into law by President Trump in July, will have significant implications for Minnesotans and their healthcare in the coming years. Consumers, insurers, care providers and state officials will be navigating uncertainty, additional reporting requirements, steep Medicaid cuts and reduced financial flexibility to make ends meet.

The bill tightens eligibility requirements and makes enrollment more complicated for people applying as well as for the county, state and Tribal workers helping them. The ultimate effect is to shift significant costs of providing services the federal government used to heavily subsidize, especially in rural areas, to the states and critical providers, many of whom are not prepared to bear that additional burden on their own.

The Minnesota Department of Human Services estimates that this could result in as many as 140,000 Minnesotans losing coverage and puts rural healthcare providers at risk of closing their doors.

About 1 in 5 Minnesotans are enrolled in Medicaid, which is called Medical Assistance in Minnesota, though certain counties in Greater Minnesota have much higher rates, such as Mahnomen (55%), Beltrami (38%), and Wadena (37%).

In 2024, Minnesota spent a total of $18.5 billion on Medicaid, $11 billion (60%) of which was federal funding. The annual federal Medicaid funding represents 36% of Minnesota’s annual general fund budget.

Reductions in federal Medicaid funding will negatively impact nursing homes and hospitals. Long-term care facilities are forecasted to receive $1.4 billion from Medicaid in 2026; $752 million of which is federal funding. In 2023, Minnesota hospitals received $3.5 billion from Medicaid.

While some of the law’s provisions went into effect immediately after passage, many of the more severe cuts to services will not take effect until 2026 or later. We will have a better idea where the State of Minnesota’s finances stand after the Management & Budget Office’s November forecast, but prior forecasts have shown the state hitting a structural budget deficit of nearly $6 billion by the 2028-29 fiscal biennium. If trends continue and the federal cuts take effect as planned, Minnesota legislators will be faced with incredibly difficult financial decisions in future budget years.

Elder Voice Advocates is in contact with legislators, county governments, state officials, and other advocacy networks to monitor the situation and provide support where we can. We will be at the Capitol next session fighting to ensure that government budgets are not balanced on the backs of vulnerable adults and seniors.