DHS: 140,000 Minnesotans could lose health insurance under federal tax cut and spending package

Close to 140,000 Minnesotans are likely to lose health care coverage under Medicaid cuts expected to cost the state $1.4 billion in lost federal revenue over the next four years, according to a new analysis from state health officials.

The Minnesota Department of Human Services released updated projections Monday of the impact the federal reconciliation bill will have on the state. The legislation, which Trump signed earlier this month, makes cuts to Medicaid, provides income tax cuts and is estimated to add $3.3 trillion to the national deficit.

It imposes work requirements on adult enrollees, caps provider taxes that help states pay for the program, increases costs on low-income enrollees and reduces compensation to states to provide care to immigrants with life-threatening emergencies.

Over the first four years, DHS expects the Medicaid changes to cost Minnesota and health care providers $1.4 billion in lost federal funding.

Costs to enrollees are expected to rise, said John Connolly, a deputy commissioner for DHS, adding that Minnesotans will likely forego preventative care only to wind up in hospitals with emergencies.

“That’s bad for people seeking care, and also bad for health care providers, and it’s bad for the state budget,” Connolly said.

The reconciliation bill Trump pushed through Congress represents monumental changes to Medicaid, known in Minnesota as Medical Assistance.

Uninsured Minnesotans, Connolly said, will likely wind up in emergency rooms where doctors must treat them and hospitals won’t be reimbursed for their services. He said that will increase costs for individuals on private insurance as hospitals increase prices to cover their costs.

“This is going to be hugely expensive to cover fewer people,” said Sen. Erin Maye Quade, DFL-Apple Valley, “to have more people with no healthcare, with no health insurance coverage, to have fewer hospitals...I didn’t think it was possible to make a bill this bad, and yet here we are.”

Maye Quade, who sits on the Senate Human Services Committee, said she thought the Legislature would need to come back for a special session to address the fallout from the bill, but Gov. Tim Walz told MinnPost last week he didn’t expect to call one.

Rep. Jeff Backer, R-Browns Valley, said he welcomed the oversight and work requirements and that he thought the state would find a path forward to deal with the federal cuts.

“I’m quite concerned right now that there’s a lot of doom and gloom before we have all the data and so forth,” said Backer, the Republican co-chair on the House Health Finance and Policy Committee. “Minnesotans love taking care of Minnesotans, so I’m just concerned that [DHS is] blowing a horn that should not be that loud.”

Maye Quade and Rep. Robert Bierman, DFL-Northfield, said the state doesn’t have the resources to fill the holes left by the federal bill.

Bierman, the Democratic co-chair of the House committee, noted the huge sums the bill will add to the national debt.

“What we’re achieving is simply taking healthcare away from the poorest of the poor in this state...and giving it to some of the wealthiest people in the country, so it’s mind-boggling to me,” he said.

Sen. Melissa Wiklund, DFL-Bloomington, chairs the Senate Health and Human Services Committee and said the bill would make it difficult for Minnesota to maintain its healthcare system.

“These changes will cut hundreds of millions of dollars in funding and add hundreds of millions in new costs to state and county budgets, all with the goal of removing healthcare access to Minnesotans currently relying on it,” she said.

Sen. Paul Utke, R-Park Rapids, called DHS’ figures “concerning,” but “manageable.” Utke is the ranking Republican on the Senate committee.

He said government creates issues for providers in the Medicaid program by not reimbursing them at high enough rates for their services.

“The reconciliation bill is not doing anything unreasonable,” Utke said. “There’s a whole lot of people running scared, but they need to look at what it is.”

The Department of Human Services is still assessing the impact to the state budget. With health spending already a growing part of Minnesota’s spending and contributing to a long-term imbalance, Connolly said the state may have to shore up its budget.

“It will exacerbate that challenge,” Connolly said.

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