Most of you have heard the news by now: “140,000 Minnesotans could lose healthcare coverage over federal Medicaid cuts” (CBS/WCCO News, July 28, 2025); “Medicaid and Medicare Day celebration comes as 140,000 Minnesotans might lose coverage” (5 Eyewitness News, July 30, 2025).
In other words, about 14% of Minnesota’s working-age Medicaid enrollees between the ages of 19 and 64 (roughly 140,000 people) are projected to lose their healthcare coverage starting in 2027 due to H.R. 1’s eligibility and administrative changes, according to the Minnesota Hospital Association (MHA).
In 2025, Minnesota’s working-age Medicaid population was about 650,000 people, representing 47% of all Medicaid enrollees in the state (Minnesota Department of Human Services). Minnesota’s total Medicaid population, including infants, children, people with disabilities, and older adults, is between 1.2 and 1.3 million.
While H.R. 1, the One Big Beautiful Bill, will not eliminate Minnesota’s Medicaid program, the loss of coverage for 140,000 working Minnesotans will create financial strain that ripples through hospitals, healthcare providers, and the broader healthcare system. These changes are expected to begin January 1, 2027.
State policymakers will need to act to mitigate these harms. The federal changes also reduce matching funds and increase administrative burdens (Minnesota Budget Project, Minnesota Council of Nonprofits).
H.R. 1’s cuts will not be fully covered by existing federal funds. Minnesota will likely need additional state revenue, potentially through new or expanded taxes, to maintain Medical Assistance (Medicaid) and MinnesotaCare coverage (Minnesota Budget Project).
Furthermore, for the first time in its 60-year history, workers receiving Medicaid coverage will have to meet work reporting requirements to gain or maintain their coverage. These requirements are part of Minnesota state law SF 4612, included in the Omnibus Health and Human Services appropriations legislation enacted last legislative session.
Starting January 1, 2027, “they must meet new federal work or community engagement requirements to qualify for or keep coverage.” This means “these folks will have to report regular compliance, putting them at risk of losing health coverage if they are out of work, not scheduled for enough hours, do not meet burdensome reporting deadlines, or if there is a paperwork error” (Minnesota Budget Project).
Can “business as usual” legislation offset H.R. 1’s Medicaid cuts?
Are there policies that could address the $2 billion annual reduction to Minnesota’s Medicaid funding over the next 10 years from H.R. 1, without putting low-income workers at risk of losing their coverage? Two alternatives to consider are incremental approaches and the Patient Centered Care (PCC) bill.
Incrementalism: Two sets of companion House and Senate appropriation bills (HF 217/SF 1519 and HF 1330/SF 621) were introduced last session but not enacted. These bills would have provided significant new investments in rural healthcare – $193 million in 2026 and up to $1 billion over five years – but this funding would not have replaced the Medicaid revenue lost due to H.R. 1. This legislation could have helped stabilize some rural healthcare providers and expanded services. However, Minnesota would still face a multi-billion-dollar funding shortfall in rural healthcare over the next decade unless additional, sustained funding is secured (National Rural Health Association).
In other words, Minnesota would still need additional state revenue to address H.R. 1’s cuts.
Will proponents continue down this incrementalist path of raising more taxes next session, or will they consider the potential savings offered by the Patient Centered Care bill?
Patient Centered Care
Rather than raising more taxes, further reducing Medicaid eligibility, or putting low-income workers at risk of losing their coverage, the PCC bill offers another approach. It would save an estimated $1 billion annually, helping offset the H.R. 1 projected $2 billion annual reduction to Minnesota Medicaid.
The bill proposes moving away from the current system of insurance company middleman management of Minnesota Medicaid (Medical Assistance), which carries administrative overhead of approximately 10–15%, toward direct state payments to healthcare providers, with administrative overhead of approximately 4 – 5%. This approach would return Minnesota to a system similar to the one used in the 1990s.
Don Pylkkanen, Co-Chair of Legislative & Policy Committee
Dave Garibaldi, Co-Chair of Legislative & Policy Committee