Last week, Congress passed President Trump’s extensive tax and spending bill with a vote of 218-214, where two Republicans joined all Democrats in opposing the measure.
The package signed into law by Trump on July 4 is projected to increase the national deficit by more than $3 trillion. It will be partially funded by $1 trillion in cuts to Medicaid, a move that will have widespread consequences, resulting in nearly 12 million Americans becoming uninsured over the next decade.
The health insurance program is now facing its largest cuts since its inception in the 1960s, which could lead to an estimated 150,000 to 250,000 Minnesotans losing their health insurance, according to KFF, a nonprofit health policy research organization. These policy changes are expected to introduce additional red tape and funding pressures that may cause individuals to lose their eligibility or opt out of the program as cuts roll out over the next few years.
Medicaid, which is more commonly known in Minnesota as Medical Assistance, provides health coverage for about 1.2 million people in the state. The joint state and federal program offers affordable health insurance to more than one in five Minnesotans, including children, people with disabilities and seniors.
To qualify for Medical Assistance, individuals must meet income requirements based on their age, pregnancy status and family size. Enrollees do not pay a premium for coverage or share costs for comprehensive health services.
The Minnesota Department of Human Services said the state could lose up to $500 million annually once the federal funding cuts are enacted, due to a decrease in Medicaid payments.
John Connolly, Minnesota’s Medicaid director, said deep cuts to Medicaid would cause serious harm locally. Reductions in Medicaid funding would lead to increased costs for states, counties, tribal nations, providers and individuals.
“It is a lifeline for newborns, seniors, people living with disabilities and working families,” Connolly said. “Cuts will take away health coverage, access to essential and lifesaving care and prescription drugs for hundreds of thousands of Minnesotans and increase medical debt.”
The cuts also create obstacles designed to disenroll eligible Minnesotans from their health care coverage, Connolly said.
The new law will require what the bill calls “able-bodied” Medicaid beneficiaries between the ages of 19 and 64 to prove that they are working at least 80 hours per month in order to maintain their health insurance. However, recipients with children under the age of 14 will be exempt from this requirement. This rule is set to take effect in 2027, although some states may receive extensions.
A 2023 analysis by KFF shows that most Medicaid enrollees in the U.S. are employed. Specifically, 92 percent of adults under the age of 65 are working full-time, while 64 percent are working part-time or are not working due to caregiving responsibilities, illness, disability or attending school. The remaining 8 percent of Medicaid adults indicated that they are retired, unable to find work or not working for other reasons.
The change will also require states to check recipients’ eligibility every six months instead of annually. Connolly said that these additional requirements are unnecessary barriers that make it more difficult to enroll in the program and could contribute to a loss of health care coverage.
Medicaid enrollees seeking employment or facing work difficulties due to disability or illness could be penalized under this requirement.
“Families will face impossible choices between caregiving and working, between food and medicine, and our hospitals, especially those in rural communities, will suffer. Minnesotans will fall through the cracks,” Connolly said.
Planned Parenthood North Central States lost access to $11 million in Medicaid funds immediately after the bill was signed into law. The organization is focused on keeping costs affordable for patients who are uninsured and for those who can no longer use Medicaid. This includes essential health care services such as cancer screenings, birth control and testing for sexually transmitted infections.
Ruth Richardson, president and CEO of Planned Parenthood North Central States, said that they are still working out many details regarding abortion access in the state.
“One thing is certain: we will continue providing abortion care where it is legal,” Richardson said. “Our commitment to the mission remains the same. No matter what challenges they throw at us, no matter how many times we have to adapt, Planned Parenthood will continue to be here for our patients.”
The cuts are widely unpopular, according to a recent survey conducted by the Minnesota Department of Health and the State Health Access Data Assistance Center at the University of Minnesota.
About 2,000 people completed the survey, which assessed Minnesotans’ perceptions of the Medicaid program.
The survey results indicate broad support for Medicaid across all demographics and regions of the state. 80 percent of respondents oppose federal cuts to the program, and 72 percent believe that Medicaid is very important to people in their local communities.
In Minnesota, 42 percent of children depend on Medicaid, and these kids are evenly distributed around the state, said Dr. Marc Gorelick, CEO of Children’s Minnesota.
“It's as high as 50 percent of kids in the rural parts of northern and southwestern Minnesota,” Gorelick said. “When we are talking about cuts to Medicaid, these impacts are going to be felt very broadly across the state, and every congressional district and every community in Minnesota will be affected.”
Gorelick emphasized that the Medicaid program is vital for children, pregnant mothers and families.
The most immediate impact on Medicaid would involve changes to provider taxes, modifying the way states collaborate with hospitals and other health care providers to finance their Medicaid programs.
Children’s Minnesota primarily treats kids, with nearly 50 percent of its services funded by Medicaid, but the program only covers about 70 percent of the costs for providing care.
Safety net hospitals, including Children’s Minnesota, already experience significant financial losses due to the high volume of Medicaid patients they serve.
Gorelick said that the non-profit acute care children’s hospital system was underpaid by $220 million by Medicaid last year. This discrepancy between the cost of care and reimbursement rates places a financial strain on health systems across the state, which are already struggling to remain operational even in the absence of the federal Medicaid cuts ordered in the tax and spending bill.
“We are going to have to look at the services that we provide and whether or not we can maintain the level of access that we have if there are substantial cuts to those payments,” Gorelick said. “There are significant implications. And we are not the only ones. Other hospitals around the state are having the same conversations.”
A spokesperson for Hennepin Healthcare said that the approval of the spending bill is not the outcome they desired, as it presents numerous challenges for patients and families.
The safety-net health care system that provides care for low-income, uninsured and vulnerable populations will continue to assess the impact, plan for the future, and monitor the next steps from lawmakers. The organization’s mission is to provide the best possible care for everyone, regardless of their ability to pay.
Dr. Thomas Klemond, interim chief executive officer at Hennepin Healthcare, said that half of the organization’s patients are covered by Medicaid. This percentage is even higher in trauma care and addiction medicine, where approximately 70 percent of patients are enrolled in Medicaid.
All people will be impacted by reduced access to health care services and overcrowded emergency rooms, as patients will have no alternative but to rely on the emergency department for care, Klemond added.
“Health care costs will go up,” he said. “If there is a higher percentage of our population that is not supported, there are very limited ways to make that up.”
