Federal Medicaid Changes Could Jeopardize Coverage for 140,000 Minnesotans

Minnesota faces significant Medicaid coverage reductions following federal Medicaid policy changes under the recently signed tax and spending legislation. State health officials project that approximately 140,000 Minnesotans could lose Medicaid benefits due to newly introduced work requirements and eligibility verification processes targeting low-income adults without children. These administrative changes, set to be implemented primarily from 2027 onward, are anticipated to increase the complexity of maintaining Medicaid eligibility and introduce higher out-of-pocket costs for remaining beneficiaries.

The Minnesota Department of Human Services (DHS) estimates that federal funding to the state will decrease by $1.4 billion over the first four years of the legislation's implementation. Annual funding losses attributed specifically to work reporting requirements may reach $200 million, impacting the state's ability to support Medicaid enrollees. The rise in beneficiary cost-sharing represents an additional barrier to accessing preventive and necessary healthcare services.

Medicaid, established in 1965, remains the largest public health insurance program in the U.S., covering over 79 million individuals nationally, with nearly 1.3 million enrollees in Minnesota. Children constitute the largest segment of Minnesota's Medicaid population, accounting for 42%, while adults aged 65 and older and persons with disabilities make up 15% of enrollees but represent 60% of program expenditures.

The legislative adjustments reflect a shift towards increased administrative oversight and financial responsibility for Medicaid beneficiaries. This approach has implications for state Medicaid program management, including compliance with federal regulations, budget planning, and healthcare access equity. Governor Tim Walz has indicated no immediate plans for a special legislative session to address the fiscal impacts of these federal changes.

The anniversary of Medicaid's establishment is being marked in Minnesota, recognizing its long-standing role as Medical Assistance in the state. However, the federal policy shifts signify a changing landscape for Medicaid enrollees and state healthcare programs, underscoring the evolving challenges in balancing cost containment and coverage provision.