Minnesota Highlights Medicaid Changes Impacting $1.1B Funding Cut

Minnesota Governor Tim Walz designated July 30th, 2025 as 'Medicaid and Medicare Day' to acknowledge the 60th anniversary of these programs and visited a Twin Cities hospital to mark the occasion. During the event, state officials emphasized the significant impact of recent federal policy changes on Medicaid funding and eligibility requirements under HR1 legislation. The new federal law introduces cuts that are projected to reduce Medicaid funding in Minnesota by $1.1 billion over four years and could lead to roughly 140,000 enrollees losing coverage due to new reporting and work requirements.

State Medicaid Director John Connolly detailed that the coverage losses stem largely from administrative challenges such as incomplete paperwork. Minnesota Management and Budget Commissioner Erin Campbell highlighted the broader financial implications, estimating a total loss of $2.5 billion in federal funds to various state entities per biennium once HR1 is fully implemented. These federal changes compound pressures on Minnesota's budget, which is already addressing a projected deficit for fiscal years 2028 and 2029.

This policy shift underscores critical challenges for Medicaid administration and state budgeting, highlighting the intersections of federal regulatory compliance, funding risk, and program accessibility. Insights from Minnesota's experience are pertinent for other states navigating similar Medicaid policy reforms and their fiscal and operational impacts.