What is Medicaid, and what could federal cuts mean for Minnesotans?

More than 1 in 5 Minnesotans rely on the state’s Medicaid program that provides health care coverage for low-income residents, pays for nursing facilities for older adults and allows people with disabilities and seniors to continue living in the community.

The sweeping government program, called Medical Assistance in Minnesota, is paid for with a mix of federal and local dollars. The bulk of the $18.5 billion Minnesota spent on Medical Assistance last fiscal year came from the federal government.

Medical Assistance recipients and state leaders are sounding the alarm over U.S. House Republicans’ recent budget resolution. That vote this week was just the start of a complicated process, and details of their budget plan still need to be developed.

GOP leaders directed the Energy and Commerce Committee to slash $880 billion over the next decade from the programs they oversee, which include Medicaid and Medicare. It will be difficult to reach that sum without cutting into the safety-net program many Minnesotans depend on.

“We can’t put a precise price tag on any of them, but we are very concerned about what the impacts of these proposals might be,” Minnesota Department of Human Services Chief Financial Officer Dave Greeman told state lawmakers at a Thursday hearing, where senators reviewed what potential federal actions could mean for Minnesota’s budget.

With potential changes to the nation’s largest government health insurance program by enrollment on the horizon, the Minnesota Star Tribune reviewed who the program serves here and what may be coming.

The program provides preventive and primary health care coverage for low-income residents. It also can pay for nursing facility care for older adults and intermediate care facilities for people with developmental disabilities.

Finally, Medicaid in Minnesota can cover long-term care services and programs for people with disabilities as well as older adults so they can keep living in communities. The program pays for half of all long-term services provided in the state, according to the Department of Human Services.

About 1.2 million people across the state are covered by Medical Assistance monthly in the current fiscal year.

The program provides health insurance coverage to about 592,000 children across the state. Greeman said 42% of children in the state receive services through Medicaid.

No, Medicare is run by the federal government to provide health insurance to seniors and certain groups under the age of 65.

Medicaid, however, is the primary source of coverage for people who need long-term care services, like nursing homes, in Minnesota.

For the fiscal year ending last June 30, Medical Assistance spent about $18.5 billion in state and federal funds to pay for beneficiary services.

U.S. House Republicans' budget plan aims to follow through on President Donald Trump’s goal of $4.5 trillion in tax cuts as well as $2 trillion in spending cuts over a decade.

Trump has said he won’t cut Medicare or Medicaid, but has said he plans to look for fraud in the program. However, the directives GOP leaders sent to committees on how much to reduce spending would make it difficult not to cut into Medicaid.

There is a long way to go in the federal budget process, but Greeman told legislators “it’s not unreasonable to say” that the U.S. House committee overseeing Medicaid could make cuts to the program between $600 billion up to the full $880 billion.

If that happens and the cuts are distributed proportionately across states, he said Minnesota could see a $1.2 billion to $1.6 billion reduction in fiscal year 2027, with bigger losses over time.

He noted that several potential Medicaid changes have been floated at the federal level, such as adding work requirements for some enrollees.

Another idea would impose per capita caps or block grants that limit the amount of Medicaid spending the federal government would match. Minnesota pays more per person per month than most states, Greeman said, so that could have a significant impact.

And a third proposal would eliminate an enhanced federal match rate for the Affordable Care Act expansion. The state gets a 90% federal match to serve that expanded population of Minnesotans. The match rate could drop to around 51%, Greeman said, shifting costs to the state.

That expansion serves “the sickest of the sick and the poorest of the poor” including people with mental illness, chronic health conditions and substance use disorder, said Senate Majority Leader Erin Murphy, DFL-St. Paul.

“They will lose their coverage,” Murphy said, if the state cannot afford it anymore because it loses the enhanced federal match. “They will go to our hospitals, but our hospitals will not get paid. They will go to our clinics, but our clinics will not get paid. Or they will not get care. All of those things have an impact — a human impact, and a fiscal impact."

However, Sen. Gary Dahms, R-Redwood, cautioned against “putting fear into the population” when it’s not yet clear what is going to happen at the federal level.