ST. PAUL — Minnesota lawmakers are contending with how to implement broad federal Medicaid changes that could increase counties’ administrative costs by more than $150 million annually and result in thousands losing coverage.
Last year’s One Big Beautiful Bill Act reduces federal Medicaid spending over the next decade, partly by requiring more frequent eligibility checks and imposing new work requirements. Lawmakers face a Jan. 1, 2027, deadline to implement the changes.
Many legislators said there is a lack of federal guidance from the Center for Medicare & Medicaid Services on how to implement the changes. A pair of Republican-backed bills intended to guide counties on how to comply with the federal changes failed on party-line votes on Wednesday, March 4.
Rep. Danny Nadeau, R-Champlin, the author of the bills, called them an imperfect first step, and said he welcomed bipartisan collaboration. Many Democrats said the discussion of the bills was rushed and moving them forward would be premature, given the immense impact of the federal changes.
Lawmakers must pass legislation or update rules to bring state programs into compliance with the new federal requirements. The bills proposed several changes to align Minnesota law with the new federal law.
The Affordable Care Act expanded Medicaid coverage to more than 200,000 Minnesota adults who live below or slightly above the poverty line. They now face stricter requirements. Eligibility will be checked twice a year rather than once, and recipients must work or attend school for a minimum of 20 hours a week. Counties will be responsible for all verification.
Along with the addresses of hundreds of thousands of low-income adults, counties will need to regularly collect the addresses of roughly 1 million other people covered by Medicaid, including children and people with disabilities. Counties will also be expected to verify four times a year that all enrollees are not deceased.
Enrollees are currently eligible for coverage of medical expenses incurred up to three months before their application date. Moving forward, adults covered by the ACA Medicaid expansion will be eligible for one month, and other groups will be eligible for two months.
Certain immigrant populations, such as refugees and asylum seekers, will no longer be eligible for Medicaid coverage on Oct. 1, 2026.
In late February, the Trump administration announced a halt to more than $250 million in Medicaid funds to Minnesota. In the past several months, the federal government has placed Minnesota’s welfare systems under a microscope in the name of fighting fraud.
Republicans said that noncompliance with new Medicaid requirements would bring financial or program-based penalties.
To effectively comply with changes by the fast-approaching January deadline, Minnesota needs a rapid implementation plan, which includes modernizing verification processes and strengthening agency databases.
Counties cover half the cost of administering Medicaid, and the additional verification workload could result in more than $150 million in new costs for counties every year, said Angela Youngerberg, a consultant with the Association of Minnesota Counties.
While some federal grants and funding matches exist to aid transitions, DFL legislators expressed doubt that federal support would be honored in Minnesota, given what they called President Donald Trump's targeting of the state.
Exact impacts and implementation plans remain undetermined. But people will continue to get sick, and they still need care, said Rep. Tina Liebling, DFL-Rochester. The federal law made sweeping changes to health care and left states to pick up the pieces, said Rep. Robert Bierman, DFL-Apple Valley.
“My perspective is that this Legislature must do everything in our power to minimize the damage to our state, to providers, and to the people who depend on Medicaid for the care they need to survive,” Bierman said.
Report for Minnesota is a project of the University of Minnesota’s Hubbard School of Journalism and Mass Communication to support local news across the state.
