Minnesota Medicaid explained: Who’s on it, how much it costs, what could change

Medicaid, a signature program of the 1960s “War on Poverty,” is once again in congressional cost-cutters’ sights. But given its success in providing a safety net to children and parents, as well as poor, disabled and elderly Americans, Republicans in Congress insist that despite seeking hundreds of billions of dollars in cuts, they will still preserve the broadly popular program. 

Minnesota boasts some of the lowest rates of uninsured residents nationally and has consistently leveraged Medicaid’s federal-state partnership to cover more people than other states. This leaves the state with much to lose if any changes to Medicaid affect the services Minnesota can provide to the 1.2 million residents who rely on the program.

Related: ‘We always try to maximize federal dollars’: How Minnesota became a national model for Medicaid expansion

Cuts to federal Medicaid funding will either result in greater costs to Minnesota, if it chooses to use state money to make up for lost federal dollars, or an increase in the number of uninsured Minnesotans. Either way, any significant changes will create big ripples in the health care ecosystem, with the effects traveling downstream from Minnesota’s largest single health payer to major hospitals, private practices, nursing homes, community clinics and, ultimately, the wide array of people who rely on Medicaid to live healthy lives. 

This primer explains what Medicaid looks like in Minnesota, and which residents rely on it.

What is Medicaid and who does it cover in Minnesota?

Medicaid, known as “Medical Assistance” in Minnesota, is a joint state and federal program that has been around in some form since 1966. Medicaid covers many health services for enrollees, from the cost of giving birth to the expenses related to living in a nursing home. Its enrollees are children, parents and other adults with low incomes, as well as older adults and people with disabilities who also meet income thresholds.

Children and their parents make up more than half of Minnesota Medicaid recipients. However, those groups only make up roughly 20% of the program’s total costs. The bulk of cost, just over 60%, comes from caring for the elderly or disabled.

Because so much of Medicaid’s budget goes to the elderly and disabled, nursing homes throughout the state will be particularly affected by any cuts to Medicaid. The nursing homes in the following chart received the largest Medicaid reimbursements last year.

Where is Medicaid used in the state?

Medicaid is used in every corner of Minnesota, with some rural counties having significantly higher Medicaid participation rates than the state average.

The map below shows the program is a lifeline in many of the counties of Greater Minnesota, some of which have one-third or more of their population enrolled in Medicaid. But its impact is not limited to rural areas, with one-quarter of Hennepin County’s population enrolled, and one-third of Ramsey County’s residents in the program. Many of the counties most reliant on Medicaid have older populations, such as Aitkin County, where the median age was 56.5 years in 2023, compared to a statewide average of about 42. Other counties are particularly low-income, such as Mahnomen County, which had both the highest rate of Medicaid enrollment at 54.9% in 2023 and the highest rate of poverty, with an average of 20.9% living under the poverty line in the preceding five years.

How has Medicaid changed over the decades?

As the U.S. population has aged, the number of people on Social Security, Medicare and Medicaid has increased, and Minnesota enrollment has tracked with that. Since 2023, states and the federal government have worked to return Medicaid to its pre-pandemic level of operations, with 2025 numbers.

As older adults began making up more of the population, they’ve required more and costlier health care to maintain healthy, fulfilling lives. That has led to broadly climbing costs, with the average monthly Medicaid payment rising from $839 in 1981 (adjusted for inflation) to $1,171 in 2024. And according to DHS projections, those average monthly payments will rise further to $1,828 by 2029.

Medicaid has always been a federal-state partnership, with funding coming from both federal and state governments. The federal and state shares have fluctuated over the years, but for the most part have remained roughly equal until the early 2010s. In 2011, as part of the Affordable Care Act (ACA), also known as Obamacare, the federal government encouraged states to expand who was eligible for Medicaid and other health insurance assistance programs. To entice states to expand, the federal government would pay 90% of the costs for those enrollees added under the expansion, while the state was only on the hook for 10%. This has led to more federal spending on Medicaid, though state spending has also increased.

Despite the ACA incentives, the federal contribution to Minnesota’s Medicaid program has fluctuated between 49% and 66%. 

As the ups and downs of the graph above show, the relationship between states and the federal government changes from year-to-year, depending on population changes and health needs. But with Medicaid being such a major part of Minnesota’s push to insure as many residents as possible, any major cut to the program’s funding or limits to enrollees’ eligibility is expected to be felt more deeply and broadly than in states with fewer enrollees. 

How might Congress reduce Medicaid’s costs?

The final form of any changes to Medicaid is still up in the air, with the Republican-led House Committee on Energy and Commerce ultimately responsible for crafting the Medicaid budget. While the committee was initially instructed to find $880 billion in savings, it has, understandably, had difficulty reaching that figure. One idea, though, has been the concept of instituting work-reporting requirements for what some proponents have called “able-bodied” working-age adults.

Who exactly these work requirements would apply to is still open to debate: Who is considered “able-bodied,” and who is allowed to make that distinction? What does “working age” mean in this context? Does being a student, or a caregiver for a family member, qualify as working or seeking work? What systems will need to be created and implemented to confirm individuals’ eligibility? Will the federal government fully take over states’ traditional role in determining who is eligible for Medicaid?

Related: House Republicans appear to be backing off of some, but not all, of the steep proposed reductions to Medicaid

With so many questions still in the air – and likely to remain so until a final bill is passed later this year – it is difficult to determine exactly how Medicaid cuts will hit Minnesotans. But to try to give an idea of how many people could eventually find themselves buried in new paperwork amid work requirements, MinnPost asked the Minnesota Department of Human Services (DHS), which administers the program, for some numbers.

First, we asked how many Minnesotans on Medicaid fall into the category of “working-age,” defined as those who are 18-64 years old. Second, how many of that category are “certified disabled,” in DHS parlance. This would likely exclude them from Medicaid work requirements, though DHS pointed out that is not a guarantee as the agency does “not collect enrollment data on whether that disability prevents them from working.” The agency said that there are 560,600 people on Medicaid between ages 18 and 64. Of those, 93,000 have a certified disability. That leaves 467,600 who could see themselves subject to work requirements, or about two in five of Minnesota’s 1.2 million Medicaid recipients as of April 2025.

According to an analysis by the Robert Wood Johnson Foundation, as many as 5.2 million Americans could lose Medicaid coverage in 2026 if Congress enacts a work requirement in the 40 states (including Minnesota) that expanded their Medicaid programs. The same study goes on to note that if work requirements are not limited to the Medicaid expansion, states coverage losses will be even greater.

Not all who fall into the work requirement basket, however it is ultimately defined, would lose coverage, though. Those who can provide continued, timely proof that they are working or seeking work would likely be able to keep their Medicaid. But there are several major arguments against instituting work reporting requirements that are worth briefly going over:

• State agencies like DHS argue that this will lead to more red tape and state costs to administer work-requirement verification mechanisms. “Work reporting requirements create expensive, complex, new bureaucratic procedures and systems that create headaches for everyone involved,” DHS wrote in a brief pamphlet on the issue. 
• Most people on Medicaid already work or have a legitimate reason not to have a traditional job. In 2023, nearly two-thirds of working-age adults on Medicaid were working, according to KFF. Another three in 10 had legitimate qualifying exemptions from the work requirement, the study showed.
• Many Minnesotans who would be eligible for Medicaid just won’t bother with the paperwork. Analyses of states that have tried work requirements show that many eligible recipients would lose coverage simply by not reporting their work. People with low incomes face added challenges that makes complying with reporting rules even more difficult, DHS wrote.

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Editor’s note: Shadi Bushra wrote this story for MinnPost.com. Callaghan covers state government for MinnPost. 

This article first appeared on MinnPost and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.

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