HHS bill shifts massive $5 billion burden on anyone seeking healthcare services, makes care financially inaccessible for Minnesotans

On a party-line vote, Senate Democrats today passed a Health and Human Services budget bill that will make access to healthcare services financially out of reach for families in Minnesota. The most troubling part of this bill is the inclusion of tax and fee increases along with assessments, totaling over $5 billion over the next four years, reducing access and driving up healthcare costs for every single Minnesotan.  

“Under this bill, healthcare costs are going to skyrocket for every single family in our state,” said Senator Paul Utke (R-Park Rapids). “Healthcare should be affordable, reliable, and accessible, but this bill increases costs, tacks additional mandates onto facilities that cannot afford them, and will lead to less access alongside a decreasing quality of care.”

There are multiple concerning tax increases included in this bill:  

  • Provider Rate Assessment on Managed Care: this portion establishes increased payment rates for behavioral health policies, which are set to be at least 100% of the Medicare Physician Fee Schedule. This will lead to increased premiums for many Minnesotans.
  • Premium Subsidy Assessment: This is the Democrats’ attempt to eliminate the successful reinsurance program and replace it by assessing health plans and insurance companies, who will in turn, raise premiums on all individual market users.
  • Assessment on health plans and health insurance companies: Raising premiums to reduce premiums flies in the face of the programs intended purpose.
  • Provider Tax increase: this tax currently applies to gross receipts that health care providers receive for providing patient services in Minnesota. The current rate is at 1.8% and today’s bill will raise it to 2%. This increase will manifest in higher costs passed down to patients for each trip to the doctor’s office.
  • Expanded provider tax on prescriptions: this applies to rebates and discounts for prescription medications. This language means that wholesale distributors of prescription drugs will be taxed on the cost of the prescription, rather than being taxed on what customer pays for them – yet another initiative that will increase the cost of care for Minnesotans. 

One of the most controversial portions of the bill creates a Managed Care “alternative” to the state’s highly successful reinsurance policy. Minnesotans currently pay a 1.8% tax on healthcare services to subsidize affordable healthcare options, and insurance companies face an 8.86% tax. Senator Gary Dahms (R-Redwood Falls) previously introduced legislation to extend Minnesota’s reinsurance program, which would have allocated $512 million from the state’s general fund to the Premium Security Plan account in fiscal year 2026. Though the bill received a hearing, Democrats instead opted to create an entirely new program.   

“Reinsurance has delivered real results by reducing health insurance costs for Minnesota’s consumers,” Dahms previously said. “This program is a critical part of keeping health care affordable, stabilizing the individual insurance market, and ensuring Minnesotans have access to the quality care they need.” 

Democrats’ alternative is slated to face numerous issues. Their proposal requires payment via assessment on health plans and health insurance companies. MNSure is set to facilitate the program, despite admitting that they are unable to have the program fully functional by 2026. They believe it will only be half functional by 2027. Though requests have been made, there is only an incomplete fiscal note on the true cost. It is also unknown how many FTEs will be required to run the program. 
 
“This is a blank check to prop up a brand-new untested program to replace a longstanding highly successfully program – this doesn’t make sense for Minnesota,” continued Utke. “Our reinsurance program led the nation to stabilize the market, increase choices for consumers, and made insurance more affordable for small businesses and families. We need to keep our market stable, and we can only do that by renewing reinsurance.”  

Additionally, there are also numerous fee increases included in the bill which will be passed from facilities onto consumers and continue the theme of driving up the cost of care. These fee increases amount to just over $70 million in the next four years. 

Senate Republicans offered a slate of amendments that would reduce costs and eliminate the bill’s most controversial provisions. These commonsense amendments were rejected by the majority: 

Despite extended discussion on the floor, this bill continues state-funded healthcare for undocumented residents. The program launched in January 2025 and was estimated to draw 5,874 enrollees throughout its first year. Recent numbers have shown an explosion in enrollment, totaling over 20,000 in the first four months alone. As a result, cost projections have now risen to over $600 million over the next four years – an unsustainable number given the $6 billion deficit facing Minnesota. Today, California Governor Gavin Newsom proposed ending new enrollment and charging current enrollees in a similar state program that had the same explosion in participation, along with higher-than-expected costs.  

Senate Republicans offered multiple amendments that would have shifted this funding to things like investments in Minnesota families and childcare providers and additional mental health services. Every Democrat voted against this amendment, instead choosing to prioritize state-funded healthcare for those here illegally, further digging a larger financial hole for our state to the detriment of Minnesota’s taxpaying families. 

“The bottom line is folks want healthcare to be affordable – they want costs lowered without losing access to their doctors and services. This bill heads in the total opposite direction. Every single thing in this bill will make healthcare services more expensive and less attainable for Minnesota families,” finished Utke.