The Minnesota Senate on Wednesday passed a Health and Human Services budget bill that will increase the cost of healthcare for families across the state while ignoring a promising, budget-neutral solution to improve care in rural communities.

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.

Senator Carla Nelson (R-Rochester), who has previously served on the Senate’s health committees, voiced serious concerns during floor debate about the bill’s impact on patients, providers, and the future stability of Minnesota’s healthcare system.

“This bill increases the cost of care, burdens patients and providers, and threatens the stability of the individual insurance market,” Senator Nelson said. “There are fee increases, tax increases, and new mandates that will drive costs up at a time when families are already struggling to afford care. We’ve missed the mark with this bill. Minnesotans need us to make healthcare more affordable, not more expensive. We can and must do better.”

Sen. Nelson also expressed disappointment that the final Senate bill left out CARMA, the County Administered Rural Medical Assistance program, which had strong bipartisan support and was included in the House version. CARMA would give counties a new, locally administered alternative to the state’s Prepaid Medical Assistance Program and was crafted through years of collaboration with DHS and county leaders.

“We had a real opportunity to support a locally driven, budget-neutral innovation for rural healthcare,” Sen. Nelson said. “Leaving out CARMA is a serious setback for the people who rely most on county-based care.”

Key Provisions That Will Drive Up Costs:

• Provider tax increase: Raises the state’s “sick tax” by 11%,  making each doctor’s visit more expensive.
• Expanded tax on prescriptions: Applies the provider tax to rebates and discounts, raising drug prices.
• Premium Subsidy Assessment: Replaces the state’s reinsurance system with a tax on insurers, who will pass those costs to consumers.
• $70+ million in new fees: Hospitals, clinics, and health plans will pass these increases directly to patients.
• Unvetted coverage mandates: Sen. Nelson questioned whether all mandates received proper review, warning they will inflate premiums.

Sen. Nelson also raised concerns about a blanket prohibition on facility fees, which could limit how clinics and hospitals pay for essential support staff, electronic health records, and maintenance because those costs will still exist and will likely be shifted elsewhere.

Sen. Nelson supported several amendments to reduce costs, protect access, and improve transparency. Unfortunately, the  majority party rejected these efforts, including proposals to:

• Extend Minnesota’s successful reinsurance program instead of replacing it with a new unproven system.
• Increase funding for school-linked mental health and mobile crisis services.
• Make targeted childcare investments and early learning improvements.
• Ensure proper Medicaid enrollment and prevent fraud.
• Fully itemize agency spending to improve transparency and accountability.