On a party-line vote, Senate Democrats on Wednesday 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.

“The health and human services budget proposal that Senate Democrats passed today is incredibly disappointing,” Senator John Jasinski (R-Faribault) said. “The tax and fee increases are going to cause healthcare costs for working families to soar even higher than they already are. Healthcare should be affordable and accessible. This proposal would take a massive step in the wrong direction.”

There are four 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. Senate Republicans 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.

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.

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:

• Full repeal of MinnesotaCare for individuals here illegally: would free up funding to make additional investments in school-linked behavioral health, mobile crisis grants, and increased rates for mental health providers at all levels across the state.
• Full repeal of MinnesotaCare for immigrants here illegally: would free up funding to make additional investments in childcare improvement grants, the Great Start Compensation Program, and early learning scholarships.
• Full repeal of the Premium Subsidy Program: eliminates Democrats’ untested reinsurance replacement program. This elimination would free up funding to be invested back toward the current and highly successful reinsurance program.
• Ensure accurate enrollment regarding public health programs: takes steps to ensure we are helping Minnesotans on Medicaid who need it the most while preventing fraud, waste, and abuse.
• Fully itemize the base budget for state agencies funded in the bill: ensuring all appropriations made in the last two years and the next two years be tied to their stated purpose, which allows for greater transparency in state spending.

Despite extended discussion on the floor, this bill continues state-funded healthcare for undocumented citizens. 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. On May 14, 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.