By: Senator Rich Draheim (R-Madison Lake)

Minnesotans are already facing high costs in nearly every part of their lives—groceries, gas, housing, and health care. Now, Democrats are proposing to make it even more expensive to get the care you need by raising the state’s healthcare provider tax, commonly referred to as the “sick tax.” 

The sick tax is a tax on medical and dental services, and it’s applied when you pay for care—things like an MRI, a dental cleaning, or a sleep apnea machine. Democrats want to increase this tax, raising your healthcare costs by an additional $470 million over the next four years.  

Just over a year ago, Minnesota had an $18 billion budget surplus. Now, we’re looking at a $6 billion deficit in 2028–29, and Democrats are once again looking to taxpayers to fill the gap. This comes on top of $10 billion in new taxes and fees already passed in the last two years. At a time when we should be focusing on affordability, they are proposing to raise costs on people who are sick. 

Revenue from the sick tax goes into the Health Care Access Fund (HCAF), a separate account from the state’s general fund. This separation allows spending from the fund to avoid normal budget oversight and balance requirements. In practice, this has turned the HCAF into a budget backfill tool for whatever needs arise, not just health care for low-income Minnesotans, which was its original purpose. 

That should concern every taxpayer. According to a joint letter from the Minnesota Business Partnership and other health care groups, “Any effort to lower health care costs by raising taxes is at cross purposes with itself—and the result will be increased costs for many Minnesotans.” 

Another concern is how this tax increase might be used to shore up the expanding costs of MinnesotaCare, the publicly funded health insurance program. In 2023, Democrats expanded MinnesotaCare to cover undocumented immigrants. State officials projected 5,800 enrollees this year. But the actual numbers have surged. As of April 1, more than 17,300 undocumented individuals had enrolled—triple the original estimate. 

The program was originally estimated to cost $220 million over four years. That figure has now ballooned to over $600 million, and it’s still climbing. The question Minnesotans should be asking is this: Will new sick tax revenue be used to cover this exploding cost? The answer isn’t clear but the structure of the Health Care Access Fund leaves the door wide open. 

This debate comes at a time when the state is asking others to tighten their belts. School districts are facing $280 million in combined budget shortfalls. Nursing homes and disability services are looking at potential cuts. Yet instead of prioritizing existing needs, the state is looking to increase taxes on patients and potentially subsidize costs that were poorly forecast and not transparent to taxpayers. 

Minnesotans deserve real accountability and smarter budgeting. A tax increase on medical care is not the answer, especially when we’re not being honest about where the money is going. 

We need to take a closer look at what we’re asking Minnesotans to pay for, and make sure we’re protecting the services they rely on first, not growing programs without clear oversight or limits.