Federal Budget Bill Will Have Significant Impact on Minnesota Healthcare

July 10, 2025

With the passage of President Trump’s budget bill, many in healthcare are wondering how it will affect the practice of medicine in the United States, and how it will impact the health of Minnesotans. 

The narrowly passed bill is controversial for both its expenditures and financing mechanisms. Expenditures include the extension of tax cuts for individuals and corporations, which were passed in 2017 and set to expire at the end of 2025; increases in military, border, and immigration spending; and the enactment of new federal tax breaks for income made from tips and overtime work.  

These expenditures are largely financed by a $3.4 trillion (i.e., 9.4%) increase in the national debt over 10 years and significant cuts to healthcare and nutrition programs, including Medicaid, Affordable Care Act (ACA) marketplace subsidies, and the Supplemental Nutrition Assistance Program (SNAP).  

The nonpartisan Congressional Budget Office (CBO) estimates that the bill will result in 16 million Americans losing their insurance in the next 10 years – 11.9 million due to Medicaid cuts and 4.2 million due to cuts to ACA marketplace subsidies. KFF has published a tracking sheet that details the dozens of technical provisions that comprise these cuts. 

Provisions that affect Medicaid include, but are not limited to: 

• The imposition of work requirements (i.e., 80 hours per month) for certain Medicaid recipients (effective January 2027); 

• The tightening of eligibility renewal requirements from every 12 months to every six months (effective January 2027); 

• The limiting of retroactive coverage from 90 days prior to application to only 30 days prior to application for expansion enrollees and 60 days for traditional enrollees (effective January 2027); 

• A requirement that states impose cost sharing of up to $35 for certain services (effective October 2028); 

• The prohibition of new, and heavy restrictions on existing, Medicaid provider taxes, which states depend on to draw down critical federal matching funds (effective immediately, but with a three-year grace period for states with active taxes to transition); 

• The limiting of states’ ability to use state directed payments-- a mechanism through which states can force insurers to pay providers certain rates for care provided to Medicaid patients-- to no more than 100% of Medicare (effective immediately, but with a gradual implementation for grandfathered states); and 

• Reductions in federal matching fund rates for states that provide gender-affirming healthcare and/or public healthcare programs to people with undocumented status (effective October 2027). 

“The MMA has been actively fighting these Medicaid cuts since March, when Congress first started drafting the bill,” said MMA President Edwin Bogonko, MD, MBA. Since then, the MMA published a “Protect Medicaid Access” landing page on its website, sent two Action Alerts prompting members to send emails and secure texts to their members of Congress, and joined more than 40 other state medical societies in sending a letter to Congressional leadership.  

“While we are disappointed with the final bill, the MMA is committed to educating our members as the bill is implemented,” Bogonko said. “We will collaborate with our Minnesota partners to mitigate the bill’s anticipated harms, and advocate for corrective policy at every possible opportunity.”  

For more information, contact Adrian Uphoff, manager of health policy and regulatory affairs.