Why It Matters
Minnesota hospitals recorded more than 2 million emergency department visits in 2024, while more than a quarter reported operating losses. Hospital executives say federal Medicaid changes could further reduce funding and coverage.
What Happened
The Minnesota Hospital Association released a report titled A Statewide Crisis of Care, warning of additional pressure on hospitals as federal policy changes take effect.
The One Big Beautiful Bill Act, passed in July 2025, cuts taxes and social services, primarily Medicaid, while increasing immigration-enforcement spending. Changes to state provider taxes may reduce hospital funding by $1 billion per year, and new work requirements are projected to reduce Minnesota’s Medicaid population by 140,000 people.
Hospitals must accept uninsured patients in emergency departments. At United Hospital District, patients covered by Medicare and Medicaid make up more than half of the patient population. Hospital executives say reimbursements from both programs contribute to negative operating margins.
Rick Ash described the expected effects in stark terms: “Instead of ‘HR1,’ I’m gonna call it ‘H1R1’ because it’s gonna be like a pandemic when it hits.”
By the Numbers
2 million — emergency department visits at Minnesota hospitals in 2024.
More than a quarter — share of Minnesota hospitals that lost money on operations in 2024.
$1 billion per year — estimated annual hospital funding reduction from state provider-tax changes.
140,000 people — projected decrease in Minnesota’s Medicaid population from new work requirements.
Over half — share of United Hospital District patients insured through Medicare and Medicaid.
Zoom Out
The report places the Minnesota debate within a broader conflict over healthcare costs and public reimbursement. Hospitals, insurers and pharmaceutical companies have lobbied over payment policies, including the 340B drug discount program for hospitals treating low-income patients.
A bipartisan bill to strengthen and extend 340B failed during the 2026 Legislature amid lobbying between hospitals and drug companies. Rachelle Schultz said Medicare and Medicaid “reimburse less than the cost of care.”
What’s Next
Hospital executives anticipate a difficult Minnesota legislative budget year in 2027 as the federal Medicaid changes affect state funding and coverage. The failed 340B legislation and projected provider-tax reductions remain part of the budget pressure facing hospitals.