Senate hearing warns HR 1 and federal actions threaten Minnesota health and human services funding

ST. PAUL, Minn. — State officials and service providers told a Minnesota Senate Health and Human Services Policy Committee on Feb. 19 that the federal reconciliation law known as HR 1 and other federal actions are already reshaping how health and human services are paid for and delivered in the state.

Anna Menge, state budget director with Minnesota Management and Budget, told the committee "About 36% or you could think, you know, 1 in 3 dollars that state government spends actually comes from the federal government." She said that health and human services rely on federal sources for almost 60% of spending in that area and summarized MMB estimates that Minnesota could lose roughly $327,000,000 in federal funds in the 2026–27 biennium and about $1.6 billion in the 2028–29 biennium as a result of HR 1 and related changes.

Menge and other witnesses described multiple channels for those losses: changes to Medicaid eligibility and work-reporting requirements, new limits on retroactive coverage and directed payments to providers, and altered matching rules for SNAP. Menge noted some estimates remain provisional while federal guidance is pending and that a federal court has temporarily paused some grant terminations through March 12, 2026.

Physicians and hospitals warned of downstream effects on patients and providers. "HR 1 ... will reduce federal Medicaid support to Minnesota by approximately 1,400,000,000 per year," said Dr. Lisa Matson, president of the Minnesota Medical Association, citing a Department of Human Services estimate. A Minnesota Hospital Association official said charity care rose 40% in 2024 to $342,000,000 and that coverage losses and lower premium assistance could increase uncompensated care.

Committee leaders said the hearing is an initial step in a series of briefings and pledged follow-up: MMB and agencies will provide more specific breakdowns and the committee will continue a deeper review of IT modernization and agency budgets at future meetings.

The committee did not take votes; members asked MMB for a written follow-up clarifying which figures represent funds already received and which are projected future losses.