As horror stories continue to circulate about the thousands who could lose Medicaid coverage due to the “work requirements” and “eligibility checks” in the One Big Beautiful Bill (OBBB), two points are worth emphasizing.
First, Minnesotans support these Medicaid provisions. A Thinking Minnesota survey conducted in May found, for instance, that over half of all Minnesotans support OBBB’s work requirements, and three-quarters back its annual Medicaid eligibility checks.
Second, and more importantly, to the extent that vulnerable Minnesotans have reason to worry, the real threat to Medicaid’s future isn’t the OBBB’s common-sense reforms. It is rather the state’s ongoing budget deficits, driven by the 2023 session’s unchecked welfare expansion.
Every year between 2024 and 2029, Minnesota will spend more than it collects in revenue. Ergo, it is going to get increasingly difficult for the state to sustain its Medicaid program. And unless policymakers pursue thoughtful, targeted spending cuts (like those included in the OBBB), these deficits will likely end up hurting the very Minnesotans Medicaid is meant to serve.
The future of the state budget: persistent deficits
According to Minnesota Management and Budget’s (MMB) 2025 end-of-session estimates, Minnesota will spend $33 billion during the 2026 fiscal year. This is $770 million more than the state will collect in revenue during the same period.
Contrary to claims that the legislature balanced the budget, Minnesota will operate with a structural deficit each year between FY 2024 and FY 2029.
In the 2026-27 biennium, spending will outpace revenues by nearly $2 billion. The $18 billion surplus covers that gap, but will be depleted by the end of the 2026-27 biennium. Consequently, Minnesota has a projected $2.2 billion structural deficit and $1.1 billion budgetary deficit in the 2028-29 biennium.
Figure 2: Revenue vs Spending, 2025 End of Session Estimates, FY 2024-2029
Spending cuts are necessary to get the budget back on track, without which fast-growing programs like Medicaid will suffer.
Medicaid’s growth is unsustainable
The Minnesota budget underwent significant expansion in the 2023 session, driven primarily by Medicaid spending growth.
General fund Medicaid spending is expected to grow by 50 percent between FY 2019 and FY 2029. This is more than three times the growth in total general fund spending in the same period. Health and Human Services (comprised mainly of Medicaid spending) will drive the majority of general fund spending growth.
Figure 3: Medicaid, HHS, and Total General Fund Spending, 2019=100
OBBB is not a threat, but offers a way to Medicaid reform
Minnesota’s Medicaid program is facing a serious threat, but it is not the OBBB.
In the 2023 session, lawmakers added billions in new spending to Medicaid, putting the program on an unsustainable path. Its astronomical growth is not only driving the state’s widening budget deficits but also making meaningful reform difficult.
The OBBB’s work requirements and eligibility checks are a responsible first step toward ensuring Medicaid serves those who truly need it while easing the program’s burden on both the budget and the broader economy. They should be viewed as part of the solution, not the problem.
