Minnesota legislators may need to do more to avoid big DOGE fines

As legislators worked to complete a special session to avoid a partial government shutdown, MinnesotaCare funding for illegal aliens became a flashpoint. Progressive DFL legislators considered it among their top accomplishments in a 2023 session both lauded and criticized for its audacious progressive agenda. In a final session-ending agreement, Governor Walz and leaders agreed to stop paying for MinnesotaCare for undocumented adults beginning Jan. 1, 2026.

This could prevent a major federal penalty Minnesota would have faced, but other provisions in HR1 seem to be aimed right at Minnesota’s issues with generous public programs and the state’s inability to stop wasting money on fraud.

MinnesotaCare funding will continue for undocumented pregnant women and children to go on the program. The “Big Beautiful Bill”(HR1) passed by the U.S. House contained a significant penalty for states that used federal pass-through funding to partially cover the cost for illegal immigrant health care. According to the Kaiser Foundation, this could cost Minnesota $600 million in the next biennium if the penalty is assessed.

Amendments to HR1 seemed to slim down the penalty to exclude pregnant women and minors. However, anti-fraud health care provisions that would have put Minnesota into compliance with the federal law were left on the cutting room floor as the special session adjourned.

Federal HR1 aims at the $900M-$2B/yr in improper payments that we currently misspend in Minnesota on people who do not qualify for Medicaid because they make too much money, live in another state, are on another plan or are dead. Rep Backer, Sen Drazkowski, and Senator Utke carried legislation aimed at cutting those improper payments. Their bills simply asked Managed Care Organizations (MCOs) to find a recipient to make sure they are alive, live in the state and want to continue receiving Medicaid. Other provisions would cause more frequent checking to see if people qualify.

Whether slimming down Minnesota’s program to provide Minnesota Care to illegal aliens will eliminate the $600 million fine remains to be seen. However, other provisions in HR1 guarantee Minnesota can no longer afford to look the other way when it comes to eligibility determination.