Minnesota’s ‘sick tax’ hiked to pay for illegal immigrants’ health care under senate bill
The following letter was presented on the floor of the Minnesota State Senate during debate on the Omnibus Health and Human Services bill (SF 2669).
Dear Senators:
On behalf of Minnesota families, their doctors, nurses, and caregivers, Center of the American Experiment urges you to consider critical provisions in SF 2669, the HHS omnibus bill, due to its fiscal and policy implications.
A primary concern is the proposed 11% increase in the provider tax, which funds the Healthcare Access Fund (HCAF) for MinnesotaCare. This “sick tax” hike, projected to raise $238 million, is unlikely to cover the escalating costs of extending MinnesotaCare to undocumented immigrants, a policy enacted in 2023 and effective January 1, 2025. Over 17,000 undocumented individuals enrolled in the first three months of 2025, doubling initial three-year projections[i] and costing an estimated $550 million, primarily borne by Minnesota taxpayers.
This expansion strains the HCAF, which blends state and federal funds through a unique Basic Health Plan agreement. Federal rules prohibit using federal dollars for undocumented individuals, and the complex funding mix risks violating these regulations, potentially jeopardizing over $1 billion in federal waivers for legal residents. California’s similar program, costing $8.4 billion in 2025, has drawn scrutiny[ii] from the Congressional Budget Committee for mixing funds, leading to warnings about fraud and resource diversion. Minnesota faces similar vulnerability.
Moreover, the policy creates inequities. MinnesotaCare requires no social security number, no minimum length of time as a resident and no verification of undocumented status.[iii] The Center of the American Experiment has documented over $500 million in state fraud in recent years, and this loophole could exacerbate losses. Meanwhile, legally present Minnesotans face strict eligibility checks and rising premiums, effectively subsidizing a program that offers free coverage to others. That’s not fair.
We urge you to support efforts to eliminate MinnesotaCare for ineligible people, preserving resources for vulnerable Minnesotans and avoiding federal penalties. With a looming $6 billion deficit [iv] and past fraud, Minnesota cannot afford this policy’s risks.
[i] https://www.house.mn.gov/members/profile/news/15597/50652
[ii] https://budget.house.gov/press-release/california-to-spend-84-billion-this-year-on-health-care-for-illegal-aliens
[iii] https://www.dhs.state.mn.us/main/groups/publications/documents/pub/mndhs-068276.pdf