According to data from the Centers for Medicare and Medicaid Services (CMS), in 2023, Minnesota spent $12,982 per average Medicaid enrollee. Only Pennsylvania and Washington exceeded this amount.
For people with disabilities, Minnesota spent $57,388 per person, the highest level in the entire country. The median state spent $26,566, less than half as much. Minnesota spent over $9,000 more than Washington (the second-highest state), and nearly $16,000 more than New York (the third-highest state).
Yet these high spending levels have not curtailed calls for more money or opposition to spending reform — however minor. What gives? Even more importantly, can Minnesota afford to spend an ever-increasing amount of money on Medicaid?
Medicaid Spending per Enrollee, People with Disabilities — All Funds, Including Federal (2023)
The worker shortage argument for more money
The Long-Term Care (LTC) service industry faces persistent worker shortages. In recent years, the legislature has tried to address this issue by raising wages. As a result, spending on long-term care has consistently grown.
Growth shot up, particularly starting in 2024, after the 2023 DFL-controlled legislature not only raised baseline spending levels but changed inflation adjustment formulas, accelerating future growth.
Despite a partial reversal of some of these policies, spending on LTC waivers, 80 percent of which is disability programs, could reach $88,818 per person in 2026. This is 25 percent more than Minnesota spent in 2023. Even after a slight dip, spending in 2027 and 2028 is still 22 percent higher than in 2023. Thus, contrary to some claims, LTC waivers did not face dramatic cuts in the 2024 or 2025 session.
LTC Waivers (Home- and Community-Based Services) per Person — All Funds, Including Federal (FY2020-2029, 2025 $)
HHS is the primary driver of the persistent structural deficit
Worker shortages may justify an increase in LTC waivers, but that stance is highly debatable given the rampant fraud plaguing high-risk programs like Personal Care Assistance (PCA). Not to mention, LTC worker shortages are a nationwide issue.
But warranted or not, the tremendous growth in LTC has significant implications for the state budget.
Even after accounting for the $300 million in anti-fraud spending cuts enacted in the 2026 session, Health and Human Services (HHS) — driven by LTC waivers — remains the primary driver of state budget growth.
For every $100 increase in Minnesota’s budget between 2024 and 2029, a full $50 is allocated to HHS. Consequently, by 2029, HHS will surpass E-12 Education and become the state budget’s primary expenditure.
While in 2023, the Department of Human Services’ budget (approximately 90 percent of which is Medicaid) was equivalent to three-quarters of E-12 Education spending; by 2029, it is projected to equal 86 percent of the E-12 budget.
Share of All New General Fund Spending by Category, FY2024-2029
Despite the federal government covering over half of all Human Services spending, HHS’s rapid expansion has monopolized the state budget, leaving little to no room for other essential public services. Compounding this issue is a persistent structural deficit, which severely limits Minnesota’s capacity to absorb additional Medicaid spending without further sacrificing other public services (such as roads) or raising taxes.
To correct this trajectory, policymakers must directly confront fast-growing HHS programs like disability waivers, which will likely mean addressing the staggering $57,000 per-enrollee price tag.
Ultimately, Minnesota cannot afford its current system. Restoring fiscal sustainability will require the state to bring its spending in line and move down the national rankings.