Minnesota Governor Tim Walz unveiled a budget agreement in the capitol reception room, as Democratic representatives and senators protested noisily outside, chanting and pounding on the doors. The uproar stemmed from Walz’s decision to abandon a taxpayer-funded healthcare program for adult undocumented immigrants, a plan that, like a comparable initiative in California, was already faltering.
In 2023, Governor Walz signed a bill that gave MNCare health coverage to undocumented immigrants. That legislation took effect January 1st of this year. More than 17,396 undocumented have joined the MNCare rolls in the first three months, which is more than double the projected enrollment for the first three years.
This high-profile progressive cause that helped thrust Tim Walz into the national spotlight may (or may not) have cost him the thin House majority that enabled it, but it undoubtedly delayed the legislature’s timely completion.
Leading up to the last election, Governor Walz boasted, “you don’t win elections to bank political capital – you win elections to burn political capital” The steep price of that spent capital is the loss of the House DFL majority and any chance of passing a budget before the legislature adjourns. The MN House Republicans believe they were elected as a check against the ultra-progressive agenda hastily rammed through the legislature in 2023.
MNCare is funded through the Minnesota Healthcare Access Fund. This account is fed by a Minnesota-only “sick tax” on healthcare as well as federal monies. Democrats in the senate proposed an 11% hike in the sick tax, but it was clear that even this $238 million tax increase would not cover the exploding costs to care for the undocumented enrollees.
The feds pick up around half the cost of traditional Medicaid, which pays for people with lower incomes and those with disabilities. With rare exceptions for some emergency care, Medicaid does not pay for people who are here illegally. This put the $550 million cost of care on the backs of Minnesota taxpayers. The smaller proposal to provide MNCare for minors will cost less but inevitably cause problems for the financing of the entire MNCare program.
The congressional Budget Committee has already raised red flags on California’s program that mixes federal and state money to pay for the undocumented. “Expansions of Medicaid to cover illegal aliens and waste, fraud, and abuse divert resources from Medicaid beneficiaries and add to our country’s out-of-control $36 trillion national debt” the Budget committee noted, stressing the need to “focus our resources on those who need it most.”
California’s first year of coverage for undocumented immigrants spent $3 billion more than projected, forcing legislators to consider immediate cutbacks. This week, Gov Newsom put the breaks on the California plan. Minnesota and California are two of three states that have a unique federal-state Basic Health Care Plan agreement.
Minnesota will receive over $1 billion through this agreement in the next biennium. It seems unlikely that the Budget Committee or the Trump administration would sign off on any audit of a waiver that included an ambiguous mix of state and federal dollars that are spent on a prohibited use.
MNCare enrollees who have previously lied about being a US citizen are encouraged to endorse an illegal status without redetermination being necessary. A social security number is not required, nor is there a minimum number of days of residency in the state. A simple “plan” to be a Minnesotan will do.
Earlier this spring, Minnesota legislators were given a sobering warning from the folks in charge of monitoring the state budget. After documenting the astonishing disappearance of a $17 billion surplus, and the raising of $10 billion in additional taxes, the glum forecasters predicted a $6 billion deficit in the upcoming biennium.
Governor Walz knew Minnesota couldn’t afford to pay for undocumented immigrant’s health care without cutting services for vulnerable Minnesotans and raising taxes. He proved that in his own budget that cut $700 million for nursing homes and services for the disabled while featuring a bevy of tax and fee increases.
Tim Walz clearly admires Gavin Newsom. He should follow California’s governor again and pause expanding MNCare to undocumented immigrants. Failing to do so could jeopardize the entire MNCare program.