This week, Minnesota’s budget forecast was downgraded to reflect that in the upcoming biennia, legislators and the Governor will have a budget that is $6 billion more than the projected tax collections. Without irony, the popularity of Medicaid-approved weight management drugs like Ozempic was highlighted specifically as an unforeseen budget item within skyrocketing health care costs contributing to the deficit.
Minnesota’s economist Dr. Anthony Becker’s forecast is driven in large part by explosive growth in Health and Human Service spending. State budget managers announced that in July 2028 and thereafter, for the first time, Minnesota will spend more money on Health and Human Services than any other budget area, including education.
Medicaid expansion continues to fuel this growth, as HHS crowds out every other area of the budget. When Obamacare was introduced into the state in 2011, the promise of “free” federal money was irresistible enough to persuade then Governor Dayton to (as his first act as Governor) make Minnesota one of the first Medicaid expansion states. He ignored state conservatives who likened the move to taking home a grizzly bear cub. Now that cub is 14 years old, and he is very hungry.
Health and Human Services expenditures in Minnesota are expected to total $27.221 billion in the 2028-2029 biennium. Medicaid alone in Minnesota is expected to grow $2.87 billion, which is a sixteen percent increase across two biennia covered in the forecast.
Able-bodied single adults without children, who used to be on state-run programs like Minnesota Care, are now subsidized by the federal government at 90% to be on Medicaid, while Minnesotans with disabilities are only funded at around half the cost by the federal government. Minnesota is one of only a few states with specific “sick taxes” on health care. Both of these practices are seen by some as an unfair way for states to draw down a disproportionate share of federal money. Those aggressive policies to get more federal aid than other states could put Minnesota’s budget at a higher risk as federal regulators seek greater fairness from state to state and attempt to keep Medicaid solvent for the very poor, and disabled.
Minnesota is one of a handful of states that approved Medicaid to pay for GLP-1 obesity drugs like Ozempic. That spending shot up 420% in 2024 alone, and those costs are predicted to rise by $80-$90 million in each the upcoming biennia. Most of us would like to lose a few pounds, but putting potentially millions of Americans on a $990/month prescription with untested long term side effects, seems unwise.
Medicaid reform should not solely be seen as a way to trim the budget, but rather as a necessary lifesaving procedure to save the program itself.