MHA calls on policymakers to pass 340B protections and establish a hospital support pool as hospitals face billions in projected losses and a surging uninsured population
Minnesota’s nonprofit hospitals and health systems are facinga financial crisis unlike anything in recent memory. Thirty-one hospitals across the state currently meet formal financial distress criteria. Some are unable to make payroll.
The state’s largest safety-net hospital faces potential closure. A Level I trauma center warns it is at a “breaking point”. Nineteen labor and delivery programs have shut down, forcing mothers to scramble for care. And patients in Greater Minnesota are driving 40, 50, even 70 miles for basic services.
The Minnesota Hospital Association (MHA) is sounding the alarm: this is a systemwide crisis that demands immediate action from state and federal policymakers. And today, new national data from KFF confirms that the worst is yet to come.
New National Data: The Uninsured Population Is Growing Again
A new analysis released by KFF (Kaiser Family Foundation) reveals that the number of Americans without health insurance rose by more than 1.3 million in 2024, reaching 26.7 million people — the first increase in the uninsured rate since 2019. The national uninsured rate for people under age 65 climbed from 9.5% to 9.8%, driven primarily by a decline in Medicaid coverage following the end of pandemic-era continuous enrollment protections. In Minnesota, the uninsured rate increased by 1.5% between 2023 and 2024, the 6th highest increase in the country.
The picture is about to get dramatically worse. The Congressional Budget Office projects that over 14 million additional people will lose coverage by 2034 due to changes to Medicaid and the ACA Marketplace included in the 2025 reconciliation law and the expiration of enhanced premium tax credits. The KFF data shows that over 80% of uninsured Americans are in low-income working families, nearly four in ten delay or forgo needed medical care due to cost, and 62% carry health care debt.
“Every person who loses coverage is a patient who will still need care — but will arrive at our hospitals sicker and without the ability to pay,” said Rahul Koranne, M.D., president and CEO of the Minnesota Hospital Association. “This KFF report is a warning. The wave of coverage loss heading toward our hospitals will accelerate a crisis that is already breaking the system.”
The Evidence Is Everywhere: Minnesota’s Hospitals Are Already Buckling
The crisis is not theoretical. Across every corner of the state, hospitals are losing services, losing staff, and losing the ability to serve their communities:
- Nearly a quarter of Minnesota’s hospitals meet the state’s formal financial distress criteria.
- Hennepin Healthcare, the state’s largest safety-net hospital, faces potential closure after cutting 100 positions and five medical programs.
- Rural hospitals face a compounding crisis of Medicaid underfunding, while a Medicare billing failure is freezing payments — which could close Onamia’s only hospital.
- A Medicaid freeze is threatening psychiatric units across the state at a time of soaring mental health need.
Medicaid reimburses hospitals just 69 cents for every dollar of actual cost. “Some of the hospitals in the state are literally out of cash to make payroll,” Koranne told WCCO on April 9. “Thirty-one hospitals in financial distress across the state of Minnesota at one time is a systemic crisis.”
Federal Policy Changes Will Deepen the Crisis
The federal reconciliation law (H.R. 1) is projected to cost Minnesota hospitals between $700 million and $1.5 billion in annual net revenue once fully implemented — totaling $6 billion to $10 billion over the coming decade. At the state level, hospitals face an additional $320 million to $580 million in annual Medicaid financing shortfall.
Minnesota is being disproportionately penalized for having expanded Medicaid. The federal provider tax phase-down and supplemental payment rate caps impose harsher financial consequences on states that chose to extend coverage to more of their residents. The projected implementation of work reporting requirements could cause 25,000 to 45,000 Minnesotans to lose Medicaid coverage — driving patients into emergency rooms at zero reimbursement rather than the already below-cost rates hospitals receive under Medicaid. The result: uncompensated care at safety-net hospitals is projected to increase 21.5%. Former Minnesota Health Commissioner Jan Malcolm, who has served under three governors, warned on MPR News that the federal changes will dramatically accelerate the crisis: “Hennepin and others are looking at pretty serious financial situations now that are going to get many times worse after those full cuts hit. That is exactly what the federal bill was intended to do — to shift more of the cost from the federal government to the states.”
What Policymakers Can Do Now
While the full impact of federal policy changes will unfold over the coming years, MHA is calling on state and federal policymakers to take immediate, concrete steps to stabilize the health care system and protect patient access to care.
Pass SF 3769 to Protect the 340B Drug Pricing Program. The 340B program is a lifeline for hospitals that serve the most vulnerable patients — allowing them to stretch limited resources to provide more care, maintain services in underserved areas, and absorb the rising costs of treating uninsured and underinsured patients. Trillion-dollar pharmaceutical companies are actively lobbying to undermine the state law that protects this program. SF 3769 would make critical 340B protections permanent and give the Attorney General enforcement authority to hold drug manufacturers and intermediaries accountable.
Establish a Statewide Hospital Support Pool. As federal funding erodes and uncompensated care grows, many hospitals — particularly those serving safety-net, and underserved communities — face an existential threat to their ability to keep their doors open. MHA is calling on the Legislature to establish a targeted funding mechanism that directs resources to the most financially vulnerable hospitals and health systems, ensuring continuity of care for every Minnesotan regardless of where they live.
Address the Chronic Underfunding of Public Programs. Medicaid reimburses Minnesota hospitals just 79 cents for every dollar of actual cost. Medicare pays about 82 cents. This chronic underfunding is the root cause of the financial crisis. Policymakers must work to close the gap between what it costs to care for patients and what public programs pay.
No New Mandates on Hospitals Already in Crisis. Hospitals that are struggling to keep their doors open cannot absorb additional unfunded requirements. The Legislature should avoid imposing new mandates that add cost without providing resources.
“The earthquake of federal policy changes commands our attention, but the real crisis for nonprofit health care is still building,” said Koranne. “We have the policies. We need lawmakers to have the will to act now — before more hospitals reach the breaking point and more Minnesotans lose access to the care they need.”
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