On July 21, Secretary of Health and Human Services Robert F. Kennedy announced that the Centers for Medicare and Medicaid Services (CMS) would be deferring more than $1 billion in Medicaid payments to California and Minnesota while it investigates allegations of fraud in the states.

This is the latest in a series of federal funding suspensions for Minnesota, including funds from the Department of Health and Human Services, the Small Business Administration, and the Department of Agriculture. Courts have temporarily blocked the previous attempts to freeze funding.

Let's break down the data on Medicaid in Minnesota and what this news might mean for the program. (Check out California's picture here.)

Medicaid is a program that provides health insurance for people with low incomes. It is jointly funded by the states and the federal government. In fiscal year 2024, the federal government covered 64.8% of the overall program costs, while states covered the remaining 35.2%. The Minnesota state budget covered 42.0% of Medicaid costs, the fifth highest share of any state.

Combining state and federal funding, Medicaid cost $19.3 billion in Minnesota in fiscal year 2024, making up 32.6% of the state’s annual budget.

In 2024, the budget was split between:

• payments to private health plans that states contract with ($8.4 billion)
• long-term services and supports like nursing home care and home health ($7.9 billion)
• covered costs for low-income seniors and people with disabilities ($300 million), and
• other benefits ($2.1 billion).

The Affordable Care Act gave states the option to extend eligibility to a larger subset of adults than previously possible. Minnesota expanded Medicaid in January 2014.

Medicaid costs have risen 39% in Minnesota since 2014, short of a 45% nationwide increase in costs.