Minnesota Attorney General Keith Ellison filed a lawsuit to block the Trump administration from requiring the state to impose new federal work requirements on Medicaid recipients, arguing the policy is unconstitutional and could strip hundreds of thousands of residents of their health coverage.
The lawsuit, filed Thursday alongside the attorneys general of Oregon, New Mexico and Washington, challenges provisions of federal legislation HR 1, also known as the One Big Beautiful Bill Act. The law requires states to implement new Medicaid eligibility rules starting in 2027 or risk losing all federal Medicaid funding.
The attorneys general say this financial threat amounts to “unconstitutional coercion” because it requires states to dramatically change how they administer Medicaid or risk losing billions of dollars in federal support.
The coalition is asking the court to rule that the federal government cannot deny existing Medicaid funding to states that refuse to implement the new work requirements.
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A spokesperson for the Centers for Medicare & Medicaid Services said in a statement to MPR News that the federal agency does not comment on matters involving pending litigation.
New work rules threaten coverage for hundreds of thousands of Minnesotans
In Minnesota, 1.2 million people receive health coverage through Medicaid, the state’s Medicaid program, and 243,000 residents will need to meet federal work requirements.
Beneficiaries include children, families, pregnant women, older adults, people with disabilities or complex health conditions, adults without children, and people experiencing homelessness.
Under new federal requirements, some Medicaid beneficiaries must prove they meet work requirements or qualify for an exemption to maintain coverage.
Minnesotans ages 21 to 64 who apply for Medicaid will need to demonstrate that they have worked, attended school or volunteered for at least 80 hours each month to qualify or maintain health insurance under the joint federal-state program.
Attorneys general say the added red tape and administrative hurdles could result in the loss of health insurance for hundreds of thousands of people, including those who might be eligible but have difficulty navigating the verification process.
“It’s a bait-and-switch and it’s unconstitutional,” Ellison said in a statement, criticizing the legislation for shifting the focus of Medicaid from providing health coverage to low-income Americans and toward using access to health care as an employment incentive mechanism.
Ellison added that the legislation could push vulnerable Minnesotans off their health insurance, worsening health outcomes and increasing pressure on hospitals and local governments.
States say the federal government is overstepping its powers
Medicaid was established in 1965 as a partnership between the federal government and the states. Under this program, states contribute funding and administrative resources while receiving federal support to provide health care to eligible low-income residents.
Ellison and the other attorneys general argue that the new work requirements represent a significant change in the program because they require states to revise eligibility systems and monitor recipients’ employment status.
They argue that Congress cannot force states to implement these changes by threatening to revoke their existing Medicaid funding.
The lawsuit also argues that states have little practical ability to reject work requirements. If Minnesota refuses to implement the new requirements, attorneys general say the loss of federal funding would devastate the state’s Medicaid program and harm residents who rely on it.
“H.R. 1’s new eligibility system now threatens to fundamentally transform the Medicaid program, the lawsuit says. “The work requirement will ultimately leave millions of former and potential Medicaid beneficiaries with nowhere to turn for basic health care. And, ironically, HR 1 will also make these individuals less able to work – and expose them to financial catastrophe due to increased medical debt – by depriving them of basic health care.
Potential impact on the health system
Attorneys general warn that people who lose coverage could experience treatment interruptions for chronic conditions, reduced access to preventive care and greater use of emergency services.
The lawsuit argues that these consequences would extend beyond those directly affected by the new requirements, putting additional strain on Minnesota’s broader health care system and increasing the costs of uncompensated care for hospitals.
Federal Medicaid work requirements are scheduled to take effect January 1, 2027.
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