Minnesota lawmakers are wrestling with how to sustain the state’s financially distressed hospitals while patients confront growing medical debt.
One Minnesota lawmaker wants to steer money from an existing healthcare tax back to hospitals so they can expand their charity care programs for patients who can’t afford their bills.
The proposal follows a Minnesota Star Tribune-KFF Health News investigation that found hospitals across the state spend far less on charity care than hospitals in many other states, and use widely different standards to decide who qualifies for free or discounted care.
State Rep. Steve Elkins said helping hospitals with their own tax contributions makes sense as more Minnesotans are losing health insurance.
“Hospitals are providing a fair amount of charity care, but they kind of have an obligation to do something more than they are doing,” said Elkins, who introduced legislation May 13, in the final days of the legislative session.
Elkins noted recent reports by the Lown Institute and Minnesota’s legislative auditor indicating some hospitals are gaining more in nonprofit tax benefits than they are spending on community benefits, including charity care.
Simply demanding more from hospitals isn’t necessarily the answer, though, Elkins said. Newly released financial data shows 31 Minnesota hospitals meet the state’s definition of financial distress because they lost money on operations in four of the last eight years.
Hennepin County Medical Center in Minneapolis appears poised for a $205 million state bailout this year to prevent the urban trauma center from closing.
HCMC provided the most charity care of any Minnesota hospital in 2024, an estimated $88 million, which consumed more than 3% of its operating budget. Elkins said he suspects some charity care patients from other hospitals are being diverted to HCMC, which has a process for automatically screening patients for financial needs upon admission.
Incentivizing hospitals to be more generous could take pressure off HCMC, Elkins said. The state gains about $250 million per year from a 1.56% tax on hospital patient revenue, which roughly equates to the $241 million that hospitals spent on charity care in 2024, according to estimates by the Minnesota Department of Health.
“You could pretty much make every Minnesota hospital whole with all of the charity care they’re providing,” he said.
A lack of state standards allows some hospitals to limit free care to people making less than $15,000, while others offer care to people living alone who make as much as $47,000. Being stingy with charity care can be self-defeating for hospitals, which end up wasting money in debt collection efforts from patients who couldn’t afford their bills in the first place, said Eli Rushbanks, director of policy advocacy for Dollar For, a nonprofit that helps U.S. patients apply for charity care.
“It’s not really a question of whether they are doing better than other states. It’s a question of whether they are doing enough” for Minnesota’s patient population, he said. “Minnesota has charity care-eligible patients who are not receiving charity care.”
Some state-by-state disparities in charity care are beyond the control of hospitals, and even signal positive trends. Lower rates of chronic disease mean Minnesotans need less healthcare in the first place. Higher levels of insurance coverage mean they don’t need charity care as much to afford their healthcare.
Elkins’ idea of taking money from hospitals and giving it back with strings seemed unnecessary to leaders of the Minnesota Hospital Association, which would prefer to see the tax disappear.
Joe Schindler, the association’s vice president for finance policy, said one alternative would be moving the money into the Medicaid health insurance program for people with low incomes or disabilities. He said that would unlock more federal matching dollars to benefit patients and help close the reimbursement gap in that program.
Hospital systems have discretion to decide the income and financial thresholds by which patients qualify for financial assistance in the form of free care or partial discounts. Elkins’ proposal wouldn’t change that, but other state leaders and advocates have proposed models that standardize how charity care is offered.
Dollar For recommends policies that at least provide discounts to households with incomes around 400% of the federal poverty level, because there are fewer bad debt cases and lawsuits involving patients with incomes above that level, Rushbanks said. The Star Tribune-KFF Health News analysis of 123 Minnesota nonprofit or government-run general hospitals showed 52 provide discounts to patients with household incomes at 350% or higher, but the rest fall below that level.
After investigating irregularities in charity care at Mayo Clinic last year, Minnesota Attorney General Keith Ellison recommended that the state set a minimum floor for charity care eligibility across all hospitals. He also recommended all hospitals adopt presumptive eligibility systems that assume patients need financial help until proven otherwise.
This week’s article “makes it clear there is more work in front of us, and I will continue to use the power of my office to help Minnesotans get the medical care they need, no matter what’s in their bank accounts,” Ellison said in a statement.
Charity care is only one category of community benefits reported by hospitals for which they don’t receive direct payment. Other examples include providing medical education services for training doctors and nurses, and maintaining money-losing services such as obstetrics or emergency care in rural and underserved communities.
Whether hospitals gain more in nonprofit tax savings than they spend on community benefits depends on what’s included in the state auditor’s analysis. Hospitals are chronically underpaid for the cost of medical care by Medicaid, and the state hospital association reports that as a community benefit.
The legislative audit found that only 28 Minnesota hospitals spent less on community benefits than they saved in taxes in 2023, when that underpayment was part of the total. When excluded along with other research and education expenses, 62 hospitals spent less on the remaining community benefits than they gained in tax benefits as nonprofits.
Elkins said his idea to redistribute tax revenue could motivate hospitals to spend more on charity care or other community benefits. The state also could recruit more doctors, he said, if Minnesota hospitals increased residency slots for required on-the-job training after medical school.
The idea is an easier sell right now, given Minnesota’s budget surplus, he acknowledged, but could create challenges in future years when lawmakers would have to find ways to replace the lost revenue for other state needs. The lawmaker said he intends to bring it up next year if it doesn’t make it into the state’s health budget this session.
Facts Only
Minnesota lawmakers are discussing solutions to financial distress in hospitals and growing patient medical debt.
State Rep. Steve Elkins introduced legislation on May 13 to redirect funds from a 1.56% healthcare tax on hospital revenue to expand charity care programs.
A Minnesota Star Tribune-KFF Health News investigation found Minnesota hospitals spend less on charity care than hospitals in many other states.
Hennepin County Medical Center (HCMC) provided $88 million in charity care in 2024, consuming over 3% of its operating budget.
HCMC is poised to receive a $205 million state bailout in 2024 to prevent closure.
The state collects about $250 million annually from the hospital tax, roughly matching the $241 million hospitals spent on charity care in 2024.
Minnesota hospitals use varying income thresholds for charity care eligibility, ranging from $15,000 to $47,000 for individuals.
31 Minnesota hospitals meet the state’s definition of financial distress, having lost money on operations in four of the last eight years.
Attorney General Keith Ellison recommended setting a minimum charity care eligibility standard and adopting presumptive eligibility systems.
The Minnesota Hospital Association opposes Elkins’ proposal, preferring to eliminate the tax or redirect funds to Medicaid.
A legislative audit found 62 hospitals spent less on certain community benefits than they gained in tax exemptions when excluding Medicaid underpayments and education expenses.
Elkins’ proposal may face challenges in future years if state budgets tighten.
Executive Summary
Minnesota lawmakers are debating how to address financial strain on hospitals and rising medical debt among patients. State Rep. Steve Elkins has proposed redirecting funds from an existing 1.56% healthcare tax on hospital revenue to expand charity care programs, arguing that hospitals could do more to assist low-income patients. The proposal follows investigations revealing disparities in charity care spending among Minnesota hospitals, with some providing far less than counterparts in other states. Hennepin County Medical Center (HCMC), which spent $88 million on charity care in 2024, faces a potential $205 million state bailout to avoid closure. Critics, including the Minnesota Hospital Association, argue the tax should be eliminated or redirected to Medicaid to leverage federal matching funds. Advocacy groups like Dollar For and Attorney General Keith Ellison support standardizing charity care eligibility, with Ellison recommending a minimum floor and presumptive eligibility systems. The debate highlights tensions between hospital financial distress, community benefit obligations, and patient access to care.
The discussion occurs amid broader questions about how nonprofit hospitals balance tax exemptions with community benefits. A legislative audit found that 62 Minnesota hospitals spent less on certain community benefits than they saved in tax exemptions, though hospitals argue Medicaid underpayments should be factored into these calculations. Elkins' proposal, introduced late in the legislative session, may face challenges in future years if state budgets tighten. The outcome could influence how Minnesota addresses healthcare affordability and hospital sustainability moving forward.
Full Take
The strongest version of this narrative highlights a legitimate tension: Minnesota hospitals face financial strain while patients struggle with medical debt, and current charity care policies lack consistency. The proposal to redirect tax revenue to incentivize more generous charity care is a creative attempt to align hospital incentives with patient needs. However, the debate reveals deeper systemic issues—how nonprofit hospitals balance tax exemptions with community benefits, the role of Medicaid underpayments, and whether standardization would improve access or create unintended consequences.
Patterns detected: none. The article avoids emotional exploitation or distortion, presenting multiple perspectives without forcing a binary choice. The root cause appears to be a misalignment between hospital financial models and community needs, exacerbated by inconsistent charity care policies. The implications for human dignity are significant—patients may forgo care due to cost, while hospitals risk closure if financial pressures persist. Second-order consequences could include reduced healthcare access in underserved areas or increased state intervention in hospital operations.
Bridge questions: How might standardized charity care thresholds affect hospital solvency in rural vs. urban areas? Would redirecting funds to Medicaid better address systemic underpayment issues? What role should presumptive eligibility play in balancing patient access and hospital sustainability?
Counterstrike scan: If this were part of a coordinated campaign, the playbook might involve framing hospitals as greedy to justify state intervention or, conversely, portraying regulation as a threat to healthcare access. The actual content does not match this pattern—it presents a nuanced debate with valid concerns on all sides, suggesting genuine policy discourse rather than manipulation.
Sentinel — Human
This analysis is grounded in specific, verifiable data and multiple conflicting viewpoints, characteristic of human investigative journalism rather than synthetic generation.