An expansion of the MinnesotaCare health plan and other health reforms were delayed or shelved Friday night as lawmakers announced compromises on a health budget bill that would increase state spending by $1.7 billion over the next two years.

Lawmakers on a conference committee recommended that Minnesota spend next year studying the economic value of expanding eligibility to the public health plan beyond low-income individuals. If the results were favorable, then the expansion and MinnesotaCare public option would take place in 2025.

They also decided to first study whether the state could reign in drug costs by taking direct control over the pharmacy benefits for public health plans.

Sen. Melissa Wiklund, DFL-Bloomington, said tough decisions had to be made to resolve differences between the House and Senate budget bills – with only a few days left in the legislative session. The Senate had recommended a rebasing that would boost payment rates by the state’s public health programs to Minnesota’s financially struggling hospitals. But that was scrapped in the final version.

“It was just a matter of trying to balance all of the things we were trying to include in the bill,” she said.

The compromise proposal also canceled plans to create a health care affordability board, which would set spending growth rates for Minnesota hospitals and possibly fine those that exceeded those rates. The creation of the board was one of two legislative proposals that prompted Mayo Clinic to threaten to move a billion-dollar expansion project to another state.

Mayo got its way on both. All of its hospitals were exempted from separate legislation that would require hospitals to set up committees of administrators, nurses and other caregivers to establish nurse staffing levels.

The affordability board could have been problematic for Mayo, which tends to be a higher-cost provider than others in Minnesota. The compromise health budget will still create a division of health care affordability within the Minnesota Department of Health to monitor health care spending and cost-saving solutions.

The compromise included funding to support long COVID survivors and study the impact of the mysterious condition. Some initiatives to boost mental health and substance abuse treatment programs were funded while others were cut or received less money.

Payment rates for abortion and reproductive health services were boosted by 20% under the compromise bill, which will require approval by the House and Senate before it is presented to Gov. Tim Walz.

The session hasn’t been great for hospitals not named Mayo. While nurses and their union leaders argued that hospital nurse staffing committees will reduce worker burnout and improve patient care, hospital leaders worried that they will have to close units or deny patients when they don’t have the staffing available to meet the committee’s requirements.

Hospitals needed a rebasing of the payment rates by which state health plans pay for care, said Joe Schindler, a finance vice president for the Minnesota Hospital Association. The current methodology results in payments that are about 28% below cost.

“Finances at hospitals and health systems are at historically low levels,” he said.

Sen. Jim Abeler, R-Anoka, lamented the lack of support for hospitals during the conference committee.

“It seems like that is something we really should do … to keep them squared away,” he said.

The committee meeting ended late Friday without a vote, but Rep. Tina Liebling, DFL-Rochester, a key author of the health budget, said the compromise will be presented without any more changes to the House and Senate.

“This is not open for negotiation any further,” she said.