Updates About Budget

According to the Citizens Research Council (CRC), approximately 530,000 Michiganders are set to see higher healthcare costs due to the expiration of federal tax credits for health insurance purchased through Patient Protection or the Affordable Care Act (ACA). Congress failed to extend these tax credits when passing the One Big Beautiful Bill Act. Currently, around 350,000 Michigan residents are covered by tax credit supported plans supported by the federal government. After the credits expire, estimates point to a 70% increase in premiums on the marketplace. Additionally, 200,000 Michiganders are set to lose insurance coverage under the ACA.

The CRC warns that these coverage losses could create ripple effects across the state. Residents who forgo coverage will face greater financial and health challenges, while the departure of healthy enrollees from the marketplace will drive up costs for those who remain. Even employer-sponsored plans could see higher premiums as the marketplace shifts. Many will wait to seek healthcare until it requires a visit to the emergency department. However, those delaying care are mostly likely to be unable to afford its cost, thereby causing uncompensated care costs to rise.

The CRC cautioned that the state will have to grapple with the impacts of fewer people having health insurance, higher premiums, and increasing uncompensated care for hospitals. CRC suggested a state tax credit or healthcare incentives, but any move would require more state spending. Given the tight budget climate, lawmakers may resist, but inaction could result in daunting consequences for Michigan residents.

On July 4, 2025, the One Big Beautiful Bill Act of 2025 (OBBBA) was signed into law. As a result, Michigan is facing significant and concerning updates to its Medicaid and SNAP programs that will have wide-reaching effects on residents’ health and access to essential services. These changes are expected to reduce coverage and support for many vulnerable populations.

The Supplemental Nutrition Assistance Program (SNAP) supports over 1.7 million Michigan households, helping prevent food insecurity. Key changes include:

• Low-Income Home Energy Assistance Program (LIHEAP) deduction may reduce SNAP benefits
• Internet Expense Deduction removed
• Work Requirements: Waiver for Able-Bodied Adults Without Dependents (ABAWDs) is being rolled back, requiring more individuals to work or face SNAP loss
• Changes to Immigrant Eligibility: Certain refugees and asylees previously considered eligible may have benefits reduced or terminated
• Enrollment Frequency: Enrollment for SNAP may now occur every six months, instead of annually
• Error Rate-Based Funding Cuts: States will be required to pay a portion of SNAP benefits based on their Payment Error Rate (PER), effective FY28
• Administrative Cost Shift: Federal funding for SNAP administration will decrease from 50% to 25% starting FY27, requiring Michigan to cover 75% of administrative costs

Medicaid currently provides coverage for roughly one in four Michiganders and is a critical lifeline for low-income residents. Major updates include:

• New work requirements for Healthy Michigan Plan (HMP):
  • Applies to enrollees ages 19-64
  • Must work, train, or volunteer at least 80 hours per month to maintain coverage
  • Many exemptions and exceptions
  • Effective January 1, 2027
• Six-month redeterminations instead of renewing eligibility annually
• Retroactive eligibility Limits (previously 90 days prior to application):
  • HMP: Coverage now only 30 days prior to application
  • Other Medicaid programs: Coverage now only 60 days prior to application
  • Effective January 1, 2027
• Fewer coverage pathways for non-citizens
  • Some lawfully present non-citizens may receive Emergency Services Only (ESO) coverage
  • Lawful permanent residents remain eligible
  • No longer eligible: Refugees, asylum grantees, trafficking victims, and more
  • Effective October 1, 2026
• Financing and Provider Changes:
  • Insurance Provider Assessment (IPA) tax to be discontinued
  • Gradual reduction of provider tax cap
  • State Directed Payments (SDP) to providers now capped at Medicare rates (replacing prior commercial-rate cap)

For a full review of the projected impacts of these changes on Michigan residents, see this Medicaid and SNAP Impact presentation by MDHHS shared during a Senate Appropriations committee hearing.

As Medicare and Medicaid reach their 60th anniversary, Governor Gretchen Whitmer and Lieutenant Governor Garlin Gilchrist are celebrating the sweeping impact the programs have had on Michiganders while also raising alarm over recent federal threats to their future. These landmark health care programs now cover more than one in four state residents, providing essential care for children, seniors, people with disabilities, and low-income families. Whitmer credited Medicaid and Medicare with reducing poverty, supporting rural hospitals, and keeping costs down for working families.

At the same time, Whitmer and Gilchrist sharply criticized recently passed federal legislation that cuts nearly $1 trillion in Medicaid funding, which would eliminate health care for many here in Michigan. With nearly 2.6 million Michiganders relying on these programs, including 1 million children and three in five nursing home residents, Whitmer and Gilchrist have pledged to keep fighting for access to affordable care, even as Congress moves in the opposite direction.