by Proposed Medicaid cuts in Michigan threaten access, increase costs, and put rural hospitals and vulnerable residents at risk, state leaders and health advocates warn.
Proposed Federal Medicaid Cuts Spark Deep Concerns in Michigan Senate
LANSING, Mich. — Proposed federal cuts to Medicaid funding could severely disrupt Michigan’s health care system, with broad implications for rural hospitals, long-term care services, and over 2.6 million state residents who depend on the program. That was the message delivered during a June 2025 Michigan Senate Health Policy Committee hearing, where testimony from state officials, hospital executives, and impacted families highlighted the potential scope of the crisis.
One in four Michigan residents currently relies on Medicaid for health coverage, according to the Michigan Department of Health and Human Services (MDHHS). But changes embedded in the House reconciliation bill would undermine provider taxes, restrict eligibility, and impose new administrative burdens on both the state and individuals.
Medicaid Cuts Would Threaten Care in Rural and Underserved Areas Across Michigan
Megan Groen, Senior Deputy Director of Health Services at MDHHS, outlined how proposed federal policy changes would gut key parts of Michigan’s Medicaid infrastructure, especially in rural counties. “Many of our rural counties in Michigan have 40% of their population on Medicaid or more,” Groen said. She warned that reductions would force hospitals to close services — or shutter entirely.
Medicaid covers 61% of births at Mson Hospital in Cadillac, and nearly half of all births statewide. “If hospitals shut down their maternity services,” Groen said, “it’s not just the birthing unit that’s affected. It’s the pediatricians, OB-GYNs, and the whole health ecosystem around it.”
Groen noted that cuts to optional services like home and community-based care, hospice, and behavioral health — labeled “optional” by federal standards — would disproportionately affect seniors and people with disabilities. Nearly 70% of Michigan’s Medicaid budget comes from federal dollars. The state’s ability to offset cuts is limited.
Health Officials Say Cuts Will Hurt All Michiganders, Not Just Medicaid Recipients
Senator Jeff Irwin (D-Ann Arbor) put it plainly: “When hospitals close, everybody is impacted. Not just Medicaid patients.”
Michigan’s Medicaid expansion under the Healthy Michigan Plan currently covers 750,000 low-income adults. Groen said scaling back that expansion would lead to delayed treatment, more uncompensated emergency room visits, and increased costs for privately insured residents.
According to the Michigan Health and Hospital Association (MHA), $7 billion in Medicaid funds flow to Michigan hospitals annually, supporting over 217,000 health care workers. Cuts could upend this system. “We’re already at risk,” said MHA Vice President Adam Carlson. “This bill goes beyond anyone’s reasonable definition of waste, fraud, and abuse.”
Rural Hospitals Warn Medicaid Cuts In Michigan – We’re at a Breaking Point
Jeremiah Hodshshire, CEO of Hillsdale Hospital, said rural providers are already running on thin margins. “Roughly 70% of my payer mix is government programs — Medicaid and Medicare,” he told the committee. “We can’t absorb these cuts. We’re not talking about belt-tightening. We’re talking about losing core services like obstetrics and psychiatric care.”
The impact isn’t theoretical. Six rural Michigan hospitals are already at immediate risk of closing, with 20 more flagged as vulnerable, according to data cited in testimony.
Work Requirements, Administrative Changes Could Boot 500,000 Off Medicaid
Groen warned that new work requirements would require most adults to verify 80 hours of work monthly. The state estimates implementation costs at $155 million and predicts as many as 500,000 people could lose coverage.
“This isn’t about people being lazy,” said Vice Chair Senator Santana. “Nearly half of those affected are already working.”
The bill also reduces retroactive coverage from three months to one and forces eligibility redetermination every six months instead of annually. The result, Groen explained, would be a dramatic increase in administrative churn and delayed care.
Voices From the Community: Medicaid is Not Welfare, It’s Survival
Multiple families testified about what Medicaid has meant for their children’s survival. Katie O’Neal, a school nurse, shared her son Nathan’s battle with a rare airway condition requiring repeated hospitalizations and surgeries. “Because of Medicaid,” she said, “my son is alive, learning, and laughing today.”
Courtney Gilmore, another parent, described having to downshift to a single income to care for her son Andrew, who was born with brain damage. “We’ve used every resource,” she said. “Medicaid is the only reason we can manage.”
Melissa Fosberg, whose son Jace was born with half a heart, added, “Our bills would be in the millions. No one is prepared for this. Medicaid isn’t a handout. It’s a safety net.”
Mental Health and Addiction Recovery Advocates Sound Alarm
Nate Dunar, a peer recovery coach and former substance user, told lawmakers that Medicaid is crucial for recovery. “Behavioral health isn’t something private insurance wants to pay for,” he said. “Without Medicaid, there’s no hope.”
He added, “People say get a job — but how do you heal if you’re not even stable? Medicaid lets people rebuild their lives.”
Michigan Leaders Call for Federal Action Before It’s Too Late
Senators emphasized the long-term effects of Medicaid cuts in Michigan. “These are not scare tactics,” said Chair Senator Kevin Hertel. “The cuts are real. The damage will be real.”
83% of Michigan residents oppose Medicaid cuts, according to polling cited in the hearing. Yet lawmakers in Washington appear determined to push the reconciliation bill forward.
“Budgets are a statement of values,” said O’Neal. “Cutting Medicaid tells families like mine we don’t matter.”
Summary
The Michigan Senate Health Policy Committee held a critical hearing in June 2025 to assess the impact of proposed Medicaid cuts in Michigan. Lawmakers, healthcare officials, and families warned that the cuts—stemming from a federal reconciliation bill—could shutter up to 20 rural hospitals, strip coverage from as many as 500,000 residents, and destabilize healthcare access across the state. Testimony highlighted that Medicaid cuts in Michigan would disproportionately affect rural communities, seniors, people with disabilities, and children. Officials emphasized that Michigan’s healthcare system relies heavily on federal funding, with 70% of the Medicaid budget coming from Washington. If enacted, the proposed cuts would not only reduce access to care, but also increase costs across the board and threaten the economic viability of small-town hospitals, many of which are major local employers. Experts and residents alike stressed that the consequences of Medicaid cuts in Michigan would be felt far beyond the Medicaid population—impacting the entire state’s healthcare infrastructure.
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