Citizens Research Council Memo Outlines the Potential Impact of Proposed Federal Medicaid Cuts on Michigan
Livonia, MI, June 26, 2025 – As policymakers in Washington debate major legislation that, as written, would significantly reduce federal spending on Medicaid, the Research Council today released a brief primer on Medicaid in Michigan and the potential impact of those proposed cuts.
The complexity of the federal-state Medicaid partnership can make it difficult to understand how the program operates and how Michigan’s residents might be impacted by changes in federal policy. The Research Council seeks to provide the public with an accessible overview of Medicaid’s role in delivering individual healthcare coverage and supporting the state’s healthcare system, thereby properly contextualizing the impact of proposed changes to the program.
“We want to help establish the public understanding of how Medicaid works,” said Eric Lupher, president of the Citizens Research Council of Michigan. “Medicaid has such a large impact on the state, both as a share of the state budget and in terms of how many people have health insurance through the program. This paper gives people the information they need to understand the debate and prepare for what might happen if the legislation is enacted.”
Medicaid is a joint federal-state program established in 1965 for vulnerable individuals (due to age, disability, etc.) in low-income households who are unable to access healthcare. The federal government sets parameters for state programs. It provides matching funds to participating states, allowing them flexibility in designing their own programs. Services covered by Medicaid include primary and acute care, as well as long-term support services.
“As a matter of policy, Medicaid is relatively complicated, so it is not always easy to understand how a change in the law might impact the actual delivery of health care on the ground,” said Karley Abramson, Research Council associate for health policy. “If you are not familiar with how Medicaid eligibility and funding work, you would not necessarily realize how dramatically the proposed legislation could impact people and health care providers in the state.”
Medicaid provides health insurance coverage to a significant portion of Michigan’s residents (~23 percent) and is a vital component of the payment mix that health care providers rely on. Medicaid has taken on a larger role in Michigan over the last two decades, with spikes in enrollment during periods of economic downturns (2009 Great Recession and 2021 COVID-19) and the program’s 2014 expansion under the Affordable Care Act.
Health Insurance Coverage in Michigan, By Type, Selected Age Groups, 2023
If federal legislation is enacted with substantial cuts to Medicaid, states will be left to respond to problems on two related fronts: the impact on people losing care and the impact on those providing care. Cuts to Medicaid will increase the uninsured population by at least 200,000 residents who will be impacted by the effects of delayed care and increased financial hardship. On the provider side, the proposed Medicaid cuts may imperil local hospitals, particularly in rural areas, as well as other types of providers. If Medicaid spending is reduced substantially, some rural providers are likely to become unviable, which will not only impact those losing Medicaid coverage but also affect people living in those areas who have secure, private coverage.
These problems will have a broader impact on the state budget. Policymakers will face difficult choices as the state is likely to experience a loss of federal Medicaid revenue of at least $2 billion per year, necessitating cuts to the program, reductions elsewhere, or new revenue sources – none of which are attractive options.
