Updates About Appropriations

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.

Michigan parents, health providers, and advocates came together at the Capitol last week urging legislators to safeguard Medicaid in the face of proposed federal funding cuts. During a Senate Health Policy Committee hearing, members of the Protect MI Care — a coalition of 240+ organizations working to preserve access to health care — shared personal stories illustrating how essential Medicaid has been to their families’ survival and stability. Two mothers from Grand Rapids spoke about how Medicaid coverage made it possible to care for their medically complex children, one born with a serious heart defect necessitating open heart surgery, the other living with cerebral palsy and epilepsy. Both emphasized that Medicaid was not a “handout,” but a vital safety net that filled gaps private insurance did not cover. Coalition leaders and health experts warned that the proposed cuts would threaten access to care across Michigan, particularly in vulnerable and rural communities.

The Michigan Senate Appropriations Health and Human Services Subcommittee advanced its version of the FY 2026 DHHS budget last week at $39.31 billion, coming in slightly higher than the Governor’s proposed $39.15 billion recommendation. Chair Sylvia Santana’s (D-Detroit) objectives include improving health outcomes for families while protecting essential services and preparing for potential decreases in federal Medicaid support.

Key Senate additions include $58 million for expanding Flint’s Rx Kids program, $13 million for water affordability initiatives, and $10 million for reproductive health access grants. The Senate also proposed smaller increases to Medicaid eligibility than Whitmer’s plan. The budget did not include funding for building a state psychiatric hospital in Northville or for health care services for incarcerated individuals prior to release. It also failed to include several items funded by opioid settlement dollars that were proposed in the Governor’s executive recommendation. However, the Senate added funding in areas such as permanent supportive housing, reproductive health access grants, children’s advocacy centers, non-clinical direct care worker pay, and medical debt relief.