Proposed Federal Cuts to Medicaid Would Devastate Health Care and Jeopardize Michigan's Economy

LANSING, Mich. – Proposed federal budget cuts to Medicaid, totaling $880 billion nationwide, would have serious consequences for Michigan, threatening the health and financial security of millions of residents and placing an increased strain on hospitals, workers, and the state’s budget.

“The proposed cuts to Medicaid would jeopardize health care coverage for hundreds of thousands of Michiganders, including children and seniors,” State Budget Director Jen Flood said. “At a time when families are already facing high costs and economic uncertainty, these cuts would cost nearly 30,000 jobs, force rural hospital closures, and drive-up health care costs for everyone.”

At more than $26 billion, Medicaid makes up 32% of Michigan’s fiscal year 2025 budget. Nearly three-quarters of that funding comes from the federal government. If enacted, the proposed cuts could cost Michigan as much as $2 billion in annual federal support.

Medicaid plays a vital role in the state’s economy. Michigan hospitals receive nearly $7 billion annually in Medicaid payments, supporting health care as one of the state’s largest industries and contributing $77 billion each year to the state economy. If federal cuts go into effect, an analysis by the Commonwealth Fund and George Washington University estimates that 29,400 Michiganders could lose their jobs.

These cuts would severely impact health care providers, particularly rural hospitals that depend on Medicaid reimbursements. More than 37% of residents in small towns and rural areas are covered by Medicaid, and many hospitals are already experiencing financial strain. Further funding reductions could lead to closures—leaving entire communities without access to critical care and eliminating major local employers.

“We urge federal leaders to consider what’s at stake for Michigan families and families across our nation,” Flood said. “Now is the time to strengthen care—not walk away from the people who depend on it most.”

More than 2.7 million Michiganders—one in every four residents—rely on Medicaid for essential health care services. This includes nearly 1 million children who depend on regular checkups and preventive care; over 300,000 people with disabilities who require specialized treatment and support; 168,000 older adults who often need long-term care; and 740,000 low-income adults covered through the Healthy Michigan Plan. Medicaid also supports maternal and infant health by covering nearly 45% of all births in the state.

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