Dr. Rob Davidson, executive director of the Committee to Protect Health Care, at a Lansing press conference discussing the Trump administration’s proposed Medicaid cuts. March 20, 2025. Photo by Kyle Davidson.
A sea of white coats filled the Senate appropriations room on Thursday as members of the Senate Appropriations Subcommittee on the Department of Health and Human Services heard testimony on the dire threat federal cuts to Medicaid could pose to Michigan residents and health care providers.
As President Donald Trump, alongside billionaire Elon Musk and his Department of Government Efficiency, seek to free up funding for tax cuts and action on border security, House Republicans have eyed programs including Medicaid for potential cuts, while lawmakers, physicians and hospital administrators warn these cuts could bring catastrophic consequences.
Medicaid is the largest insurance program in the U.S., said Meghan Groen, the senior deputy Director of the Behavioral and Physical Health and Aging Services Administration for the DHHS, noting that the program provides coverage for low-income children and families, elderly and disabled individuals and pregnant women.
One in four Michiganders is enrolled in Medicaid, Groen noted, for a total of 2.6 million individuals, including 1 million children, 300,000 people with disabilities and 168,000 seniors.
Additionally, Medicaid provides health coverage for 40% of the population in Michigan’s rural areas Groen said, later noting that if rural health care providers are forced to close due to dramatic cuts to Medicare, those facilities would close for everyone in those areas, marking the loss of a major employer within these communities.
She later explained that Medicaid is a major payer in the healthcare system, accounting for one fifth of all health care spending, with over half of that funding going toward long-term care, she said.
Medicaid funding makes up 34% of the state’s overall budget with more than 70% of that funding coming from federal sources, Groen said.
Groen explained that Medicaid is jointly funded through both the state and federal government, with the federal government matching payments made at the state level. Michigan receives a 65% match rate and the state covers the remaining 35%.
“Every dollar you’re putting in, you’re getting $2 back, which is giving us $3 to spend on those beneficiaries that we were just talking about,” Groen said.
The state also receives a 90% match rate for its expanded Medicaid program, which includes individuals at or below 133% of the federal poverty level, according to the DHHS’s presentation, with the federal government similarly matching administrative costs at a 50%, 75% or 90% rate.
If lawmakers opt to lower the 90% federal match rate to a proposed 65%, the state would lose $1.1 billion annually. Without an investment to cover that, 30% of Michigan’s expanded Medicaid enrollees — or 750,000 people — would lose their coverage, Groen said.
Proposals to limit Medicaid provider taxes would also be detrimental to the program, Groen said, noting that these are used to fund the program.
Groen also addressed federal proposals to impose work requirements on Medicaid, noting that 64% of Michigan’s expanded Medicaid population is employed.
“We have a little experience with work requirements in the state here, it cost us about $30 million previously when we were looking at implementing those. And that’s an increase to those administrative costs,” Groen said.
“We did have some concerns about coverage losses. I believe it was around 100,000 individuals that we thought whose coverage would be terminated at that time. And we did believe that some of those individuals were certainly working, but had not gone through that process to verify their employment with the state of Michigan,” Groen said.
Ending the enhanced federal match for administrative costs would similarly burden the state, leaving the state short $115 million for information technology projects needed to maintain current operations, Groen said.
While MDHHS has not received any details on proposed caps to federal funding or block grants to support Michigan’s Medicaid program over time, the national landscape and modeling show the state would lose $16 billion in federal funds between Fiscal Year 2025 and Fiscal Year 2034.
Sen. John Cherry (D-Flint) noted that Michigan was among the better states in leveraging federal funding, in reference to data from the Kaiser Foundation, and that it was one of the lowest rated states for spending.
“Those two combinations, bringing in a lot of federal dollars and already being extremely efficient and lean means we are particularly vulnerable to cuts. Because when we’re cutting, we’re not cutting fat, we’re cutting people. You know, there comes a point, you know, people like to do more with less. We do more with less. At some point, you just end up doing less with less,” Cherry said.
Groen later emphasized there’s only three ways to cut Medicaid.
“You can cut the people who are on it so that they no longer have that care. You can cut the rates that we pay to provide some of these services, like nursing homes and things like that. Or you can cut the services we provide. And as we kind of talk just briefly about, like, what optional services are in Medicaid… they’re things that, again, I wouldn’t, probably biased here but I don’t think are optional,” she said.
Alongside testimony from the MDHHS the committee also heard from representatives of various health care associations and providers detailing how they would be impacted by Medicaid cuts.
Farhan Bhatti, CEO of Care Free Medical, which provided nearly 13,000 office visits to 3,800 patients mostly from Ingham, Eaton and Clinton counties, said U.S. House Republican’s resolution to cut $880 billion in spending over the next decade would likely force his clinic to close its doors.
Federally-qualified health centers like Care Free Medical, along with clinics and hospitals across Michigan, rely on Medicaid reimbursement to pay their overhead, Bhatti said. If large numbers of Medicaid patients suddenly become uninsured, many clinics and hospitals simply won’t be able to make ends meet and will cease service for all patients, not just the ones on Medicaid, Bhatti said.
“Closing Care Free would mean 2,100 patients who rely on Medicaid, and another 1,700 additional patients who pay for care or receive discounted care would lose their health access completely. They would have nowhere else to go. And I would venture to guess that at least half of my patients voted for President Trump, and believed him when he said that cuts to Medicaid would be off the table,” Bhatti said.
During a press conference held after the hearing, Aisha Harris, a family physician from Flint, said most people don’t realize they’re getting Medicaid just because their personal insurance doesn’t say Medicaid.
“I don’t know if they understand what this cut will do. And if they’re in nursing homes, doing other assistance programs, they’re not really realizing the major impact,” Harris said.
“A lot of community programs are benefiting from Medicaid benefits, and if patients and people in the community don’t realize that impact, it’s going to be really devastating, and most of them are just going to go without any type of insurance,” Harris said, warning that this could lead to a widespread increase of individuals facing medical debt.
Additionally the government does not make payments quickly, Harris said, with people just now getting payments for appointments they made in January.
“So the idea that these cuts may happen at any point, they don’t know if that’s going to delay their money that they’re going to get, and that’s going to impact their overhead, which will impact people’s payroll. It’s going to have this, like, ripple effect. And so if it happens, it’s going to be another crisis.”
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