Updates About Budget

The ongoing Federal Government shutdown is expected to affect many areas in Michiganders lives. Notable impacts include the following:

• Nearly 30,000 civilian federal employees will be either ordered to work without pay or furloughed until Congress reaches a deal. Those ordered to work will receive back pay after the shutdown is over

• All active-duty military personnel, including the National Guard, will carry out their duties without pay

• Short term funding has been made available to both food assistance programs SNAP and Women Infants Children (WIC). Each state has received contingency funds that have estimated to be sufficient for one week of operations, however states may have additional dollars to spend. In Michigan, we are expected to have funds to continue the program for a couple weeks.

• Michiganders on Medicare and Medicaid will continue to receive benefits, but communication delays from the agency are expected

• The Veterans Health Administration, which falls under the Department of Veterans Affairs and is also Michigan’s largest employer, is expected to be 97% operational

• Retirement, disability, veterans, and health care benefits that are covered under federal programs will continue, but delays are expected due to reduced staffing

• The US Postal Service will remain open and mail is expected to arrive on time

• The Michigan Department of Education will also remain open. In a memo, State Superintendent Michael Rice explained that any issues the state needs to elevate to federal officials for guidance will likely be delayed until normal operations resume. He also noted that federal reimbursement-based funding to local schools will be delayed

According to a statement released by Michigan Department of Health and Human Services (MDHHS) Director, Elizabeth Hertel, the meager budget passed by House Republicans would have dire consequences on Michigan residents. Hertel highlighted that the budget’s $4.95 billion reduction in MDHHS funding would lead to significant staff reductions impacting child protective services workers, benefits specialists, disease specialists, and fraud, waste, and abuse investigators.

The director also reported that the budget cuts would curb certain service programs such as removing $20 million in adult dental coverage, $10 million to hospitals for maternal health care, $7 million for the Office of Community Violence and their gun violence reduction efforts, $6.8 million to state psychiatric hospitals, and $4 million toward addressing homelessness.

Hertel stressed that the eliminated funding would negatively impact behavioral health services by increasing wait times and decreasing the state’s patient capacity capabilities. The cuts would also erase Medicaid coverage for approximately 33% of residents in rural communities, placing an extra burden on local hospitals and resources posed with absorbing the costs of their care.

According to the Citizens Research Council (CRC), approximately 530,000 Michiganders are set to see higher healthcare costs due to the expiration of federal tax credits for health insurance purchased through Patient Protection or the Affordable Care Act (ACA). Congress failed to extend these tax credits when passing the One Big Beautiful Bill Act. Currently, around 350,000 Michigan residents are covered by tax credit supported plans supported by the federal government. After the credits expire, estimates point to a 70% increase in premiums on the marketplace. Additionally, 200,000 Michiganders are set to lose insurance coverage under the ACA.

The CRC warns that these coverage losses could create ripple effects across the state. Residents who forgo coverage will face greater financial and health challenges, while the departure of healthy enrollees from the marketplace will drive up costs for those who remain. Even employer-sponsored plans could see higher premiums as the marketplace shifts. Many will wait to seek healthcare until it requires a visit to the emergency department. However, those delaying care are mostly likely to be unable to afford its cost, thereby causing uncompensated care costs to rise.

The CRC cautioned that the state will have to grapple with the impacts of fewer people having health insurance, higher premiums, and increasing uncompensated care for hospitals. CRC suggested a state tax credit or healthcare incentives, but any move would require more state spending. Given the tight budget climate, lawmakers may resist, but inaction could result in daunting consequences for Michigan residents.