Updates About Health Insurance

The Michigan Department of Health and Human Services (MDHHS) recently announced that they are preparing to implement the federally required Medicaid changes that were passed under H.R. 1. This includes the new work requirements and more frequent eligibility reviews for certain Healthy Michigan Plan (HMP) beneficiaries.

Beginning in January 2027, some HMP enrollees ages 19 to 64 may need to complete approved activities. The list of approved activities includes employment, education, volunteer work, or work programs. Some enrollees can qualify for an exemption to maintain their coverage. The department will be reviewing federal guidance, updating systems, and developing outreach materials to help beneficiaries understand and comply with the new requirements.

The changes will be implemented gradually, and MDHHS has stated that beneficiaries will receive additional information and notices as the transition moves forward.

After a lengthy session day that took place over the course of 30 hours, the Michigan legislature passed a budget for the 2026-2027 (FY 27) Fiscal Year on July 3. Following the passage, significant questions have emerged about the overall spending total of the budget. On paper, the FY 27 budget totals $75.2 billion. However, the budget authorizes $86.4 billion in spending after federal Medicaid taxes and federal K-12 appropriations were shifted into boilerplate and not included in the topline.

The budget reduces Medicaid appropriations by approximately $479.2 million, ($185 million GF/GP), mostly coming from pharmaceutical program restructuring. About $87 million in savings was assumed by using restricted funds, instead of general fund dollars for certain programs.

Much of the 30 hour marathon session was spent voting on legislation unrelated to the budget, likely part of negotiations with fellow lawmakers ahead of campaign season. Before concluding with the budget bills, the Legislature first passed 66 policy bills that were largely uncontroversial. Highlights include establishing a two-year lobbying ban for certain former elected officials and department heads (HB 4062, 4063 and HB 4064), a bill prohibiting large corporate entities who already own 100+ Michigan homes from purchasing more (HB 6074), and legislation requiring Michigan Medicaid to cover evidence-based group prenatal care services (SB 415).

A full list of the legislation passed alongside the FY 27 budget can be viewed here.

Michigan Attorney General Dana Nessel recently joined a coalition of 24 attorneys general and two governors in filing a lawsuit that challenges the Trump administration’s implementation of the new Medicaid work requirements under H.R.1 (also known as the One Big Beautiful Bill Act or OBBBA).

The lawsuit targets an interim final rule issued by the U.S. Department of Health and Human Services (DHHS) and Centers for Medicare and Medicaid Services (CMS). The coalition argues the new interpretation of the rule would unlawfully narrow expectations for individuals who are considered “medically frail.” The coalition also claims that the interpretation, on top of new administrative burdens, will make it difficult for eligible Medicaid recipients to qualify for exemptions and would cause many to lose coverage.

They also allege that the rule fails to adequately consider the impact on states and the healthcare sector while imposing new compliance requirements after states had already begun implementing H.R. 1. The coalition is seeking to block enforcement of the challenged provisions before the work requirements take effect on January 1, 2027.