As federal lawmakers debate steep reductions to Medicaid, Michigan health leaders are raising urgent concerns about the consequences for the state’s behavioral health system. They warn that the proposed funding changes — ranging from block grants to reductions in federal cost-sharing — have sparked urgent concern across hospitals, mental health providers, and policy advocates. Proposed funding cuts have the power to dismantle critical services, especially for residents facing poverty, mental illness, or substance use disorders — groups already struggling to access timely and affordable care.

Organizations across Michigan are mobilizing to prevent the cuts before they happen. The Michigan League for Public Policy (MLPP), Community Mental Health Association of Michigan (CMHA),  and Michigan Health and Hospital Association (MHA) are three of more than 140 Michigan groups involved with Protect MI Care, a coalition working to raise awareness, organize public education campaigns, and put pressure on lawmakers.

“This is such an important factor to the overall health and well-being of Michiganders,” says MLPP president and CEO Monique Stanton. “We really should be looking at ways to make our system better … not what we’re going to have to do if these massive cuts take place.”

Monique Stanton

Medicaid’s role in behavioral health access

Medicaid is more than a safety net program — it’s the financial backbone of behavioral health care in Michigan. 

“Medicaid is the largest payer of mental health services in the United States and this includes Michigan,” says Stanton. “Removing Medicaid, or significantly reducing Medicaid’s ability to provide these services, will ultimately lead to the termination of people's behavioral health care services.”

Currently, Medicaid covers more than 2.6 million Michiganders, including one in two children, half of all births, and a majority of people with serious mental health conditions, intellectual or developmental disabilities, and substance use disorders. It also funds crucial services like residential treatment, outpatient therapy, case management, and peer support.

“These cuts don’t just harm access to services for individuals that receive Medicaid … they disrupt the entire ecosystem,” says Stanton.

Cuts to Medicaid would also impact the already-strained behavioral health workforce. 

“If we’re not able to maintain a workforce to provide these services, that ultimately means that people can’t get the care they need when they need it,” says Stanton.

Reductions in federal funding would place stress not only on the behavioral health system but on every point of care — emergency rooms, community health centers, and crisis response teams — leading to longer wait times, reduced capacity, and fewer options for patients at every income level. This disruption could undo years of progress in addressing Michigan’s behavioral health crisis, which worsened dramatically during the COVID-19 pandemic and continues to be marked by record-high rates of anxiety, depression, and substance use.

How cuts affect the most vulnerable

CMHA CEO Robert Sheehan notes that Medicaid provides coverage for individuals with the most severe and complex mental health conditions, including schizophrenia, bipolar disorder, and opioid use disorder. 

Robert Sheehan“The cuts being proposed in Medicaid are so large that they will impact those persons first,” says Sheehan. “And those are the most vulnerable members of our society.”

He adds that mental illness and poverty are often closely linked. 

“All the research shows that if you live in poverty, your anxiety and depression are already spiking high, right? All the time … because you’re scrambling all the time to make ends meet. 97% of our clients live in poverty,” says Sheehan. 

MHA warns that Medicaid reductions would reverse key public health gains made since the passage of the Affordable Care Act, including significant drops in uncompensated hospital care and increased access to mental health and addiction services. 

Lauren LaPine, MHA senior director of legislative and public policy, warns that funding reductions would hit institutions hard. 

“A real consequence of Medicaid cuts will be closures of service lines and even hospitals. When hospitals have to cut services because Medicaid is cut, those services are lost for all patients and not just those who receive health care coverage through Medicaid.” says LaPine. “Medicaid is the single largest payer for long-term care, maternity care, and mental health services. It is a cornerstone of our health care system and keeps people healthy at every stage of life.”

Lauren LaPine

A system-wide ripple effect

Sheehan explains that when Medicaid funding dries up, hospitals and providers do not stop delivering care — they pass the cost on. 

“Rural hospitals will go out of business,” says Sheehan. “And the cost of care for commercially insured people will go up dramatically, because the hospitals and providers have to cover the cost.”

This warning aligns with analysis from the MHA, which estimates that proposed changes to Medicaid — like block grants, per capita caps, and reduced federal matching rates — could create a $1.73 billion funding gap in Michigan. This shortfall would put immense pressure on the entire health care infrastructure, potentially forcing hospitals to reduce services or close altogether, especially in rural areas. MHA and other statewide leaders warn that such cuts would roll back progress made since Medicaid expansion, including reduced uncompensated care and improved behavioral health access.

In response to these threats, Governor Gretchen Whitmer issued Executive Directive 2025-3 on April 17, directing the Michigan Department of Health and Human Services (MDHHS) to prepare a comprehensive report within 30 days outlining how Medicaid cuts would affect the state. The directive specifically calls for analysis on the number of Michiganders who could lose coverage, the impact on hospital operations — especially in rural areas — and how the state budget would be affected.

Whitmer said in a public statement, “We’re going to send a clear message to anyone trying to trade your health and someone else’s tax cut. Medicaid is not for sale.”

Proposed funding cuts would dismantle critical services for Michiganders facing poverty, mental illness, or substance use disorders.

What's at stake for everyone

While some may see Medicaid as a program that serves only low-income residents, Sheehan says everyone has a stake in protecting it. 

“Hospitals, doctors, labs, and pharmacists will still be serving people without coverage, but they have to pick up that uncovered cost somehow,” says Sheehan. “That cost gets loaded onto private insurance.”

For many, this will mean higher premiums, fewer available services, or, as mentioned, closures of entire hospitals. 

“If you think rural hospitals have begun to shut down already — now they’ll really shut down,” Sheehan says.

LaPine agrees. 

“Cuts to Medicaid funding will mean cuts to care,” she says. “It will make it more difficult for all Michiganders to receive mental health services.”

Brianna Nargiso, a graduate of Howard University and Mercer University, specializes in media, journalism, and public health. Her work has appeared in The Root, 101 Magazine, and Howard University News Service, covering profiles, politics, and breaking news. A Hearst journalism award nominee and active member of the National Association for Black Journalists, she has also worked with Teach for America and the Peace Corps. Now a doctoral candidate at American University, Brianna is dedicated to advancing social justice, public health and education on a global scale.

Photos by Doug Coombe.
OnPoint photo by John Grap. 
Collage photos by Doug Coombe, John Grap, Leslie Cieplechowicz, and Victoria Reackhoff.
Monique Stanton photo courtesy Michigan League for Public Policy.

The MI Mental Health series highlights the opportunities that Michigan's children, teens, and adults of all ages have to find the mental health help they need, when and where they need it. It is made possible with funding from the Community Mental Health Association of Michigan, Center for Health and Research Transformation, LifeWays, Michigan Health and Hospital Association, Northern Lakes Community Mental Health Authority, OnPoint, Sanilac County Community Mental Health, St. Clair County Community Mental Health, Summit Pointe, and Washtenaw County Community Mental Health and Public Safety Preservation Millage.