New Federal Rules Could Hit Michigan's Largest Health Insurer

Between 171,000 and 355,000 Michiganders are projected to lose Medicaid coverage in 2028 under new federal work requirements and eligibility rules established in the Trump Administration's One Big Beautiful Bill Act. That's according to a research report published by the Urban Institute, a nonprofit organization based in Washington, D.C.

Medicaid is a public health insurance program serving low-income families and individuals and people with disabilities. It's jointly funded by the federal and state governments. The program currently covers about 2.6 million residents, or 25% of the population, making it the state's largest health insurer.

What the New Requirements Mean for Michiganders

The new requirements will go into effect in 2027. Many applicants will have to show proof they've worked or done other approved activities for 80 hours a month, and redeterminations of whether people are eligible to renew coverage will be required every six months instead of every year.

Matthew Buettgens, a senior fellow with the Urban Institute, said it's typical for a certain number of people to get disenrolled when a redetermination process occurs. However, the Urban Institute found that many people who meet the work requirements will still lose coverage because of difficulty navigating administrative processes for reporting their work activities or exemptions.

For example, Buettgens said, those who are self-employed could have a hard time verifying their income. Individuals who are self-employed, have health conditions, or are 50 to 64 years old are more at risk of losing Medicaid coverage under the new policies, the Urban Institute said.

The Financial Impact on Michigan Hospitals

State and health industry leaders have said the cuts to Medicaid will result in hospitals closing their doors, cutting staff and/or reducing available services to make up for losses in government funding.

Residents with private and employer-provided health insurance are likely to see increased costs as hospitals seek to recoup funding. Longer emergency room wait times may also hit communities already struggling with access challenges, industry experts said shortly after the bill signing.

Brian Peters, CEO of the Michigan Health & Hospital Association, said the impact on Michigan hospitals alone is north of $6 billion in negative impact over that 10-year horizon. Peters said you cannot take $6 billion out of the hospital funding line without severe consequences in terms of access to patient care.

State Implementation Choices Will Matter

The extent of the decline will depend on efforts at the state and federal level. Among the potential mitigation efforts outlined by the Urban Institute were:

  • Developing and upgrading data systems to support automatic determinations
  • Defining exemption criteria broadly
  • Limiting paperwork requirements for applicants
  • Minimizing the number of months of required compliance to limit coverage losses

Researchers projected between 4.9 million and 10.1 million people will lose Medicaid coverage in 2028 across the country. That represents declines of 27% and 55% among people enrolled in expansion coverage under the Affordable Care Act.

Losses would vary by state. In Michigan, the projections would come out to a 24% decline with high mitigation, 40% under a medium mitigation scenario, and 50% with low mitigation.

"The Medicaid coverage of several million people will depend on state implementation choices and federal guidance that help ensure that people are not wrongfully denied coverage or disenrolled," Buettgens said.

Who Is Most at Risk

The One Big Beautiful Bill Act included $1.2 trillion in cutbacks to Medicaid health care and SNAP (Supplemental Nutrition Assistance Program - food stamps), largely by imposing new work requirements.

Medicaid recipients who are able-bodied will be required to work at least 80 hours per month in order to continue to receive benefits, beginning in 2027. Exceptions are for people 65 and older, parents with children younger than 14, pregnant women, and those medically certified as physically or mentally unfit for employment.

The Research Behind the Numbers

The Urban Institute was assisted in its analysis by the Robert Wood Johnson Foundation. Matthew Buettgens, senior fellow at the Urban Institute, said among the residents in danger of losing coverage are those who are meeting or exempt from work requirements but have difficulty submitting the necessary paperwork.

The bill was signed by President Donald Trump on July 4, 2025, and Medicaid cuts will take effect in 2027.