LANSING – “The Reconciliation Act, which you know as the One Big Beautiful Bill, is not beautiful for us,” said Laura Appel, the executive vice president of government relations and public policy at the Michigan Health & Hospital Association.
The changes in federal law and funding for the Medicaid program will hurt Michigan hospitals that provide comprehensive health services to low-income adults and children.
Language in the One Big Beautiful Bill Act says the overhaul of Medicaid rules is aimed at reducing fraud, improving enrollment and eligibility processes, and preventing wasteful spending.
It includes new procedures to verify eligibility and tightens criteria for the program.
“While the new law doesn’t specify an exact financial impact, the most significant effect on health care in Michigan is an estimated $1 trillion in total federal funding cuts to Medicaid over the next decade, according to Appel.”
Of that, Michigan hospitals will lose $6 billion over the next decade.
She said the cuts threaten reimbursement that hospitals receive for providing patient services.
“Hospital reimbursement comes from multiple sources,” she said, listing commercial insurance payers including Priority, McLaren Health Plan and Health Alliance Plan (HAP).
In addition, she said, “Medicare is a significant payer for hospital services, especially in certain areas.”
Appel discussed the possible outcomes of the cuts for hospitals.
“The reductions that are possible in terms of Medicaid reimbursement are terrible,” she said, “They will reduce reimbursement below what it costs to take care of people in almost every organization.”
She said some hospitals in the state “are always financially insecure” and thus especially vulnerable to reduced reimbursement rates.
According to Appel, there have been a couple of hospital closures in Michigan due to financial problems.
“For example, the hospital in Ontonagon was forced to close due to financial instability,” she said, “And one in Sturgis was converted to a rural emergency hospital that maintains an emergency department but does not provide inpatient services or overnight stays.”
Earlier in September, Aspirus Health announced that it will end birth services at its hospital in Ironwood. The decision sparked protests from Upper Peninsula lawmakers.
Besides the hospital closures, the tightened Medicaid coverage will also make it harder for people to afford their medications, according to Appel.
“There’s a lot of concern about what happens to people when it gets to the line at your local pharmacy. There are a lot of people who aren’t okay.” said Appel.
According to Appel, changes and budget cuts mandated by the One Big Beautiful Bill come at a time when hospitals already face economic challenges stemming from frequent drug price hikes by drug manufacturers.
“Of course, there’s the price of newer drugs, which on average are like $300,000 annually, some of which are absolute miracles,” she said. “There’s a drug for cystic fibrosis that pretty much makes it so that people will survive indefinitely. It’s $275,000. But they’re alive.”
Appel also provided an example of how drug prices can rise rapidly in an emergency situation.
“A couple of years ago, we had a shortage of two different widely used chemotherapy drugs,” she said. “One of our local hospitals needed to purchase these drugs because they needed it for the people in the middle of their chemotherapy.”
She said the price of one of those drugs, which usually cost $11 a dose, jumped to $550 a dose in the market but the reimbursement rate from health insurers didn’t increase to reflect that.
“Hospitals are very much in the same situation of rising drug costs.” Appel said.
Considering the current challenge of rising drug prices, Appel said the stricter Medicaid rules will likely compound the financial challenges for Michigan health care providers.
Editors note: This story was updated on Sept. 20, 2025, to clarify that the $1 trillion Medicaid funding cut is a national figure that includes a $6 billion cut for Michigan.
