What $1 trillion in Medicaid cuts means for your family
Home and community based services are optional under federal Medicaid law. Nursing facilities are not. When federal money contracts, states cut the optional column first, and they have done it before within living memory.
Email your Community Mental Health case manager and ask: “Which of my family member’s current services are authorized under an optional Medicaid benefit or a 1915(c) waiver, and which are mandatory state plan services?” Ask for the answer in writing. You are not being difficult. You are building the record that tells you which supports are structurally exposed, and you will want that record before the cuts arrive, not after.
Mandatory
Nursing facility care. Inpatient hospital. Physician services. Federal law requires states to cover them.
Optional
HCBS waivers. Community living supports. Personal care. Prescription drugs. All discretionary at the state’s choice.
The bias built into the law
An institution bed is a federal entitlement. A support worker in your kitchen is a favor the state may withdraw. That asymmetry is not an accident of drafting. It is the load bearing wall of the whole system.
Michigan’s own numbers
Executive Directive 2025-3 ordered MDHHS to model the damage. The May 2025 findings: more than 700,000 Michiganders at risk of losing coverage, roughly $1.1 billion a year in lost federal match, $2.3 billion less to hospitals, and $75 to $155 million a year in new paperwork costs.
Coverage loss
CBO’s estimate of additional uninsured people under the enacted package. Coverage loss and service loss are different problems that arrive together.
The precedent
This has run before. When federal support receded after the last recession, states reached for the optional column, and waiting lists grew.
What is optional under federal Medicaid law
Optional. 1915(c) authority, state capped
Optional. Waiver or 1915(i)
Optional as a state plan benefit
Optional. Every state covers it anyway
Optional. Targeted case management
Optional. Much of behavioral health
Optional. First to go, historically
Mandatory. Always funded
Mandatory
Mandatory
Ray is 34, has Level 3 autism, and lives with his mother in Genesee County on 25 hours a week of community living supports. Those 25 hours are the entire reason he is not in a facility. They are also, in the language of federal Medicaid law, optional. His mother learned that word from a state budget document, not from anyone who ever sat across from her at a planning meeting.
What to do before the cuts reach your service plan
Escalation ladder
- 1Get your current IPOS or service plan in writing.
- 2Ask which authorities fund each service on it.
- 3Ask your CMH what its contingency plan is.
- 4Take that question to your PIHP regional office.
- 5Put the same question to MDHHS in writing.
- 6Give the written answer, or the silence, to your legislator.
Build your paper trail now
- Current service plan with authorized hours
- Every denial or reduction notice you have ever received
- Medicaid eligibility and redetermination dates
- A log of unfilled shifts and missed services
- Physician letters on functional limitations
- Documentation of what happens without supports
- Names and dates for every verbal promise
- Digital backups of all of it, stored off site
Documentation is not paranoia. It is the only asset in this system that appreciates when the budget contracts.
There is a column in federal Medicaid law labeled “optional,” and your kid is in it. Not by accident, not by oversight, not because some drafter in 1965 failed to imagine autistic adults. Nursing facility care is mandatory. States must cover it. Home and community based services, the ones that keep your son in your house instead of a facility, are optional. States may cover them. States may also stop. When people ask me what is structurally wrong with adult disability services in America, that is the answer, and it fits on an index card.
Now take that architecture and remove close to a trillion federal dollars from it over ten years. That is what the One Big Beautiful Bill Act did in July 2025. And now you know why I have been writing about it since.
The number, honestly stated
You will see $1 trillion in a lot of headlines, including this post’s title. Here is the more careful version. The Congressional Budget Office’s estimate for the enacted reconciliation package puts the federal Medicaid spending reduction at roughly $911 billion over ten years once interactions are accounted for, alongside about 10 million more people uninsured. Earlier versions of the bill scored above a trillion, and analyses that fold in related ACA changes get back to that neighborhood.
I am telling you the range rather than the scariest single figure because you are going to be in rooms where somebody says “that trillion dollar number was exaggerated,” and I want you holding the citation instead of the vibe. Nine hundred eleven billion is not a reassuring correction. It is the largest reduction in federal Medicaid support ever enacted.
Why states reach for the optional column every single time
State budgets have to balance. Federal Medicaid money is the largest single federal transfer to states. When that transfer shrinks, a state has four options: raise taxes, cut other spending, cut Medicaid eligibility, or cut Medicaid services. The first two are politically expensive. The third generates a coverage story with named victims and news coverage.
The fourth is quiet. Freeze a rate. Decline to expand a waiver slot. Tighten a medical necessity definition. Leave the waiting list open but stop pulling names off it. Nobody’s card gets cancelled. Nobody appears on the evening news. The service just stops being available, and families conclude the problem is their own paperwork.
This is not speculation about what states might do. It is a description of what states did the last time federal support contracted. The pattern was documented then, and the researchers who documented it have been pointing at it again since 2025 with a certain grim consistency.
What Michigan told itself in writing
Governor Whitmer signed Executive Directive 2025-3 in April 2025, ordering MDHHS to quantify what federal Medicaid cuts would do to this state. That was a smart move, and the resulting numbers are the most useful thing Michigan families have.
More than 700,000 Michiganders at risk of losing coverage, roughly 30 percent of the state’s Medicaid population. About $1.1 billion a year in reduced federal match. A $2.3 billion decrease in hospital payments and more than $325 million less to nursing homes. Somewhere between $75 and $155 million a year just to administer new reporting requirements, which is a genuinely obscene line item: money spent to check whether people deserve care, subtracted from the money that provides it.
Notice what is not in those headline figures. There is no line labeled “community living supports hours eliminated.” There is no line labeled “waiver slots not opened.” The disability services damage lives inside that $1.1 billion, unlabeled, and it will be allocated by people in rooms you will not be invited into unless you ask loudly and early.
The part that should make everyone uncomfortable
Here is the fiscal argument, and I want conservatives in the room for this one because it is theirs.
The most recent national data compiled by the University of Minnesota’s Residential Information Systems Project puts average annual spending at about $140,210 per person in an ICF/IID institutional setting against about $48,458 per person in an HCBS waiver setting. Institutional care costs roughly three times as much. It is also the option federal law guarantees.
So the structure of the cut does this: it squeezes the cheap option, which is optional, and preserves the expensive option, which is mandatory. Families who lose community supports do not evaporate. Some of them, eventually, end up in the facility. The federal government then pays about three times as much for a worse outcome that nobody wanted.
That is not a bleeding heart argument. That is an accounting argument. The math adds up. And it is obscene.
What actually helps, starting this month
You cannot repeal a federal statute from your kitchen. You can do three things that materially change your family’s exposure.
Learn which of your services are optional. Ask your case manager in writing which authority funds each line of the service plan. Waiver services, 1915(i) state plan services, and mandatory state plan services carry very different risk profiles. Most families have never been told which is which, and the answer takes a case manager about ten minutes to produce.
Document what happens without support. Every unfilled shift. Every ER visit. Every regression. When a state has to defend a cut, or when you have to win an appeal, contemporaneous documentation of harm is the only currency that has ever worked. Start the log this week, even if nothing is wrong this week.
Make the cost argument, not just the suffering argument. When you call your legislator, lead with the three to one ratio and the Michigan analysis, then tell them about your kid. Suffering moves the members who were already with you. Cost effectiveness moves the ones who were not.
None of this was inevitable. Congress chose the optional column knowing what was in it. Different choices were available, and other countries and other states have made them. Now we know what we are fighting.