Illinois Built the DSP Wage Into the Rate. Michigan Stacked Three Temporary Add-Ons.
Both states raised direct care wages. Only one of them made the raise permanent. Michigan’s entire increase sits on top of the base rate as a passthrough that has to be re-funded, and that structural difference is the whole story.
Michigan’s required wage reached $17.13 on January 1, 2026, and reporting through 2026 says many community mental health services programs have not passed that funding to providers and families. Nobody is auditing this at the household level. If your provider says no, that is a finding, and it belongs in three minutes of public comment at your CMHSP board meeting. An appropriation that does not arrive still gets counted in Lansing as a workforce solution.
$13.73
Michigan base rate
The base direct care wage in the rate. Everything above it is a passthrough that exists only because a legislature appropriated it again.
Illinois: $20.50
The Illinois DSP wage rate effective January 1, 2025, statewide, with a Chicago Metro rate of $23.58. It sits inside the rate methodology rather than on top of it.
Three separate votes
Michigan’s $3.40 passthrough was assembled from FY22 at $2.35, FY24 at $0.85, and FY25 at $0.20. Three appropriations, three chances to say no.
$563.4M
Gross ongoing cost
The cumulative gross cost of Michigan’s $3.40 in wage increases, about $198.8 million of it General Fund. This is a recurring obligation dressed as a series of one-time decisions.
The FY27 ask
A $1.27 per hour increase effective January 1, 2027 requires $182.2 million in gross Medicaid funding. It is not scheduled. It is requested.
Ohio’s benchmark
Ohio implemented Medicaid provider rate increases in January and July 2024 with the stated expectation that the statewide average DSP wage would reach at least $18 per hour once fully implemented.
How Michigan’s $3.40 was assembled
I got the raise. Then my supervisor told me it was funded through September and she genuinely did not know what happened after that. I have a kid and a car payment. I took a job at a distribution center where nobody tells me my wage expires.
Push for permanence, not another add-on
Ask for these, in this order
- 1Ask your provider whether the current passthrough arrived, and get the answer in writing.
- 2Take three minutes of public comment at your CMHSP or PIHP board meeting and report what your provider told you.
- 3Write your state representative and senator naming the FY27 increase and the $182.2 million figure specifically.
- 4Ask them, in the same letter, whether any bill would build the direct care wage into the rate methodology rather than appropriating a passthrough.
- 5Ask for a legislative fiscal analysis comparing the ongoing cost of a rate-based wage against the recurring cost of annual add-ons.
- 6Testify during the spring appropriations subcommittee hearings on health and human services, when the decision is actually open.
Facts to keep in the letter
- Michigan base rate: $13.73 per hour
- Cumulative passthrough: $3.40 per hour
- Required total effective January 1, 2026: $17.13
- Assembled from FY22, FY24, and FY25 appropriations
- Cumulative gross cost: $563.4 million, $198.8 million General Fund
- FY27 increase requested: $1.27, requiring $182.2 million gross
- Illinois statewide DSP rate, January 1, 2025: $20.50
- Whether your own provider received the passthrough
The question is not whether Michigan pays direct care workers enough. It is whether Michigan has decided what they are paid, or is deciding again every year.
A direct support professional in Genesee County told me she got her raise and then found out it was funded through September. She left for a distribution center about six weeks later. She liked the work. She could not plan a life around a wage with an expiration date.
I have written a lot about how far behind Michigan’s direct care wages are. This post is about something different and, I think, more important. It is about the difference between raising a wage and setting one.
What Michigan actually did
Michigan’s required direct care worker wage reached $17.13 per hour effective January 1, 2026. That number is not one thing. It is a $13.73 base rate plus a $3.40 mandatory passthrough sitting on top of it.
The $3.40 was assembled over four years out of three separate appropriations. FY22 added $2.35 per hour at a gross cost of $414.5 million, about $146.1 million of it General Fund. FY24 added $0.85 at a gross cost of $120.2 million. FY25 added $0.20 at a gross cost of $28.7 million. Cumulatively that is $563.4 million gross and about $198.8 million General Fund.
Look at the shape of that. $2.35, then $0.85, then $0.20. The increases get smaller each time, which is what happens when something has to be re-argued from zero in every budget cycle. The first year has momentum. The fourth year has fatigue.
What Illinois did instead
Illinois set a DSP wage rate of $20.50 per hour statewide effective January 1, 2025, with a Chicago Metro rate of $23.58 reflecting a geographic multiplier. That number lives inside the rate methodology.
The mechanism behind it matters more than the number. Illinois operates under the Ligas consent decree, which obligates the state to fund community services adequately. The state commissioned a rate study, which recommended a specific wage increase to meet those obligations. And Illinois attached budget language requiring that wage funds actually go to base wages, with employers certifying compliance.
That is three things Michigan does not have. A legal obligation forcing the question. A rate study establishing what adequacy costs. And a compliance mechanism ensuring the money lands in a paycheck rather than dissolving somewhere in the administrative chain.
Ohio, for a third data point
Ohio implemented Medicaid provider rate increases effective January 1 and July 1 of 2024, with the stated expectation that once fully implemented, the statewide average DSP wage would be at least $18 per hour.
Ohio’s approach is worth noting because it is neither Michigan’s nor Illinois’s. It raised the provider rate rather than mandating a wage, and it set an expected outcome rather than a floor. The Ohio Department of Developmental Disabilities sets provider rates, not individual employee wages, so the increase reaches workers through employer decisions rather than through a mandate. Whether that works depends on the labor market and on the employer, which is a real limitation and Ohio is fairly upfront about it.
But it is still a rate change. When the rate goes up, it stays up until somebody changes it. That is structurally different from an add-on that lapses unless somebody renews it.
Why the structure matters more than the number
Here is the part I most want Michigan families and legislators to sit with. A wage that has to be re-funded every year does three specific kinds of damage that a rate-based wage does not.
It cannot be planned around by a worker. The woman in Genesee County did not leave because $17.13 is a bad wage. She left because she could not tell whether it would still be her wage in October. People make life decisions on expected income, not current income, and an expiring raise is not expected income.
It cannot be planned around by a provider. A provider deciding whether to open a residential program is making a five year commitment on a wage line that is funded for one. When 52% of providers nationally say they are considering further program cuts, uncertainty is doing part of that work. You cannot build capacity on a variable you do not control and cannot forecast.
It puts the burden of advocacy on families, forever. This is the part that makes me tired. A rate-based wage requires one legislative fight. A passthrough requires the same fight, every year, with the same families writing the same letters, against a legislature that reasonably feels it already handled this. Structural solutions retire problems. Add-ons rent them.
And the money is not always arriving anyway
There is one more wrinkle in Michigan, and it is the reason I keep telling families to ask their provider directly.
Reporting through 2026 indicates that many community mental health services programs have not provided the additional funding to providers and families for the direct care worker wage increase. The state appropriated a raise. Whether the raise reached a person doing the work is being answered county by county, and largely without anyone auditing it.
So Michigan’s structure has two failure points where Illinois has neither. The appropriation might not happen, and if it does happen, the money might not arrive. Both of those are consequences of running a wage as an add-on through a multi-layered administrative chain rather than building it into the rate the chain is paid.
What to ask for
The FY27 increase is $1.27 per hour effective January 1, 2027, and it requires $182.2 million in gross Medicaid funding. Advocating for it is worth doing and I will be doing it.
But do not only ask for that. Ask the structural question in the same letter. Ask whether any bill would build the direct care wage into the rate methodology rather than appropriating another passthrough. Ask for a fiscal analysis comparing the ongoing cost of a rate-based wage against the recurring cost of annual add-ons, because I suspect the honest comparison favors permanence and nobody has been asked to run it.
Michigan has now spent $563.4 million gross to raise direct care wages by $3.40 an hour, and it still has to do it again next year. Illinois spent money too, and it does not. That is not a difference in generosity. It is a difference in whether anyone decided to finish the job.