https://www.cms.gov/newsroom/press-releases/cms-takes-bold-new-approach-stewarding-medicaid-demonstration-project-spending

https://www.medicaid.gov/federal-policy-guidance/downloads/smd26003.pdf

• Implement the statutory requirement for an independent certification of a demonstration’s budget neutrality by the CMS Chief Actuary;
• Ensure states clearly demonstrate how proposals will be budget neutral through improved beneficiary health outcomes;
• Maintain state flexibility to test new approaches within defined fiscal guardrails; and
• Strengthen accountability and support careful stewardship of federal dollars to deliver measurable value for patients and taxpayers.

One major caveat about drawing conclusions from these statistics: Is Michigan's population actually growing as the Census Bureau claims, or is it actually declining?  The Census Bureau has been known to routinely cook their books to promote their political agenda, which is to maximize the number of congressional districts in blue states and minimize them in red states:

https://www.mlive.com/news/2026/06/michigans-medicaid-decline-puzzles-experts-though-they-expect-more-to-lose-coverage.html

https://ccf.georgetown.edu/2026/06/10/which-states-are-seeing-the-largest-declines-in-child-medicaid-chip-enrollment/

https://www.newsweek.com/states-seeing-biggest-obamacare-enrollment-drops-12072590

https://files.gao.gov/reports/GAO-25-107160/index.html

Michigan’s Medicaid decline puzzles experts, though they expect more to lose coverage
By Justin P. Hicks | June 17, 2026

Michigan has seen one of the largest decreases in the nation in Medicaid enrollment in recent years.

As of February, there were nearly 2.03 million Michiganders enrolled in the comprehensive safety-net insurance program for low-income people and families. That was about 235,744 fewer people, or a 10% decline, from the same month in 2020, according to the Centers for Medicare and Medicaid Services (CMS).

Some of the people who lost Medicaid coverage may have secured health insurance through the commercial marketplace instead, explained Dominick Pallone, executive director of the Michigan Association of Health Plans.

Others may have dropped down to a less comprehensive public program because they were no longer eligible or didn’t provide the state with enough information to prove eligibility for full coverage.

However, the health insurance buckets collectively haven’t seen a corresponding increase to explain what has happened to the Michiganders who have lost their Medicaid coverage.

“We’re not exactly sure what’s going on but it’s a concern for us,” Pallone said. “That’s kind of the core question driving us right now to work with our partners at MDHHS and other entities; how do we make our enrollment process a little bit better and how do we prevent as many people (as possible) from falling through the cracks?”

More concerning is how many more residents will lose Medicaid coverage and may wind up uninsured in 2027 when new eligibility and reporting requirements take effect.

“To see a continued loss month over month, that we’re worried about, and we know those numbers will get a lot worse,” Pallone said.

Officials with the Michigan Department of Health and Human Services (MDHHS) say the agency is monitoring Medicaid trends closely, including that enrollment is lower now than it was at the end of 2024 -- long after the post-COVID renewal process concluded.

A spokesperson said the department remains committed to ensuring eligible residents can access and keep the coverage they rely on.

“Ensuring Michigan families have access to affordable health care is a priority,” according to MDHHS. “Identifying and understanding the factors driving this decline is an important area of focus for the department.”

Latest on Medicaid changes

Medicaid is available to pregnant women, children and teenagers, and people with disabilities, with eligibility based on income and family size. As of February, the program supported more than 67 million Americans.

In Michigan, Medicaid, the Children’s Health Insurance Program, and other limited-benefit joint federal-state programs provide health insurance for roughly one in every four residents, or as many as 2.7 million people.

Last summer, President Donald Trump signed the One Big Beautiful Bill Act, which included cuts to Medicaid by way of new work requirements and more frequent eligibility checks for Medicaid expansion recipients.

The administration has said it wanted to “root out fraud, waste and abuse in Medicaid.” According to CMS, the program’s latest improper payment rate was about 6%, and 77% of those payments were the result of insufficient documentation.

“These payments typically involve situations where a state or provider missed an administrative step and do not necessarily indicate fraud or abuse,” CMS said in its online fact check.

Starting in January 2027, Medicaid expansion recipients who are able-bodied will be required to work at least 80 hours per month in order to continue to receive benefits.

Exceptions will be in place for people 65 and older, parents with children younger than 14, pregnant women, and those who are medically frail -- a definition the government rolled out on June 1.

Health plans wanted the medical frailty definition to be looser than what was announced, Pallone said. They also wanted enrollees to be able to self-attest their hours of work, community service or work program, though the government denied that option.

“You need to have some kind of third party validating that they’ve met those required hours,” Pallone said. “The problem is going to be in Michigan, that data is going to be in very different places. We’ve got a lot of work ahead of us to operationalize all of this.”

People who fail to verify their hours will get a notice of noncompliance and 30 days to demonstrate compliance before they are disenrolled from Medicaid.

Industry leaders and research groups have said the Medicaid changes will cause millions of Americans to lose coverage, including up to 200,000 residents in Michigan.

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, said Matthew Buettgens, senior fellow at the Urban Institute.

“The benefits of having coverage are pretty broad across a number of different areas of life,” Buettgens said in a statement. “So, interruptions in that coverage could disrupt both health and financial security.”

Michigan’s shrinking enrollment

During the COVID-19 pandemic, the federal government paused Medicaid disenrollment for three years, which kept more people covered through the public health emergency. That was followed by an unwind period, when enrollment declined as expected beginning spring 2023 and concluding fall 2024.

U.S. Medicaid enrollment climbed from 64.5 million in February 2020 to 86.6 million in February 2023. That total fell 22% over the next three years to almost 67.7 million.

KFF, the San Francisco-based research nonprofit, recommends using February 2020 as a baseline month since it was before the start of the COVID-19 pandemic and the continuous enrollment provision. In the six years since then, U.S. Medicaid enrollment increased 5% with 30 states seeing higher enrollment.

Among the 20 states that reported a decline, only Montana and Louisiana had larger dips than Michigan.

While Michigan’s comprehensive Medicaid enrollment dropped 10% over six years, its Children’s Health Insurance Program (CHIP) enrollment increased 149%. Together, the combination had an enrollment decline of 6% -- the sixth largest dip during that period.

However you look at the numbers, Pallone said his association is concerned that the number of residents currently enrolled in Medicaid is lower than the number of eligible people, meaning more folks are likely left uninsured or underinsured.

Michigan’s uninsured rate was 5.2% in 2024, according to data published by the University of Michigan’s nonprofit health policy center. That rate was up from 4.6% the year prior.

The population going without health insurance was in the double-digits before the Affordable Care Act expanded Medicaid eligibility. Michigan’s rate was more than halved between 2010 and 2015 and hasn’t surpassed 6% for almost a decade.

Medicaid expansion has also been associated with increased use of primary care, reduced use of emergency care, better health, higher employment, and less financial stress for both patients and hospitals, according to research published this month by U-M.

What should Michiganders do to prevent coverage loss?

The No. 1 guidance Pallone has for Medicaid recipients is to keep an eye out for correspondence from their health plan and the state about redetermination. That includes calls, texts, emails and letters.

When the state doesn’t hear back from enrollees, they’re forced to make determinations based solely on what they can prove. That may mean you’re dropped down to a lesser plan and you don’t realize it until you’re seeking care and get denied coverage.

“We’ve heard from folks in the program that the communication from there can be a little confusing,” Pallone said. “Maybe you missed something for your redetermination for Healthy Michigan and then you get something in the mail that says, Congrats, you’re enrolled in Plan First (a Medicaid category with limited benefits).”

Along those lines, enrollees need to make sure their contact information and mailing address are up to date on the state’s MI Bridges website. They can also do so in an MDHHS branch office, or by calling the help desk at 844-799-9876.

“I’ve heard from people that believe it’s a foregone conclusion they’re going to lose coverage,” Pallone said. “My response to them is when the department sends something to you for redetermination, fill it out. Let someone tell you whether you’re in or you’re out of the program.”

Residents who lose Medicaid coverage will qualify for a special enrollment period through the Healthcare Marketplace. For more information, visit healthcare.gov/medicaid-to-marketplace.

https://www.cms.gov/newsroom/press-releases/cms-launches-nationwide-framework-implement-medicaid-work-requirements

Kaiser Family Foundation, a left-leaning West coast healthcare giant, breaks down the new rule's impact for patients with many source links and a map of US states according to Medicaid Expansion status.

Michigan, a Medicaid Expansion state, euphemized its program as "Healthy Michigan" under the Snyder Administration.

https://kffhealthnews.org/medicaid/medicaid-work-requirements-final-rules-exemptions-trump-cms/

Final Rules for Medicaid Work Requirements Are Out. Here’s What You Need To Know.

Sam Whitehead    |    June 12, 2026

This story also ran on States Newsroom. It can be republished for free.

The Trump administration has issued final rules on how states should ensure that millions of Medicaid enrollees prove they’re working or completing other activities, such as job training, volunteering, or being enrolled in an educational program.

The Centers for Medicare & Medicaid Services released the rules on June 1. That deadline was set last year in the GOP tax-and-spending law known as the One Big Beautiful Bill Act, which established a work requirement for certain people enrolled in Medicaid, the state-federal health insurance program for people with low incomes or disabilities.

Medicaid agencies are scrambling to rework IT systems and make sure they have staff to effectively enforce the rules, while also keeping enrollees from losing coverage for administrative reasons, such as difficulty navigating state eligibility portals.

The newly announced regulations offer a clearer picture of what roughly 18.5 million Medicaid enrollees will have to do to prove they qualify for benefits.

Jim Torres, who helps people enroll in health coverage at the Samuel U. Rodgers Health Center in Kansas City, Missouri, said a “very small percentage” of his clients have heard of the changes coming to Medicaid.

“These folks have very busy lives. They’re doing the best they can to get by,” he said. “It’s just not a top-of-mind thing for most of them.”

Health policy researchers and consumer advocates said enrollees should keep a few things in mind as the Jan. 1, 2027, rollout approaches in most states.

1. The work rules won’t apply to everyone.

The new rules will apply to people covered through what’s known as Medicaid expansion. Since 2014, more than 40 states and the District of Columbia have decided to allow more people into their Medicaid programs, generally low-income adults without dependents. Georgia and Wisconsin offer coverage to some people in this group, so they’ll be subject to the rules.


Children and pregnant people, as well as individuals with disabilities who receive Social Security payments — all groups that already qualify for Medicaid — won’t be subject to the rules. Nor will people determined to be “medically frail,” or too sick to work.

People subject to the work rules are “crowding out” people in the Medicaid program who are “truly in need,” CMS Administrator Mehmet Oz claimed during a June 1 press call. “Work requirements are going to turn this around, we hope.”

The rules are set to take effect in most places in January. Nebraska started enforcing them in May. Montana plans to start in July but won’t kick people off until October. Arkansas will do a “soft” launch in July — it will start enforcing the rules but with no penalties until next year.

2. States will take your word that you’re too sick to work. For now.

Federal officials have stressed that states should make the process of reporting hours and requesting exemptions as simple as possible for Medicaid enrollees by creating automated systems and using existing data sources, such as unemployment and education records.

If states cannot determine you’re performing 80 hours of qualifying activities a month using those data sources, you may be allowed to “self-attest” to that in 2027, health policy researchers said.

People will also be allowed to “self-attest” that they are too sick to work in 2027, and do so one time in 2028. Then states will start asking for proof, if they can’t find it through available data.

But after the initial rollout, the burden of proof is likely to still fall on many enrollees, said researchers and consumer advocates.

People may need to dig up pay stubs, medical records, and doctors’ notes and submit them for state review, said Morgan Henderson, who has studied Medicaid work programs in Georgia and Arkansas at The Hilltop Institute, a research center at the University of Maryland-Baltimore County.

“The higher this manual reporting burden, the less people are going to do it,” he said. “That means that we’re going to see coverage drop-offs.”

3. The rules are tougher than expected for people too sick to work.

One of CMS’ primary goals has been to “protect vulnerable populations” through “strong exemptions to make sure people who can’t reasonably be expected to work are not subject to the requirements,” Dan Brillman, a deputy administrator at the agency, said during the June 1 press call.

Consumer and patient advocates, however, said the final rules’ exemptions are more restrictive than expected. Enrollees will eventually have to provide documentation, such as a statement from a medical professional, to prove that a health condition keeps them from working. And each individual state will have to determine the severity of beneficiaries’ medical conditions.

“Someone could be medically frail in Nebraska but not medically frail in Delaware,” said Carolyn Sheridan, associate director of state policy for the National Organization for Rare Disorders, which lobbies for patients with rare diseases. She said her group had hoped the rules would offer a standardized definition of who counted as medically frail and not leave the decision up to states.

Trump administration officials have publicly crusaded against fraud in government health programs, such as Medicaid, and states could face financial penalties for incorrectly granting people exemptions from the work rules, said Jennifer Tolbert, who researches Medicaid at KFF, a health information nonprofit that includes KFF Health News.

“States may be more cautious,” she said. “That will likely lead to people losing coverage who may still be eligible.”

4. Only certain qualifying activities count.

Enrollees can satisfy the rules by working 80 hours a month. They can also be enrolled in college courses, volunteer through a community organization, or do “in-kind” work that doesn’t result in pay.

The rules set out, in detail, how many academic credit hours translate to 80 hours a month — students need to be enrolled in six credit hours per semester to meet the “half-time” requirement. An unpaid internship can count toward the 80 hours.

People can also prove they’re volunteering with “a document from a community service organization.”

Consumer advocates say it might be hard for people to obtain proof they’re performing these kinds of informal activities. But supporters of the rules say volunteerism can already be tracked.

“If you run into trouble with the law and the judge says, ‘Hey, you need some volunteering and community service to serve your time,’ there are already ways that we verify that,” said Niklas Kleinworth, who works on state health policy for the conservative Paragon Institute.

5. You have time to prepare.

Make sure your state Medicaid agency has your current mailing address and keep your eye on your mailbox, said researchers and consumer advocates. State Medicaid agencies must inform you in two ways if you’ll be subject to the rules — by either regular mail or email, and by one other form of communication, such as a text or phone call or by posting a notice online.

“The important stuff comes by mail,” Henderson said.

And check in with your state Medicaid agency, said researchers and advocates. Some states, including Arkansas, California, and Wisconsin, have already posted information about the work rules on their websites. If you can’t find what you’re looking for there, visit or call a local office. A caseworker should be able to tell you whether you’ll be subject to the rules.

“Get ahead of this,” said Joan Alker, who is executive director of the Georgetown University Center for Children and Families and studies Medicaid. “So that you don’t end up going to the pharmacy one day and they say, ‘Oh, you’re not insured anymore’ when you’re trying to get your prescriptions refilled.”

KFF Health News correspondent Samantha Liss and senior correspondent Rachana Pradhan contributed to this report.

https://bridgemi.com/michigan-health-watch/michigan-medicaid-rolls-drop-5-prompting-fears-of-surge-in-uninsured/

• It’s unclear why 149,000 fewer Michiganders are covered by Medicaid now than at the end of 2024, nor is it clear how many have found coverage elsewhere or are now uninsured.
• About 149,000 Michiganders have lost Medicaid coverage in a 16-month period
• No one’s sure why, but they have theories
• It’s a particular concern now, as Michigan and other states prepare to enforce federal requirements that could squeeze more people from coverage

As states prepare to tighten access around Medicaid benefits, Michigan is facing the possibility of a big rise in people without health insurance.

That includes more than 149,000 people who have already vanished from its Medicaid program in the last 16 months for reasons that elude many experts.

They do not appear to have gained coverage through employers — at least not all of them, according to the Michigan Association of Health Plans, which tracks insurance enrollment data.

Nor do those 149,000 — representing a drop of more than 5% in total enrollment — appear to have migrated en masse to the federal marketplace where consumers buy insurance directly.

It’s a particular concern now for advocates for Michigan’s low-income and disabled residents, who worry that many of those 149,000 residents are now uninsured.

“We just don’t know what is driving that loss in enrollment,” said Dominick Pallone, executive director of the insurance association.

There are several theories for the decline — from confusion about ever-changing policies to the immigration crackdown to cuts in critical staff. Some even cite a better economy.

But it comes as even more Michiganders are likely to lose coverage through Medicaid starting next year.

Michigan and other states are gearing up for new federal requirements that will force beneficiaries next year to prove they are working, looking for work, engaged in the community, going to school or in a training program.

The Trump administration is still releasing guidance on those requirements — the latest arrived this week. In Michigan, the Whitmer administration has estimated that up to 200,000 residents will lose coverage under the new requirements, including some who are eligible, but fail to submit all their necessary documentation.

“We’re looking down the end of the barrel here,” said Jeremy Lapedis, executive director of the Washtenaw Health Project, an Ann Arbor-based nonprofit that works with the Washtenaw County health department to help residents find affordable coverage.

Left without coverage, those Michiganders will seek treatment only when it’s most serious and most expensive, Lapedis said.

It’s a problem that leads to medical debt for the individual and drives up health care costs for everyone.

“Those costs (for uninsured people) have to shift somewhere — whether it’s on the hospitals or places like ours,” said Jessica Kowalski, deputy director of clinical operations at the ACCESS Community Health and Research Center, a Dearborn-based community service organization that provides medical care.

The drop in Medicaid enrollment over the past year or so — even before new federal requirements, “may be a precursor to what we’re going to see in the future, which is just a huge stress to the entire health care system,” said Jeremy Lapedis, executive director of the Washtenaw Health Project, an Ann Arbor-based nonprofit that works with the Washtenaw County health department to help residents find affordable coverage.

In fact, the numbers of Michiganders covered by Medicaid significantly dropped the latter half of last year — more so than the US in general, according to KFF, a San Francisco-based nonprofit focused on health research.

At ACCESS, staff see the change firsthand, said Kowalski.

“People are coming in and we check their insurance,” Kowalski said, “and we tell them, ‘Your insurance is inactive.’ They’re shocked. They’re like, ‘What do you mean?’”

State officials appear baffled at the loss, too.

The Michigan Department of Health and Human Services is “monitoring this trend closely,” department spokesperson Laina Stebbins said in an email to Bridge.

“Identifying and understanding the factors driving this decline is an important area of focus for the department,” she wrote.

Post-COVID rightsizing or a concern?

There’s an argument that Michigan’s Medicaid program — one that cost $25 billion in 2024, according to the most recent numbers — is simply being made more efficient and slicing out what critics, including President Trump, say is waste and abuse.

Whatever the cause for the declining enrollment, it means less taxpayer money being spent on Medicaid in the short-term.

Cost savings weren’t immediately available on Wednesday but likely tally tens of millions of dollars a year.

By one 2022 estimate, an additional 775,000 people getting Michigan Medicaid during the pandemic cost Michigan taxpayers $50 million a month.

“It’s always easy to take the negative side of this, but I think the good part is that we’ve been able to graduate some people off Medicaid,” state Rep. Curt VanderWall, R-Ludington, said. “They’ve actually found full-time employment … and (become) independent.”

State Rep. Phil Green, R-Watertown Township, agreed. He’s vice chair on the House Appropriations Subcommittee on Medicaid and Behavioral Health.

There’s a “plethora of reasons” — good and bad — behind the disenrollments, he said.

“I think without doing … exit interviews, we’re just sort of surmising,” the reasons behind the enrollment drop, he said.

And long term, the shrinking enrollment is less stark: Enrollment last month remained slightly above enrollment just prior to the pandemic: There were about 46,000 more people in Medicaid in April then in March 2020, the month Michigan confirmed its first COVID case.

‘Churn’

Certainly, monthly enrollment in Medicaid fluctuates. It exploded, in fact, during COVID.

As the pandemic gripped the US in 2020, Michigan and other states suspended annual eligibility reviews that caused a “churn” of people in and out of Medicaid each month.

With few exceptions, federal law prevented anyone from being disenrolled from Medicaid during the pandemic. The goal was to help people remain insured during the global health scare and economic upheaval.

By June 2023, that meant that nearly 3.3 million Michiganders — nearly

1 in 3 — was covered either by traditional Medicaid, which generally covers the lowest-income or disabled residents, and Healthy Michigan, which covers those whose family income is up to 138% of the federal poverty level and are relatively healthy.

In June that year, annual reviews restarted under the direction of the Biden administration. The year-long process, known as “unwinding,” whittled Michigan’s Medicaid back to fewer than 2.7 million by the end of 2024, according to state data.

That’s when experts expected enrollment to stabilize.

But since then, enrollment has continued to tumble — to just over 2.5 million by the end of April 2026, according to state data.

“You would have expected (the decline) to level off at some point,” said Lapedis at the Washtenaw Health Project. “It hasn’t, and we don’t know why.”

Moreover, more than 175,000 Medicaid beneficiaries are now enrolled in Plan First, a Medicaid plan launched in 2023 that provides narrow coverage limited to sexual health only.

While Plan First beneficiaries would have no coverage at all otherwise, their numbers further inflates the total size of Michigan’s Medicaid enrollees, said Pallone at the insurance industry group.

Anxiety, aging and other theories

Advocates have offered several theories for the drop in Medicaid enrollment. Among them: anxiety.

The debate last year and ultimate passage of the “Big, Beautiful Bill,” made it clear that big cuts and stricter rules in Medicaid are ahead.

Confused, some Michiganders “might just not be re-enrolling or applying to begin with,” said Amber Bellazaire, a senior policy analyst for the Michigan League for Public Policy, a Lansing-based nonprofit organization that advocates for low-income Michiganders.

Additionally, a high-profile, nationwide crackdown on immigration likely forced down enrollment, too, said Jennifer Tolbert, deputy director of the Program on Medicaid and the Uninsured at KFF, a nonprofit health policy research, polling, and news organization.

Undocumented immigrants do not have access to full Medicaid benefits in Michigan; however, they may get emergency care, according to state eligibility criteria.

“That population is on edge right now for good reason,” agreed Pallone, at the insurance group. “They could be a total lawful citizen, properly enrolled in Medicaid … and worry that they’re going to get swept up in some ICE raid at (a state government) office if they go and show up to reapply.”

Another theory: Michigan is aging faster than other states. About 380 Michiganders each day turn 65, the age at which they age into Medicare.

And it may be, as VanderWall suggested, that some Michiganders have taken higher-paying jobs after the pandemic, and they’re accessing insurance now through their employers or the individual marketplace, www.healthcare.gov, Pallone said.

Still, any growth in Medicare, employer-sponsored or marketplace plans falls far short of 149,000 people, he added.

‘Slashed’

Pallone also believes short staffing at local state offices has disrupted coverage for some beneficiaries who need in-person help.

“That’s a leading theory right now,” he said.

Finally, the Trump administration last year slashed nearly all funding for navigators, the on-the-ground staff that help Americans sort through options and enroll in coverage, said Kowalski at ACCESS.

For its part, Michigan’s funding dropped from $2.8 million to $280,000, forcing ACCESS to cancel its 22 contracts with navigators throughout the state and to lay off two of its own staff, Kowalski said.

All of this leaves the question: Are the 149,000 people now without coverage?

“We’re a bit at a loss,” Pallone said.

Governor Whitmer cut Doug Ringler's 2026 budget by 28% to conceal financial improprieties within our state government.  One of several reasons Michigan residents are blissfully ignorant of Medicaid fraud.  Faber's Ohio auditing operation has about six times the budget that Ringler's Michigan auditing operation has, and really much more due to backcharging for many audits.  Ohio's state budget is smaller than Michigan's, at about $ 60 billion, but they distribute functions between the state and localities differently so Faber has purview over about the same level of expenditures.

You get what you pay for, which in the case of Michigan, is corruption.

This post by Mr. Faber makes mention of "anomalies" in Franklin County.  Franklin has the second greatest number of Somalis in the United States, after Hennepin in Minnesota.  The Ohio state capitol, Columbus, is in Franklin County and it is the most populous county in Ohio:

https://www.foxnews.com/opinion/im-ohios-state-auditor-medicaid-fraud-washington-problem

• In 2020, we identified more than $455 million in Medicaid benefits paid to ineligible recipients due to flawed oversight.
• In 2022, we found that state agency administrators failed to recover $118.5 million in duplicate or improper payments tied to prison inmates and dead people.
• In 2022, we also noted agency-level failures to act on multi-state enrollment eligibility alerts that cost taxpayers up to $24.5 million.
• In 2024, an audit identified more than 124,000 people enrolled in Medicaid programs across multiple states, with Ohio paying managed-care organizations more than $1 billion for potential duplicate services.

These private insurers are exempt from the normal federal limits on fees that states can claim to finance Medicaid services. Routing money through these firms also makes funding much harder to track, letting states obtain billions of dollars in federal aid every year for purposes Congress never approved.

Chris Pope, a senior fellow at the Manhattan Institute, has studied these middlemen's contracts and produced an interesting report.  His cover story:

https://www.city-journal.org/article/medicaid-managed-care-organizations-insurance

https://www.medicaid.gov/Medicaid/downloads/michigan-mcp.pdf

https://media4.manhattan-institute.org/wp-content/uploads/reining-in-medicaid-managed-care.pdf

Medicaid’s Costly Middleman
States subcontract with private insurers to side-step limits on federal funding.
By Chris Pope - May 29, 2026

Medicaid was established in 1965 as a system of federal matching funds for states to deliver health care to low-income Americans. Initially, all states paid directly for medical services, but they increasingly subcontracted with private insurers, known as Managed Care Organizations, to administer and procure care. By 2024, 42 states employed MCOs to deliver Medicaid benefits to 78 percent of the program’s enrollees—at a cost of $491 billion.

That arrangement raises uncomfortable questions. Why do states subcontract Medicaid to private insurers if the government provides all the money, tells the insurers what they must cover and how much they have to pay for it, and doesn’t competitively bid the contracts? What’s the point of these middle men?

The answer, as I show in a new Manhattan Institute report, is that private insurers are exempt from normal limits on fees that states can claim from the federal government to finance Medicaid services. Routing money through these firms makes funding much harder to track—in turn letting states obtain billions of dollars in federal aid every year for purposes Congress never approved.

Managed care was originally meant to reduce needlessly high prices and volumes of health-care services. For Medicare, for example, the federal government’s Medicare Advantage program effectively gives beneficiaries a voucher to buy managed-care plans from private insurers. This arrangement in turn motivates insurers to procure cost-effective medical procedures and to encourage the use of preventive care services. For Medicare, the managed-care approach has worked well: it has helped avoid expensive hospitalizations, yielding better medical outcomes at lower cost.

But management by private insurers fits more awkwardly into Medicaid. Plans cannot compete for enrollees by reducing premiums since the government provides all the funding. Insurers must accept every eligible beneficiary who seeks to enroll, which creates a strong incentive for them to skimp on quality medical services that could attract seriously ill (and therefore expensive) beneficiaries. The program’s benefits and payments to providers are therefore specified in detail by law, which leaves little room for innovation.

The resultant system often works poorly. It’s hard for states to specify, regulate, and assure the quality of access to medical care indirectly through contracts with insurers. They often fail to enforce adequate provider networks as required by law, and denials of care due to prior authorization are much more common in Medicaid Managed Care (13 percent) than in Medicare Advantage (6 percent), due to the absence of federal oversight.

The government can more effectively (and efficiently) assure satisfactory access to care if it pays for it directly. That is also true of preventative care services, such as vaccinations or care coordination assistance, which are supposedly the strength of managed care. But Medicaid patients with major disabilities, who need the most care coordination assistance, are often specifically exempt from managed care by states.

As my new report details, the savings promised during Medicaid Managed Care’s expansion over the past four decades have consistently failed to materialize. Medicaid already pays very low rates for hospital care, physician services, and drugs, due to mandatory discounts. Few additional savings can be gained from further narrowing provider networks.

The involvement of private insurers tends to add another layer of administrative costs to Medicaid. These firms must negotiate contracts with providers, finance required capital reserves, advertise themselves to beneficiaries, and generate profits for shareholders. The government must police overpayments to plans and to providers. Payments to plans are often inflated. Three quarters of states pay Medicaid insurers without competitive bidding due to a concern that the winner of such bidding would be the insurer that most underestimated the cost of delivering care to beneficiaries.

To mitigate this risk of insolvency, the federal government requires that state Medicaid payments to insurers exceed their expected medical costs. But, as states typically sign three-to-five-year contracts with insurers, this effectively locks them into a higher level of expenditure and prevents them from reining in commitments when program costs increase. This arrangement also undermines the central point of managed care by encouraging insurers to inflate the volume of medical services they fund in order to increase the payments that states must give them.

Given all this, why do most states subcontract Medicaid to private insurers? The answer is that doing so expands access to free-flowing federal dollars.

Medicaid allows states to claim up to $9 in federal funding for every $1 they spend on services covered by the program—without any upper limit. But payments to private insurers are exempt from normally tight limits on fees and services that states can use to claim this enormously lucrative federal matching aid. By routing payment for Medicaid services through private insurers, states can greatly inflate the funding they obtain from Washington.

Such “Medicaid money laundering” schemes have become notorious in recent years. Subcontracting with private insurers allows states to lump together expenditures for different services, obscuring how the funding gets used. A 2021 federal investigation found that only eight states provided complete and accurate data on the utilization of medical services, the data on which states base Medicaid payments to plans.

The workarounds can be elaborate. California obtained $19 billion in federal funding by taxing insurers it used to cover Medicaid patients—claiming that this represented an increase in the program’s costs. Various states use Medicaid MCOs to expand welfare benefits from housing to food under the pretext that doing so yields incidental health benefits. The federal government estimates that the exemption of managed-care plans from limits on Medicaid payments for services will account for $145 billion in Medicaid spending this year alone.

Last year’s One Big Beautiful Bill Act sought to curb such practices. But Medicaid Managed Care still makes it easy for states to develop similar schemes in the future, which will likely enable them to side-step whatever restrictions emerge.

VP Vance is joined by Steve Miller and other task force members. I haven't seen AG Nessell yet, though it seems likely she's there.

https://www.youtube.com/watch?v=BGL881xe0EA

https://www.justice.gov/criminal/criminal-fraud/health-care-fraud-unit/2026-minnesota-hcf-case-summaries

2026 Minnesota Medicaid and Benefits Fraud Takedown
Cases Filed in the District of Minnesota

Cases Filed in the District of Minnesota

https://www.justice.gov/opa/pr/minnesota-health-care-fraud-takedown-results-charges-against-15-defendants-over-90m-fraud

Minnesota Health Care Fraud Takedown Results in Charges Against 15 Defendants for Over $90M in Fraud
For Immediate Release - Thursday, May 21, 2026
DoJ Office of Public Affairs

National Fraud Enforcement Division announces expansion of Health Care Fraud Section to investigate Medicaid fraud nationwide
The Justice Department today announced the Minnesota Health Care Fraud Takedown, which resulted in criminal charges against 15 defendants, including owners of child care centers and various Medicaid providers, for their alleged participation in various fraud schemes involving over $90 million in intended loss, including the two largest Medicaid fraud cases ever charged in the District and first-of-their kind charges involving additional Medicaid programs. The Justice Department also announced a major investment in combatting Medicaid fraud through a significant expansion of the Division’s Health Care Fraud Section, allocating funding to permit the hiring of 15 new Trial Attorney positions to combat Medicaid fraud across the United States.

“Today, we are holding scammers accountable who ripped off the American taxpayer and harmed those deserving legitimate assistance from these programs,” said Acting Attorney General Todd Blanche. “These alleged con artists stole taxpayer dollars while providing substandard care for children and abandoning at least one Medicaid recipient as they passed away. The DOJ Fraud Division, along with the White House’s Task Force to Eliminate Fraud, will dismantle illegal schemes from coast-to-coast, just as they did today in Minnesota. This is just the tip of the iceberg.”

“Driven by data showing a significant increase in Medicaid fraud across the country, the 15 additional prosecutors will serve as a force multiplier for our existing Strike Forces to combat this critical new threat,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s Fraud Division. “The Fraud Division is committed to supercharging the Health Care Fraud Strike Force program with the resources it needs to tackle the pervasive fraud in the health care industry and protect the vulnerable beneficiaries of these programs, including children and those suffering from chronic ailments.”

“Today’s arrests mark the largest autism fraud bust in American history,” said HHS Secretary Robert F. Kennedy, Jr. “Under the leadership of President Donald Trump and Vice President JD Vance, this Administration is carrying out the most aggressive anti-fraud effort in modern American history. These criminals exploited vulnerable children, stole taxpayer dollars, and diverted critical autism care and resources away from families who truly need support, and we will continue rooting out fraud to protect children and restore integrity to America’s public health programs.”

“As alleged, the defendants in this case not only attempted to steal public healthcare funds paid for by hardworking American taxpayers – but stole critical resources from families who truly needed them,” said FBI Director Kash Patel. “This FBI and our interagency partners have a mandate to investigate and systematically dismantle this exact kind of public fraud in America, which grossly abuses and mismanages money from working Americans, and that’s exactly what we’re doing. Today’s indictment is a massive moment in this effort and we’re not slowing down.”

Autism Fraud

In the largest Medicaid autism fraud case ever charged by the Department, two defendants were charged in connection with an approximately $46.6 million scheme to defraud the Early Intensive Developmental and Behavioral Intervention (EIDBI) program, a publicly funded Minnesota Health Care Program that offers medically necessary services to people under the age of 21 with autism spectrum disorder. In 2017, Minnesota became one of the first states to offer Medicaid coverage for EIDBI services. EIDBI claims skyrocketed from over $600,000 in 2018 to over $400 million by 2025.

As alleged, the defendants paid kickbacks to parents who brought their children to autism centers, diagnosed children with autism regardless of medical necessity, and billed for autism services that were not actually provided, depriving children who did need assistance of needed care.

"We continue to accelerate the pace at which we are identifying, investigating, and prosecuting those that stole billions of dollars from under the nose of Minnesota's government, said U.S. Attorney for the District of Minnesota Daniel Rosen.” We have more fraud prosecutors and law enforcement officers on the task than ever before. Stay tuned."

Integrated Community Supports Fraud

In the first criminal prosecution involving fraud in Minnesota’s Integrated Community Supports (ICS) program, one defendant was charged with a $1.4 million scheme to bill for services that were not provided as represented. ICS is a Minnesota Medicaid benefit designed to fill a gap in the service continuum between a person living in their own home and more restrictive settings such as group homes and assisted living. ICS was designed to help people live more independently in the community—as opposed to an institutionalized setting—with daily one-on-one help with health, safety, and household tasks so that qualifying individuals can live in the community. The defendant in the prosecution announced today submitted claims for vulnerable recipients who required 24-hour care, one of whom was found deceased a day after being billed for services he did not receive.

After paying out a total of approximately $4.2 million when the ICS program began in 2021, the cost has grown to more than $183 million in 2025. In all, claims data shows that the Medicaid system has paid out more than $460 million for ICS services since 2021. A failure to provide ICS services to vulnerable Medicaid recipients who are dependent on the care to live can have deadly consequences, like those described in the charging document.

“Medicaid dollars are meant to support vulnerable Americans—not bankroll luxury cars and real estate empires for fraudulent providers who exploit people with disabilities,” said CMS Administrator Dr. Mehmet Oz. “These prosecutions put Medicaid fraudsters on notice—the gravy train is over. We will cut you off, shut you down, and lock you up. They also send a clear message to the patients who depend on Medicaid and the taxpayers who fund it—this administration has your back.”

“The scope of the frauds alleged in the charges announced today is staggering, not only in the amount of loss, but in the reach of the impacted programs,” said FBI Co-Deputy Director Christopher Raia. “These programs, funded by the American taxpayer, were designed to help some of the most vulnerable members of our society. As alleged in these charges, instead of helping those in need of support, the defendants took millions of dollars for their own benefit. These frauds were uncovered thanks to dedicated work by the FBI and our law enforcement partners, and we look forward to continuing to partner with the United States Attorney's Office to reign in the rampant fraud in these programs.”

“Today’s takedown underscores a simple truth: Medicaid is a lifeline for vulnerable individuals, and we will not allow criminals to exploit it for personal gain. These schemes did more than steal taxpayer dollars — they robbed children with autism, adults with disabilities, and other at‑risk citizens of the essential care they rely on,” said Inspector General T. March Bell of the U.S. Department of Health and Human Services Office of Inspector General (HHS‑OIG). “HHS‑OIG, working shoulder‑to‑shoulder with our law enforcement partners, will continue to pursue those who prey on these critical programs. We will use every tool available to uncover fraud, hold offenders accountable, and safeguard the integrity of the benefits millions of families depend on.”

Individualized Home Supports Fraud

In the first criminal prosecution involving fraud in Minnesota’s Individualized Home Supports (IHS) program, two defendants were charged in connection with an over $22 million scheme in which they acquired over 20 separate residences and concealed their ownership interest from Medicaid. IHS was designed to help adults with disabilities such as brain injury to live independently in their own homes. Despite Medicaid prohibiting program providers from having direct or indirect financial interest in the beneficiaries’ housing, the defendants offered housing that they owned to vulnerable Medicaid beneficiaries in order to obtain Medicaid beneficiary information that they used to bill for services that were not provided as represented. Defendants used the proceeds of the scheme to acquire more real estate and further the fraud, as well as purchasing luxury automobiles and expensive jewelry. After paying out over $100 million in 2018, the IHS program grew to cost more than $700 million in 2025.

Housing Stabilization Services Fraud

Charges were brought against eight defendants for defrauding Housing Stabilization Services (HSS) of approximately $15.7 million. Some defendants were residents of Pennsylvania who engaged in fraud tourism, traveling to Minnesota for lucrative opportunities to commit fraud. In July 2020, Minnesota became the first state in the country to offer Medicaid coverage for HSS. The HSS Program was a Medical Assistance (that is, Medicaid) benefit designed to help people with disabilities, including seniors and people with mental illnesses and substance use disorders, find and maintain housing. By design, the HSS Program had low barriers to entry and minimal records requirements for reimbursement that combined to make the Program susceptible to fraud.

Before the HSS Program’s inaugural year, DHS predicted the HSS Program would cost about $2.6 million annually. In 2021 alone, the HSS Program paid out more than $26 million in claims. That figure ballooned in the following years to over $104 million in 2024. On October 31, 2025, Minnesota shuttered HSS due to fraud, illustrating how fraudulent schemes can result in the cessation of necessary programs and deprive beneficiaries of needed care.

"Today's law enforcement actions make it clear that IRS-CI is prioritizing investigations of fraud that permeate public service programs intended to serve the most vulnerable." said IRS-CI Acting Chief Gary Shapley.

Child Care Fraud

The Department announced charges against two defendants in connection with defrauding state and federal programs designed to subsidize child care. One defendant was charged with a $425,000 fraud on the state-funded Great Start Compensation Support Payment Program (GSCSPP), which reimburses for in-classroom hours provided by teachers in staff. Another defendant was charged with a $4.6 million fraud on the federally funded Child Care Assistance Program (CCAP), which reimburses child care centers for actual child care provided.

“The scale of fraud uncovered in Minnesota is alarming. HSI is fully committed to dismantling these criminal schemes and holding offenders accountable,” said Steven N. Schrank, Special Agent in Charge of Homeland Security Investigations in Minnesota. “These cases demonstrate our unwavering resolve to work with federal and state partners to root out fraud and protect those in need.”

Medicaid Fraud Enhancement and Expansion of the Health Care Fraud Strike Force

In connection with the Takedown, the Department announced the funding of 15 new prosecutors and associated support staff to combat Medicaid fraud across the country. Data show that Medicaid is a vital government benefit program increasingly targeted by criminals. The exposure of widespread fraud in Minnesota’s Medicaid program illustrates the insufficient nature of state enforcement alone, and the necessity of a whole-of-government approach. In the past year, the Health Care Fraud Section has surged prosecutors not only to Minnesota, but also to prosecute an over $650 million Medicaid fraud scheme in Arizona and over $270 million Medicaid fraud scheme in California.

These new prosecutors will be deployed by Acting Health Care Fraud Chief Jacob Foster and Acting Principal Assistant Chief Rebecca Yuan to districts where the threat of Medicaid fraud is the greatest, including existing Strike Forces in California, Florida, New York, and Texas, as well as deployed across the country through participation in the National Rapid Response Strike Force. In addition, the Department, along with its partners from HHS-OIG and FBI, announced today the expansion of the Midwest Strike Force to include the District of Minnesota. The Midwest Strike Force previously was based in Detroit and Chicago.

Health Care Fraud Assistant Chief Shankar Ramamurthy and Trial Attorney Sara Porter, along with Fraud Chief Rebecca Kline and Assistant United States Attorney Matthew Murphy for the District of Minnesota, led and coordinated the cases charged in today’s Takedown, together with the FBI, the Internal Revenue Service – Criminal Investigation, HHS-OIG, Homeland Security Investigations, and the United States Postal Inspection Service, as well as state and local law enforcement partners. Trial Attorneys Matthew Belz, Brant Cook, Jody King, Benjamin Smith, Charles Strauss, and Sara Woodward from multiple Strike Forces are prosecuting the cases charged in the Takedown. The Health Care Fraud Section’s Data Fusion Center used cutting-edge data analytics to identify and support the cases charged today.

On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division. The core mission of the Fraud Division is to zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars. Department of Justice efforts to combat fraud support President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.

The Department of Justice’s Health Care Fraud Strike Force Program, currently comprised of nine strike forces operating in federal districts across the country, has charged more than 6,200 defendants who collectively billed federal health care programs and private insurers more than $45 billion since 2007. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.

An indictment, information, or complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The following material related to today’s announcement are available on the Health Care Fraud Unit website through this link.

On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (“Fraud Division”). The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs. The Justice Department today announced the Minnesota Health Care Fraud Takedown, which resulted in criminal charges against 15 defendants, including owners of child care centers and various Medicaid providers, for their alleged participation in various fraud schemes involving over $90 million in intended loss, including the two largest Medicaid fraud cases ever charged in the District and first-of-their kind charges involving additional Medicaid programs. The Justice Department also announced a major investment in combatting Medicaid fraud through a significant expansion of the Division’s Health Care Fraud Section, allocating funding to permit the hiring of 15 new Trial Attorney positions to combat Medicaid fraud across the United States.

NFED is a newly established division within the U.S. Department of Justice focused on investigating and prosecuting fraud against taxpayer dollars and taxpayer-funded programs. It centralizes existing fraud enforcement resources and aims to enhance the efficiency and effectiveness of fraud investigations nationwide.

The WOOD Radio report includes images of Sen. Nesbitt's letter, and links important resources, at its site.

https://wtkg.iheart.com/featured/wood-radio-local-news/content/2026-05-01-senator-nesbitt-seeks-federal-probe-into-possible-medicaid-fraud/

Senator Nesbitt seeks federal probe into possible Medicaid fraud

James Gemmell    |    May 1, 2026

LANSING, Mich. -- Senate Republican Leader Aric Nesbitt is asking the National Fraud Endowment Division to probe possible cases of Medicaid fraud in Michigan.

He says red flags were raised after an investigative report was released that tracked sharp upticks in Medicaid billings beginning in 2022, plus other expenditures.

"Three years ago, Democrats took full control of the Legislature - and Governor Whitmer - they blew through a historic $9 billion surplus," Nesbitt said in an interview on the West Michigan Live program. "They wasted it on liberal pork projects, bloated government, handouts to global corporations for jobs that just never showed up."

Nesbitt speaking there to WOOD Radio WML host Justin Barclay.

More details were provided in a news release

Senate Republican Leader Aric Nesbitt on Wednesday requested the U.S. Department of Justice’s newly established National Fraud Endowment Division look into possible cases of Medicaid fraud in Michigan under the objectives of the National Task Force to Eliminate Fraud established by President Donald Trump and chaired by Vice President JD Vance.

“We want to make sure this money is available so people who truly deserve these resources can get the support they need,” said Nesbitt, R-Porter Township. “That is exactly why we must also make sure fraudsters who make a career of gaming these systems are held accountable. We are not going to stop asking the questions that need to be asked to protect taxpayer dollars.”

Nesbitt said serious red flags that prompted his request included a recent investigative report that tracked sharp upticks in Medicaid billings following changes implemented by Democrats after they took control of both legislative chambers in 2022 and a March report by Michigan’s independent Auditor General that found the state’s Department of Health and Human Services failed for more than seven years to sufficiently monitor an $82 million contract with a private pharmacy benefits manager administering drug rebates for Medicaid.

“Taxpayers deserve assurance that Medicaid dollars are protected against waste, fraud and abuse, and that criminals who siphon from this system are held accountable to the full extent of the law,” Nesbitt wrote in a letter to U.S. Assistant Attorney General Colin McDonald. “President Trump and Vice President Vance are leading the fight to combat widespread fraud and restore accountability in this system.”

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