Michigan DHHS’ proposed $37.7 billion budget includes support for families, behavioral health


Shane Ersland


The Michigan Department of Health & Human Services’ (DHHS) proposed budget for fiscal year 2025 focuses on kids, families, behavioral health, Medicaid coverage, and the healthcare workforce.

DHHS Director Elizabeth Hertel discussed the budget—proposed by Gov. Gretchen Whitmer—during a Senate Appropriations Subcommittee on DHHS meeting on Wednesday. Subcommittee Chair Sen. Sylvia Santana (D-Detroit) noted that the budget is nonpartisan. 

“It supports everyone from birth to earth,” Santana said. “There’s a lot of things happening across the state (for) constituents who are impacted by this budget in so many capacities. With this being such a significant part of our state budget, we definitely want to make sure we are accountable to our constituency and, more importantly, make sure they’re receiving the type of services necessary.”

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The proposed $37.7 billion—a nearly $2 billion increase from the current fiscal year that lasts through Sept. 30th—budget allows the state to match or access federal funds for Medicaid, and provides for food and foster care assistance. It also supports state psychiatric hospitals, programs for people experiencing homelessness, mental health services, local health departments, and lab services, Hertel said.

“The fiscal 2025 budget recommendation continues to move our state in the right direction by providing investments that support initiatives to keep kids safe, expand behavioral health access, strengthen Medicaid coverage, assist families, support the healthcare workforce, and make a difference in the lives of our friends and neighbors across the state,” Hertel said. 

Assisting Michigan’s children

“One of my top priorities is keeping kids safe,” Hertel said. “The best way to keep kids safe is to provide meaningful, timely, and effective services and support. If we can provide families with economic support, it’s more likely that a child can remain safely with their parents instead of being placed in foster care.”

DHHS licenses Child Caring Institutions for the purpose of caring for and supervising children on a 24-hour basis through foster care and juvenile justice means, Hertel said. It contracts with about 35 providers. 

“We have heard from (our) providers that the rate structure historically has been complicated, with 30 different rates and varying requirements. While the department has nearly 900 beds on contract, we consistently face placement challenges, even as the number of kids cared for daily is around 500.”

— Hertel

The budget’s proposed $38 million investment for Child Caring Institutions will transition them to a new funding model where the state will pay for a steady supply of beds, instead of paying for them only when those services are being utilized. Provider contracts will be restructured based on the needs of children across the state, while providing financial certainty to providers, Hertel said. 

DHHS requests $6.9 million in ongoing funding to implement recommendations made by the Governor’s Task Force on Juvenile Justice Reform for improvements including risk/standardized risk assessment screening, community reentry services, and youth incentives. It includes $5 million in one-time funding for infrastructure improvements at Bay Pines Center in Escanaba and Shawono Center in Grayling. 

The budget also requests $10 million for the Modified Implementation, Sustainability and Exit Plan (MISEP). 

“The $10 million in the budget proposal will allow DHHS to work toward the implementation of steps needed to achieve the remaining MISEP benchmarks through program and staffing support, including resources, training, and legal services to achieve stable, long-term care for kids,” Hertel said.

Behavioral health initiatives

Approximately 22 percent of adults in Michigan have a diagnosable mental or emotional disorder, Hertel said, while 38 percent of individuals with a mental disorder go untreated. 

The budget recommends adding $193 million for the expansion of certified community behavioral health clinics (there were 13 in 2021, and 17 have joined since). 

“This investment would expand the number of sites and serve a greater share of eligible beneficiaries,” Hertel said. 

The budget requests $8.3 million for the MiCAL line. Another proposal would provide $36.1 million to align the reimbursement rates of behavioral health practitioners with medical professionals.

“Disparities in reimbursement rates have limited participation in Medicaid programs, and have resulted in inconsistent and inadequate access to outpatient behavioral health services for those with a mild to moderate diagnosis,” Hertel said.

Medicaid coverage

Michigan’s Medicaid health plans serve 2.9 million Michiganders. The department is currently reviewing proposals for its Medicaid managed care contracts. 

“The 2025 budget requests $19.1 million to provide financial support for the implementation of new Medicaid Health Plan contract improvements so the state can meet its goals of improving access to childhood immunizations, incentivizing Medicaid health plans to improve food security through services like home meal delivery, and implementing program improvements and accountability,” Hertel said.

The budget recommends building on the success of the Healthy Moms, Healthy Babies initiative by enhancing the Maternal Infant Health Program (MHIP). The MIHP is a statewide, evidence-based, Medicaid-funded home visiting program for pregnant and postpartum women, infants, and their caregivers. 

“The $3.3 million proposed in the budget will increase reimbursement rates to MIHP service providers for additional care management services,” Hertel said. “It also funds other Healthy Moms, Healthy Babies initiatives. In total, the fiscal 2025 budget recommends $15.7 million in increased funding for the Healthy Moms, Healthy Babies initiative.”

Assisting families

Over $100 million is included in the budget to assist families and realign Temporary Assistance for Needy Families (TANF) funding for direct assistance, Hertel said. Michigan receives $773 million in TANF funding each year. 

“Over the years, the use of TANF has changed due to budget constraints and competing priorities, but the fiscal 2025 recommendation realigns the funds in preparation for changing direction from the federal government. In terms of public assistance, the budget increases the Family Independence Program payments, extends the lifetime limit of the benefits and increases the small child supplemental, (and expands) the Rx Kids program.”

— Hertel

The proposed budget includes $108 million in federal funds to extend Food Assistance program support to schoolchildren during the summer months. 

“This funding is expected to benefit up to 900,000 children, reducing hunger and contributing to positive health outcomes,” Hertel said.

Healthcare workforce

Michigan needs to continue to strengthen its healthcare workforce, Hertel said. 

“It remains one of the leading challenges that we have for our health systems and other health organizations across the state,” she said. “One of the workforce initiatives included in the recommendation is to support repaying student loans, specifically for nurses.”

A March 2023 Michigan Health & Hospital Association report showed 27,000 job openings at hospitals, with about 8,500 of those consisting of nursing positions. The budget proposal includes $10 million in one-time funding for a nursing loan repayment program. 

“This will allow for repayment of a nurse student loan over a four-year period in return for their commitment to employment. We anticipate this can benefit up to 700 nurses across the state.”

— Hertel

The proposal also requests support for the behavioral health workforce. A total of $500,000 is requested for grants for continuing education and exam fees for people working in lower-earning positions, and $3 million of one-time funds is proposed for Michigan’s public universities to expand scholarships and internships associated with behavioral health coursework, Hertel said. 

The budget also requests an 85-cent an hour increase for non-direct care workers, which includes dietary workers and housekeeping staff, among others. 

Lawmakers will continue to review the DHHS budget in future meetings.

“We have to do better when it comes to wages and workforce in our state, and really make that effort to make sure people can have upward mobility in our state,” Santana said. “But we’re grateful for the DHHS budget to support families where it can with subsidies and TANF dollars. I hope we can continue to move people in our state forward.”

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