MI Direct Care Workers in Limbo as State Budget Talks Continue

Providers and Agencies Face Severe Consequences under HB 4706

LANSING, Mich. – Leaders of Michigan’s disability community are sounding the alarm over a proposed 20% cut to Medicaid funding for direct care services in the House-passed FY26 budget.

Section 1033 of HB 4706 reduces agency reimbursement rates by $4.56 per hour while maintaining the $3.40 per hour wage increase for Direct Care Workers (DCWs). Agencies would be prohibited from lowering worker wages to cover the difference, forcing the entire cut onto already strained operating budgets.

“This plan asks for the impossible,” said Sherri Boyd, executive director of The Arc Michigan. “It’s simply not feasible to protect wages and cut funds at the same time. It’s like giving workers a raise with one hand and bankrupting their employers with the other. Families will lose critical supports, and people with disabilities will pay the highest price if agencies close or cut services.”

HB 4706 leaves provider agencies with a net loss of $4.56 per hour, an unsustainable model that will lead to service reductions, job losses, and closures.

“Our providers are already operating on razor-thin margins,” said Robert Stein, general counsel for the Michigan Assisted Living Association. “This cut would mean fewer hours for DCWs, fewer choices for families, and more Michiganders going without the essential care they need to live independently in their homes and communities.”

Todd Culver, CEO of Incompass Michigan, added: “We all want direct care workers to be fairly compensated. But protecting wages while stripping away the funds that make those jobs possible is a contradiction. If the state wants to strengthen the workforce, it must protect the agencies that employ them.”

The Michigan Direct Care Worker Wage Coalition is asking the Legislature to protect funding for DCWs and the agencies that employ them.

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