Gretchen Whitmer: Raise $800M for Medicaid by taxing nicotine, gambling, ads

February 11, 2026

Michigan Governor Gretchen Whitmer has unveiled a proposal to address a Medicaid funding crisis caused by President Trump's recent tax and spending legislation, which threatens the state's ability to tax insurance providers. Her plan includes approximately $800 million in new taxes targeting vaping products, e-cigarettes, digital advertising, and sports betting promotions, alongside $150 million in departmental efficiency savings. The proposal has encountered immediate rejection from Republican House leadership, who control the chamber and refuse to support any tax increases, insisting the state must operate within existing budgets.

Who is affected

2.6 million Michigan residents (one in four Michiganders) who currently receive Medicaid health insurance
Primarily people with lower-than-average incomes who depend on Medicaid
200,000 Michiganders who could potentially lose health care coverage
Health care providers who may face rate cuts if alternative funding isn't secured
Vaping product and e-cigarette consumers, sports betting houses, and digital advertisers who would face new or increased taxes
Michigan taxpayers generally who would fund the proposed tax increases

What action is being taken

Governor Gretchen Whitmer is proposing nearly $800 million in new taxes (including taxes on vaping products, e-cigarettes, digital ads, and restrictions on sports betting deductions) along with spending cuts to close the Medicaid funding gap. The state Department of Health and Human Services is being directed to achieve $150 million in annual efficiency savings by developing options in collaboration with stakeholders.

Why it matters

This issue has major implications for healthcare access in Michigan, where one in four residents depends on Medicaid for health insurance coverage. The funding crisis stems from federal legislation that undermines Michigan's ability to tax insurance providers, creating an immediate budgetary emergency. Without a solution, the state will be forced to make difficult choices such as reducing coverage, restricting benefits, cutting provider payment rates, or making cuts to other state programs. The political deadlock between the Democratic governor and Republican-controlled House makes resolution uncertain, while 200,000 people could lose coverage even if the funding gap is addressed, highlighting the severity of the healthcare crisis facing vulnerable Michigan residents.

What's next

No explicit next steps stated in the article

Read full article from source: bridgedetroit.com