In May 2025, the
Michigan Department of Health and Human Services (MDHHS) proposed a plan that could privatize Michigan's community mental health services, transferring control from county-controlled community mental health agencies (CMHs) to insurance companies. The plan is known as the Pre-Paid Inpatient Health Plans (PIHPs) procurement process.
The
Community Mental Health Association of Michigan (CMHA) is advocating against this plan, saying it “severely jeopardizes the care that hundreds of thousands of Michiganders depend upon.”
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Robert Sheehan, CMHAFrom upending CMHs’ community partnerships with local law enforcement, schools, courts, and homeless services providers to eliminating transparency currently guaranteed by law, the plan,
according to CMHA, “introduces multiple layers of complexity making the system more administratively burdensome.” An EPIC-MRA
study of Michiganders found strong public opposition to privatized mental health care. In
other states, privatization has led to service fragmentation, reduced access, and diminished provider networks.
MI Mental Health spoke with CMHA’s Robert Sheehan about the plan and what he and his CMH members are doing to prevent its implementation.
This interview has been condensed for length and clarity.
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CMHs, like Sanilac County CMH pictured here at a Santa Claus Parade, take part in community outreach to provide greater access to mental health care.
Q: In the MDHHS press release, MDHHS Director Elizabeth Hertel says “Michigan Medicaid beneficiaries deserve access to behavioral health care services when and where they need them.” Is this not what CMHs are already doing well?
A: It is, in fact. Our members meet or exceed the access standards of the state nearly every quarter — over half of all the services that our members provide are actually in the client's home, school, or workplace. Most of those services are available 24/7. Our system’s renowned for providing access. And we do more evidence-based practices than most other states. Innovations happen all the time.This year alone, there's been a number of innovations in clinical practice.
What hinders access is insufficient funding, a workforce problem, and MDHHS-imposed administrative burdens. An example of the financing issue:, in fiscal year 2024 and in the current year, the state sent out $200 million less to our system than was appropriated by the House, Senate, and Governor. This year that was corrected after six months of advocacy, $140 million of the $200 million. But we still see CMHs underwater. So, that's a big deal.
Q: Is the answer to the MDHHS survey results really privatization?
A: First of all, I hardly found any survey responses that said, “Let's privatize the system.” What the responses said was, “I need better funded services. I need the workforce shortage closed. I need more ready access to care.” Those behind the scenes know that better access and longer-term care is hampered by the lack of financing and workforce shortage. So, no — privatization was not the cry that advocates, clients, and families made. What they wanted was a more robust, better funded system that closed the workforce gap.
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CMHs collaborate with law enforcement, EMS, schools, and workplaces. Many offer 24/7 mobile crisis response and urgent care.
Q: How could CMHs better address those concerns than private insurers?
A: Community mental health continues to evolve and evolve rapidly. One of the misconceptions is that either CMHs have to provide all the services or private providers provide all the services. Every CMH in the state provides some services and purchases some from private providers. It's a really powerful public-private partnership. Sometimes the CMH determines it can do that job better and at a lower cost than by purchasing it. Other times they realize they can do better by purchasing it.
What makes the CMH system strong? It's a safety net. The CMH is obligated by law to provide quality care to Michiganders, and that isn't true of private providers. We use the private providers as partners when they can provide lower cost or higher quality. But the obligation still remains with the CMH. If a private provider fails in its obligations, the CMH, by law, has to step in and provide that care.
If you did away with community mental health, you'd have to change Michigan’s mental health code. You'd have private providers who could determine if they're going to provide the service or not. They could actually walk away from the contract. Actually, the state's trying to walk away from that obligation by this procurement.
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OnPoint, Allegan County's CMH, provides resources to the unhoused, like Debra Martin. Though staying with friends, Martin relies on such services.
Q: Adding another layer of costs to mental health care (i.e. corporate profit) seems counterintuitive. How do you believe privatization will impact costs and access, e.g. denial of claims?
A: MDHHS says they're only going to use nonprofit plans. That would include Blue Cross/Blue Shield, Priority Health, McLaren Health Plan, and HAP. It's important to realize these still have corporate overhead —15%, that's the amount that those insurance companies are allowed to not spend on benefits for clients. Our CMH system is allowed 2%. That's a $500 million loss — a half a billion dollar loss— in services immediately. You're talking about a private system with overhead that is seven times more expensive. When we talk to our sister organizations across the country, most of whom have privatized management of behavioral health, all they've talked about are the claim denials and the rate cuts. There are only two ways to control costs if you're a health plan. One is to pay lower rates to the providers, and the second is to reduce the authorizations of care, deny claims.
Going to your privatized system is going backwards. It takes dollars out of delivery of services, and it harms the workforce. If the Medicaid cuts we're seeing from the feds start to play out in 2027, it'll get even worse. It digs a half-a-billion-dollar hole before we even get the federal cuts. That's dramatic.
Q: Will privatization make accessing mental health care more difficult -- will there be more hoops for people to jump through before being approved for care?
A: There will be, and here's why. Currently, the CMHs have the power to approve care. It makes it a much more person-centered and clinician-driven process. Under a managed care system from private insurance companies, that's not what happens. The private insurance company is the authorizer of care, and so you'd be calling them, which makes it much more difficult. We've all heard of people being denied care or delayed or having to fight to get care paid for.
Estelle Slootmaker spends most workdays as a journalist and book editor. She is also the author of a fun, new children's picture book, Places Where the Sun Don't Shine. You can contact her at [email protected] or www.constellations.biz.
Photos by, in order of appearance, Victoria Reackhof, Roxanne Frith, John Grap, Leslie Cieplechowicz, and courtesy Ypsilanti District Library.
The MI Mental Health series highlights the opportunities that Michigan's children, teens, and adults of all ages have to find the mental health help they need, when and where they need it. It is made possible with funding from the Community Mental Health Association of Michigan, Center for Health and Research Transformation, LifeWays, Michigan Health and Hospital Association, Northern Lakes Community Mental Health Authority, OnPoint, Sanilac County Community Mental Health, St. Clair County Community Mental Health, Summit Pointe, and Washtenaw County Community Mental Health and Public Safety Preservation Millage.