I agree with OpenEyes. Your manager may have thought you were asking for LESS hours than your normal 40 hours a week b/c of your sleep problems and anxiety.

This is still a mowhill -- don't turn it into a mountain yet. Just go talk to your manager and explain that you weren't asking for a decrease in your weekly work hours, just that you want to come in later and leave earlier but still maintain a 40 hour work week. Keep it simple and emotion-free when you go talk to your manager. I'm sure he/she will be glad to accommodate you accordingly.