Tennessee Unveils Medicaid Block Grant Proposal

Tennessee today unveiled its plan to transform its Medicaid program into a block grant, essentially capping its funding rather than paying for anyone who enrolls. If approved by the Trump administration, the plan would upend the open-ended funding that has defined Medicaid since its creation in 1965.

Under the current system, states and the federal government both contribute to Medicaid, and that dollar amount rises and falls based on the number of people enrolled. In block grant funding, however, the federal government would make a lump sum contribution to the state no matter how many people were in the program. States also would be given more authority to set the rules on how the money would be spent and on whom.

Opponents believe such a plan would inevitably lead to either more restrictions on eligibility or fewer services, leaving vulnerable populations without the health care they need.

But in unveiling Tennessee’s plan, Republican Gov. Bill Lee told the Washington Post that it would “lower the cost of Medicaid services without changing the quality or level of those services to the Medicaid population.”

According to the latest federal report, Tennessee’s Medicaid program has about 1.4 million enrollees.

Republican leaders in other states have expressed interest in converting to Medicaid block grant funding, but Tennessee with its draft proposal is now the furthest ahead.

The Trump administration has not yet approved any state’s application for Medicaid block grant funding, but the president in his budget proposals has signaled his support for the idea.

In their failed attempts to repeal President Barack Obama’s Affordable Care Act, Republicans in Congress have tried to remake Medicaid into a block grant program.

Earlier this summer, the Centers for Medicare & Medicaid Services rejected Utah’s proposed Medicaid reform, one that incorporated block grant funding, but for reasons unrelated to the funding.

The Republican-led Tennessee legislature initiated the state’s effort in May when it passed a measure ordering the state to request federal permission to convert its Medicaid program to block grant funding.

The public will have a month to comment on the state’s draft plan before it is formally submitted for federal approval. Many national health advocacy organizations, long opposed to block grant funding in Medicaid, are likely to contest the plan. If approved, it likely also will face court challenges.

The Tennessee proposal does not call for a pure block grant model. Although it would establish a fixed annual payment to the state from the federal government — about $7.9 billion, according to the draft proposal — the state would get additional federal funds if enrollment grew beyond specified averages. If state spending was less in a year than it would have been under a traditional Medicaid plan, Tennessee would split the savings with the federal government.