Tennessee seeks to overhaul Medicaid with block grants

February 27, 2019 GMT

NASHVILLE, Tenn. (AP) — Tennessee Republican lawmakers who have long balked at taking millions in federal dollars to expand Medicaid advanced a plan Wednesday that would overhaul how the state provides health care to its lower-income and disabled residents.

GOP state lawmakers are moving forward on a proposal calling on the federal government to send Tennessee a fixed amount of money each year in the form of block grants. The bill still faces several key hurdles, but early GOP endorsements from top legislative leaders have signaled the legislation could reach the governor’s desk.


“This piece of legislation is long overdue,” said Rep. Matthew Hill, a Republican from Jonesborough. “Hopefully this will get Tennessee state tax dollars out of the federal government ... What holds us back is quite frankly is funding, to be able to have control at the state level. This is the right thing to do.”

The proposal comes at a time when Tennessee has refused to expand the number of people eligible for Medicaid, as allowed under former President Barack Obama’s signature health care law. Thirty-one states have opted for the expansion, but Tennessee has resisted under a GOP-dominated Legislature.

And resistance has only strengthened with newly elected Republican Gov. Bill Lee. On the campaign trail, he frequently voiced opposition to Medicaid expansion, saying instead he wanted to find an alternative solution for the estimated 167,000 Tennesseans who don’t have health coverage.

Currently, the federal government pays an agreed-upon percentage of each state’s Medicaid costs, no matter how much they rise in any given year. For Tennessee, that means the state receives approximately $7.5 billion in federal money for its $12.1 billion Medicaid program.

Republicans have argued this system gives states little incentive to keep expenses under control, because no state pays more than half the total cost. They stress that states need more flexibility to shape their Medicaid programs while also being given the opportunity to rein in spending.

However, using block grants has sparked key questions as no state has ever been given permission to rely on them for their Medicaid program. Democrats have largely led these concerns by arguing that inevitably states would end up covering fewer people or offering skimpier benefits if there is a switch to block grants due to the potential leniency and lack of oversight.

“Why are we all of a sudden doing this experiment that’s been refuted by most experts?” asked Rep. Dwayne Thompson, a Democrat from Cordova. “Why are we experimenting with the people of Tennessee?”


Rep. Timothy Hill, a Republican from Bluff City sponsoring the bill, countered that the legislation does not require one specific outcome. He said that, ultimately, it would need the Legislature’s approval before it could be implemented.

According to the proposal, the governor and the Tennessee Department of Finance and Administration would submit a waiver within 120 days of the bill becoming law asking the federal government to either amend or completely rewrite the state’s current Medicaid program. The goal would be to allow the state to use a block grant that is “tailored to meet the needs” of the state.

If that waiver was approved by the Centers for Medicare and Medicaid Services, it would need the General Assembly’s endorsement.

In 2017, Republican failed to find a way to reshape Obama’s overhaul while in control of both chambers. Since Democrats won back the House in 2018, block grant proponents have turned their sights to the federal government in hopes that officials will begin authorizing the idea through a waiver, possibly through an executive order.

Yet opponents warn such actions would likely result in legal action.