A retired Tennessee physician and professor watches his state shred the medical safety net of his state.

Just when I thought things couldn’t get much worse for the TennCare program, they did. (TennCare is Tennessee’s Medicaid managed care program.)

First, Medicaid has not been expanded under the Affordable Care Act in Tennessee. We are one of only 14 states that have neither expanded Medicaid nor are in the process of doing so. Despite public support in the state for expansion and the efforts of former Republican Governor Bill Haslam to pass such an expansion, it hasn’t happened. Consequently, Tennessee continues to forego significant amounts of federal funding that would go to providing coverage for new Medicaid enrollees; one estimate puts the lost net federal funding at $27.5-30.1 billion over ten years.

In addition, expansion would provide TennCare eligibility to an estimated 250,000 additional Tennesseans. Most of those are individuals who are caught “in the gap”, with incomes too high for current TennCare eligibility, but too low to qualify for subsidies in the Affordable Care Act (ACA) Marketplace. Meanwhile, 10 rural hospitals in Tennessee have closed since 2012, due at least in part to the lack of Medicaid expansion.  


Last year, the Tennessee legislature followed in the footsteps of a number of other states by enacting legislation intended to impose work requirements on TennCare recipients. The law directed TennCare to apply for a Section 1115 waiver from HHS, similar to that implemented in Arkansas in 2018 and subsequently approved in eight other states. Tennessee is one of six additional states with waiver applications pending. There is both theoretical and empirical evidence showing that these work requirements don’t work. It is estimated that some 600,000 to 800,000 Medicaid recipients would lose their coverage if work requirements are implemented in the nine states that already have approval.  

The future of Medicaid work requirements is uncertain at this point. A federal judge has put a hold on further implementation in Arkansas and Kentucky, ruling that these policies directly conflict with the original intent of Medicaid as established by Congress. The issue may go to the Supreme Court before finally being settled.

Now Tennessee is leading the effort, at least at the state level, to transform Medicaid from a safety-net entitlement program to a block grant program, a goal that many Republicans have long held.  On the closing day of this year’s session, the Tennessee legislature, under chaotic circumstances, enacted legislation requiring Republican Governor Bill Lee to submit a Section 1115 waiver application to HHS within 180 days that would allow the state to accept block grant funding, rather than the usual proportional cost-sharing Medicaid funding from the federal government. The intent is to accomplish by administrative waiver what Republicans in Congress unsuccessfully attempted to allow by law in 2017. No other state, to date, has submitted such a waiver application.

Although the details of Tennessee’s waiver request are yet to be determined, this approach to Medicaid funding would fundamentally alter the very nature of the entitlement program established 50 years ago. Rather than states receiving from the federal government a percentage of their actual Medicaid costs (currently around 65% for Tennessee), they would receive a set amount of money to use for providing medical services to their “Medicaid” populations, with much less federal regulation.

The primary arguments set forth for this transformation are that it would force states to be more accountable for their Medicaid spending, and that states are better equipped to determine the most efficient ways to provide care to their own populations.

However, the prospect of this change in Tennessee (and many other states) raises several concerns.

The Trump Administration in Washington has expressed the desire to reduce Medicaid funding overall. Thus, it is highly likely that the dollar amounts provided to states in the form of block grants would be substantially less than that provided with current Medicaid funding. Although the Tennessee legislation requires that the annual amounts negotiated with HHS be increased based on population growth and “inflation and other costs”, it does not provide any specifics. There is no guarantee that the amounts would be linked to medical inflation (which almost always exceeds general inflation) or to the overall health of the population. Nor does it take into consideration the fact that the next recession will result in greater unemployment and a higher percentage of the population without access to insurance. With the current system, as the cost of meeting the medical needs of the population in need increases, so does the federal contribution to these costs. With block grants there is no such guarantee.

Reduced regulations are also a concern. Block grants would potentially give Tennessee more discretion as to the population to be served, services to be covered, and procedures for enrolling and managing TennCare recipients and providers. The State’s lawmakers have already proven that they are much more concerned about controlling and reducing costs than they are in meeting the health needs of their most vulnerable citizens.

The effort to transform TennCare into a block grant program through a federal waiver is by no means a done deal. Once the waiver request is submitted, it must be approved by HHS; any final agreement between the State and HHS would then have to be approved by joint resolution of the Tennessee legislature. Given the current political climate, it is likely that an agreement satisfactory to HHS and the Tennessee legislature will be reached. At that point, there would almost certainly be legal challenges to the waiver. Since it would fundamentally alter the very nature of Medicaid as established by Congress in 1965, lawsuits questioning its constitutionality would no doubt follow. Those challenges would ultimately end up being decided by the U.S. Supreme Court. Meanwhile, Tennessee will spend precious State resources fighting for a change that would, in all likelihood, result in major harm to its own citizens. What a travesty.

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