Tennessee seeks to become first state to turn Medicaid into a block grant

Tennessee on Tuesday unveiled a proposal to convert its Medicaid program into a limited, block grant–type model, a controversial plan that, if approved, could be the first in the nation.

The proposal needs to be submitted to the Centers for Medicare and Medicaid Services for approval, after a 30-day state comment period. Imposing block grants in Medicaid has long been a major conservative goal and has been encouraged by the Trump administration.

Administration officials have drafted a guidance that would make it easier for states to apply for a capped payment or block grants. That document has been under review by the White House Office of Management and Budget for months, but it could be released at any time, especially now that Tennessee has a proposal that could be touted as a model for others.

Prognosis: The administration has been quietly trying to sell states on the merits of imposing block grants without congressional approval, so this could be a good sign for Tennessee. No states have been granted permission to date, but if Tennessee’s plan is approved, it would likely embolden other Republican-led states. The proposal will also mobilize opposition from patient advocacy groups, who have already been protesting since the state passed a bill.

Details: It’s not a “true” block grant, but it’s close enough to put activists on alert. It also could be what the future looks like if the administration hopes to find the strongest model that will survive legal challenges.

Like a traditional block grant, instead of the federal government matching state dollars, the state is asking for a lump sum payment– in this case, nearly $7.9 billion. The amount would be adjusted for inflation, but unlike a traditional block grant, it could increase in the future based on enrollment. If enrollment drops, the block grant amount would not decrease.

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