Panel Discussion Highlights Uncertainties Of TN’s Medicaid Block Grant Waiver

Photo: Kirkland Hall – Vanderbilt University 

Photo Credit: Corey Seeman / CC

Published August 27, 2021

By Jon Styf [The Center Square contributor] –

As Tennessee’s TennCare III Medicaid block grant sits in a public comment period, the Vanderbilt University Department of Health Policy and School of Medicine hosted a panel discussion on how the first-of-its-kind grant would affect Tennessee residents.

Tennessee Capitol Building in Nashville

TennCare provides health care services to about 1.2 million low-income and disabled Tennesseans. TennCare III was approved for 10 years on an experimental waiver in January by the Trump administration but has been challenged in court by the Tennessee Justice Center and two other entities, representing 13 TennCare recipients.

“Instead of accepting billions of additional federal dollars to expand Medicaid, they decide to pursue a block grant, which, in our estimate, is just a distraction from the real issues,” TJC Senior Director of Health Policy and Advocacy Kinika Young said. “If the state does expand coverage to people who currently are not eligible for Medicaid under this waiver, they would be leaving money on the table.”

It remains to be seen what changes the Biden administration will make to the waiver after the public comment period ends Sept. 9, but Young suggested the length of the waiver should be cut to three to five years. Another concern Young has with the program is the waiting period to first receive TennCare benefits and access to the prescription drugs that recipients require.

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Under the block grant, Tennessee would receive federal money for the state’s Medicaid program in one lump sum instead of periodically. State officials said doing so would allow the state more autonomy in running the program and save the state money.

House Speaker Cameron Sexton was scheduled to be part of the panel discussion but was not on the call.

The block grant allows the state to capture any savings in the program and use the savings toward future health care savings initiatives. Previously, those savings could be saved only to use against future overages of the federal Medicaid funding cap.

The state also could use $6 billion in savings compared with the federal cap that it collected from the past five years.

“There is still a lot of uncertainty on what these changes could actually mean for the state,” Sycamore Institute Policy Director Mandy Pellegrin said. “We know it creates a new funding structure, we know it give us new program design flexibility at the state level, but whether this turns out to be good, bad, both, or neither is going to depend on a lot of moving pieces.”

Young is concerned less spending now will mean a lower cap for funding in the future. The TennCare III funding cap will reset in 2026 based on how much the state has spent, per capita, between 2021-24.

Young said an increase in population or number of eligible residents or an increase in health care costs could leave Tennessee Medicaid recipients without proper care.

“There is some concern on a national level that it could create some sort of bad precedent for other states, and that’s why national organizations are really speaking out and trying to uplift the concerns with this waiver so they aren’t replicated in other places,” Young said.

While a block grant had not been approved previously, Pellegrin said the program is similar to programs used in the past in Rhode Island and Vermont. Massachusetts asked for a similar waiver but was turned down.

“It was advantageous for those states and their specific situation,” Pellegrin said. “What is unprecedented are some of the flexibilities. No state has been approved for a closed formulary. I think a lot of states want it because it is a major cost control mechanism. This waiver is not a particularly great deal for the federal government. There’s a question on if it would want to enter in another agreement like this with another state.”

Pellegrin acknowledged there are short-term incentives for the state to spend less on the program, which isn’t a new incentive, but as the second-most expensive program the state operates, the state also wants to make sure it is running the program efficiently and effectively.

“From where we sit, a lot of the arguments for and against it rest on how the state will use its power depending on where you sit or what the state has done in the past,” Pellegrin said.

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About the Author:

Jon Styf is a freelance writer for Tennessee and South Carolina. 

Follow Jon on Twitter @JonStyf.

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