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Tennessee becomes the first state to ask for Medicaid block grants

Tennessee Gov. Bill Lee speaks from behind a podium
Tennessee Gov. Bill Lee. Photo: Terry Wyatt/Getty Images

Tennessee is formally asking the Trump administration today to transform its Medicaid program into a block grant — the first real test of an idea that has captivated conservatives for years.

Why it matters: Tennessee's request will test the bounds of what the Trump administration can do on its own, as it seeks to overhaul the Medicaid program. And if it’s successful, it would usher in a new model for a program that covers some 75 million people.

How it works: Medicaid today is administered as a joint state-federal program, whose costs go up and down as enrollment and health care costs go up and down.

  • Tennessee wants the federal government to convert the state’s Medicaid funding into a simple block grant, giving the state far more flexibility over how to spend that money.

What they’re saying: Critics fear a block grant would ultimately lead to states kicking people off their rolls or pulling back services.

  • “We’re committing ourselves to not doing that,” Gabe Roberts, Tennessee’s Medicaid director, told reporters Wednesday.
  • He said the plan has been modified since it was first proposed to clarify that the state would use its new flexibilities — and, ideally, savings — to cover more people or additional services.

Details: Tennessee’s proposed block grant would be based on its existing Medicaid spending and would increase each year based on federal projections of health care costs.

  • State officials believe their program would be cheaper than the status quo, and they proposed splitting those savings 50/50 with the federal government.

What’s next: Gov. Bill Lee told reporters Wednesday that this will be a negotiation with federal officials, with whom the state had discussed its plans as recently as last week.

The bottom line: This would be a radical transformation of a major health care program, and it’s not at all clear that the Trump administration alone — rather than Congress — has the legal authority to revamp the Medicaid program so thoroughly.