That’s a bad decision for Tennessee and an alarming portent of the next potential assault on the nation’s safety net.
Under the current Medicaid program, states and the federal government share the cost of caring for those who are covered — in Tennessee, the feds pay about two-thirds — and there is no cap on federal spending in any given state. This allows anyone who is legally eligible to receive covered services. Conservatives seeking to cut the Medicaid tab have long favored a different approach: handing states defined amounts for the purpose of covering low-income people, and allowing the states to sort out how to do so. The argument is that states know better how to cover their own people and they can probably do it at a lower cost.
Enter Tennessee, whose Republican governor is expected to sign a bill mandating that the state apply for a federal waiver asking for such a block grant. It is unclear whether the Trump administration has the authority to issue such a sweeping waiver, particularly after Congress considered and failed to approve a Medicaid block-grant policy. But news reports have revealed that administration officials are trying to find a way. Tennessee lawmakers, meanwhile, insist they do not want to hollow out their Medicaid program and that the state should only accept a waiver guaranteeing a sizeable block grant that grows over time.
In fact, they would set up their Medicaid program — and those who depend on it — for trouble. Even if Tennessee’s block grant grew with inflation, population growth and drug costs, a shock to the system — for example, a recession that rendered many more people eligible for and in search of Medicaid coverage — could leave Tennessee badly shortchanged. State leaders would have to cut benefits, cut eligibility or raise taxes.
Perhaps Tennessee lawmakers feel that risk is worth taking to free their hands in administering their own Medicaid program. But it remains unclear how they believe they could use new flexibility to restrain costs or otherwise reform the system without harming those on Medicaid. We reached out repeatedly to Gov. Bill Lee and did not get an answer.
The Trump administration, meanwhile, has done nothing to show that it could reduce requirements without in the end harming needy people. Tennessee should reverse course. If it does not, the administration should reject the state’s waiver request.