Tennessee’s Transition to Block Grant for Medicaid Will Mean More State Control but Finite Funding for Program

Regular readers of the ADEA Advocate may recall that Tennessee is planning to submit a request to the federal government to receive its Medicaid funding in the form of a block grant. While this newsletter has covered the basics of a block grant and how it would differ from the way Medicaid is currently funded in states, the Tennessean recently ran a story that goes more in depth regarding the changes that might occur under this type of funding.

In the May 14 edition of ADEA Advocate, we provided an overview of this potentially significant change to Medicaid funding. “If the state’s proposal were to be approved, the state would be the first to receive Medicaid funding through a block grant, and the waiver would mark a fundamental shift in the way the state-federal partnership funds the program. Medicaid is currently an entitlement program, meaning anyone who qualifies can receive coverage under the program and the cost of that coverage is split between the state and the federal government,” we stated in the May 14 issue. “Funding for the program is not fixed under this arrangement, and in Tennessee, the state currently covers about 35% of the costs, while the federal government covers just over 65%. By shifting to a block grant, the state would essentially be asking the federal government to place a cap on the amount of funds it receives. In exchange, the federal government would have fewer strings attached, and the state would receive increased flexibility in the way it administers the program.”