Tennessee waltzes down the wrong path with Medicaid block grant proposal

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Medicaid is a vital part of the public safety net, providing comprehensive health care to more than 70 million Americans, mostly low-income children, pregnant women, seniors, and individuals with disabilities. Current efforts to stretch the use of waivers in states like Tennessee bear watching in Oklahoma as state leaders seek alternatives to simple Medicaid expansion as proposed in State Question 802.

One way states can tailor their Medicaid programs to their own residents’ needs is by negotiating waivers with the federal government. Under one kind of Medicaid waiver, known as Section 1115 waivers, the federal Centers for Medicare and Medicaid Services (CMS) are authorized to waive certain provisions of federal law so states can test new approaches to assist promotion of the Medicaid program’s objectives. In Oklahoma, the Soonercare and Insure Oklahoma programs are run through an 1115 waiver first approved in 1996.

In September, Tennessee became the first state to submit a Medicaid block grant proposal to CMS. Under its proposal, Tennessee would receive a fixed amount of federal dollars that would be adjusted annually on a per-enrollee basis rather than continuing to receive open-ended federal matching funds tied to the state’s Medicaid expenditures. If the state operates the program at less cost than under federal projections, the state and the federal government would share the savings equally.

Tennessee contends that its proposal would recognize “the state’s efforts to contain costs and improve program quality, while providing a meaningful incentive to continue building on those efforts to make TennCare a stronger and more effective program.” However, the reality is that Tennessee’s block grant proposal would pose a serious threat to access to care for the state’s Medicaid population.

Tennessee’s block grant would give the state vastly expanded authority to redesign its program exempt from traditional Medicaid rules and oversight by limiting the amount, duration, and scope of core benefits; eliminating optional benefits without federal approval; exempting Tennessee from all federal rules and protections for managed care plans; and excluding coverage of FDA-approved prescription drugs.

Of particular concern is the exemption from all minimum coverage requirements for mandatory benefits. Under this exemption, Tennessee could eliminate basic services for children and patients with health conditions considered lower priority, and family planning services. These services and others, such as physical therapy, occupational therapy, hospice, and transplant coverage, could be limited or eliminated entirely without federal oversight or public notice.

Under the block grant proposal, Tennessee would also have a strong financial incentive to eliminate as many services as possible. For every dollar it cuts from the TennCare program, the state would receive 50 percent of the savings. The proposal would allow the state to divert federal Medicaid dollars to a wide range of other state expenditures, such as costs it already incurs for social services or anything else it might deem health related.

At the same time as it incentivizes the state to restrict health care, the block grant also would put Tennessee at risk of inadequate federal Medicaid funding over time to deal with the state’s health needs. Federal Medicaid spending would be limited by annual caps and would not increase further, with dangerous consequences for families.

Although Tennessee is the first state to submit a Section 1115 block grant proposal, other states, including Alaska, are said to be considering the idea.

There has been speculation that Oklahoma officials, in trying to develop an alternative to the straight Medicaid expansion envisioned by State Question 802 that appears headed for the ballot in 2020, may propose a package that would couple expanded coverage with transformation of Medicaid into a block grant.

Rather than tilting at windmills with a legally questionable approach that poses serious threats for the state’s Medicaid population, our state should focus on tried and tested ways of improving access to care and health outcomes for Oklahomans.

David Blatt is the former executive director of the Oklahoma Policy Institute