Trump Administration Approves First Medicaid Block Grant

With just a dozen days in power, the Trump administration last Friday approved a radically different Medicaid funding system in Tennessee that would, for the first time, give the state broader authority in running the health insurance program for the poor in return for the Limit its annual federal funding.

The permit is a 10-year “experiment”. Instead of the perpetual federal funding that rises with higher enrollment and health care costs, Tennessee receives an annual block grant instead. The approach has been advocated for decades by conservatives, who say states too often scrub under strict federal guidelines about enrollment and coverage and find ways to make care more efficient.

However, under the agreement, Tennessee’s annual funding cap will increase as filings increase. What’s different is that, unlike other states, federal Medicaid funding in Tennessee doesn’t automatically keep pace with rising Medicaid spending per person.

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However, the approval faces an uncertain future as the future Biden administration is likely to be against such a move. To unravel this, officials would need to set up a review that includes a public hearing.

In the meantime, the changes will be months in Tennessee as they require final legislative approval and state officials negotiate with the administration over quality of care goals.

TennCare, the state’s Medicaid program, said the block grant system would give it unprecedented flexibility in deciding who is insured and what services it will pay for.

Under the agreement, TennCare will have a set spending cap based on historical spending, inflation and projected future changes in enrollment. If the state can run the program at a cost less than the cap and maintain or improve the quality, the state will share in the savings.

Trump administration officials said the approach adds an incentive for the state to save money, as opposed to the current system, where higher government spending comes with more federal dollars. As Medicaid’s registration grows, the state can raise additional federal funding. If the registry goes down it will get less money.

“This groundbreaking waiver puts guard rails in place to ensure adequate oversight and protection for beneficiaries, while incentivizing states to manage costs and accountable for improving access, quality and health outcomes said Seema Verma, administrator of the Centers for Medicare & Medicaid Services. “It is no exaggeration to say that this carefully crafted demonstration could be a national model that is evolving.”

Opponents, including most proponents of low-income Americans, say the approach will jeopardize the care of the 1.4 million people on TennCare, which include children, pregnant women, and people with disabilities. Federal funding covers two thirds of the program costs.

Michele Johnson, executive director of the Tennessee Justice Center, said approving block grants was a step backwards for the state’s Medicaid program.

“No other state has applied for a block grant with good reason. It gives state officials a blank check and creates financial incentives to cut health care provision for vulnerable families, ”she said.

The agreement differs from the traditional bloc grants that Conservatives advocate because it allows Tennessee to get more federal funding to keep up with the growth in enrollments. In addition, while the state is given the flexibility to increase benefits, it cannot reduce it on its own.

Democrats have been repulsing block-grant proposals from Medicaid since the Reagan administration, and most recently in 2018 as part of failed Republicans’ efforts to repeal and replace key portions of the Affordable Care Act. Even some major Republicans turned down the idea because it would cut government funding by billions, making it harder to help the poor.

Implementing block grants through executive action, rather than getting Congress to amend Medicaid law, is also likely to be brought to justice.

“This is an illegal move that could put vulnerable people at risk in the midst of a pandemic,” said US Representative Frank Pallone, DN.J., Chairman of the House Energy and Commerce Committee, on his Twitter account. “I am confident that the Biden administration will reverse these harmful policies as soon as possible.”

Block grant approval comes because Medicaid registration is at its highest level ever.

More than 76 million Americans are covered by the state health program, one million more than when the Trump administration took command in 2017. The number of enrollments rose more than 5 million in the past year as the economy collapsed with the pandemic.

Medicaid, part of President Lyndon B. Johnson’s Great Society initiative in the 1960s, is an entitlement program in which the government pays each state a percentage of the cost of care for anyone eligible for health insurance. The more money states spend on Medicaid, the more they get from Washington.

As part of the approved demonstration, CMS will work with Tennessee to set spending targets that increase by a fixed amount each year.

The plan provides a “safety valve” to increase federal funding due to unexpected increases in enrollment.

“The safety valve will maintain Tennessee’s commitment to enroll all eligible Tennesseans without diminishing today’s benefits for beneficiaries,” CMS said in a statement.

Tennessee is committed to maintaining coverage for eligible beneficiaries and existing services.

In return for adopting this financing approach, the state receives a range of operational flexibilities from the federal government as well as up to 55% of the savings that are achieved annually if the expenditure falls below the total expenditure ceiling and the state fulfills these certain quality targets have yet to be set.

The state can spend this money on a variety of community health programs, including areas that Medicaid does not normally cover, such as: B. improving transport, education and recruitment services for subscribers.

The 10-year waiver is unusual, but the Trump administration has approved such long-term attempts in recent years to give states more flexibility.

Tennessee is one of 12 states that have not approved Medicaid’s expansion under the Affordable Care Act, leaving tens of thousands of working adults without health insurance.

“The block grant is just another example of how politics is ahead of health care during this pandemic,” said Johnson of the Tennessee Justice Center. “Now is absolutely not the time to waste our energy and resources on restricting access to health care.”

State officials welcomed the approval.

“It’s a legacy achievement,” said Tennessee Governor Bill Lee, a Republican. “This new flexibility means we can work towards improving maternal health coverage and removing the waiting list for the developmentally disabled.”

“This means that we can make additional investments in TennCare without reducing services and cutting providers.”

KHN’s chief Washington correspondent, Julie Rovner, contributed to this report. Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation that is not affiliated with Kaiser Permanente.

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