Democrats warn against Tennessee Medicaid block grant

A pair of Democrats from the House and Senate want a government watchdog to make sure Tennessee does not abuse funding if the Trump administration approves the state’s request to block-grant Medicaid.

In a letter sent Tuesday, Sen. Ron Wyden (D-Ore.) and Rep. Frank Pallone Jr. (D-N.J.) urged the Department of Health and Human Services’ Office of Inspector General to “exercise vigorous oversight” if Tennessee’s waiver request is granted.

Tennessee’s waiver request would cap the amount of federal funding the state receives to provide care for Medicaid beneficiaries. If approved, it could be the first block grant–type program in the nation.

Under Tennessee’s proposal, the state would receive a nearly $7.9 billion block grant from the federal government. The state would be responsible for any costs above that amount, but if it spends less, the state would keep half of all the unspent money.

Wyden and Pallone said the system would create a financial incentive for Tennessee to cut coverage benefits for consumers. 

“The scheme promoted by the administration and embodied in the Tennessee waiver proposal would threaten beneficiary access to care in many ways, including all but ensuring Medicaid dollars are diverted by purposes not allowed under federal law,” Pallone and Wyden wrote. 

Wyden and Pallone said the state’s request is illegal and the Trump administration does not have the authority to approve it. However, the Democrats said they don’t have much faith the administration will abide by the statutory restrictions. 

Imposing block grants in Medicaid has long been a major conservative goal and has been encouraged by the Trump administration.

Administration officials had drafted a guidance that would make it easier for states to apply for a capped payment or block grants, but the document was quietly removed from the White House’s Office of Management and Budget.

No states have been granted permission to date, but if Tennessee’s plan is approved, it would likely embolden other Republican-led states.