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Will a Medicaid Block Grant Harm Tennessee Seniors?

Updated: Oct 6, 2022

In late April, the Tennessee Legislature passed a bill ordering the governor to seek federal approval to transform TennCare, the $12 billion Medicaid program covering 1.3 million Tennesseans, from an open-ended entitlement program to one where the federal government makes fixed payments.

Under current law, Medicaid reimburses the state a fixed percentage on its Medicaid costs, with Tennessee receiving approximately $7.6 billion in federal money for its $12.1 billion Medicaid program, which state Republicans say gives little incentive to keep expenses under control because no state pays more than half the total cost. The new bill — HB1280/SB1428 — would “convert the federal share of all medical assistance funding for this state into an allotment that is tailored to meet the needs of this state and that is indexed for inflation and population growth.”

Tennessee Republican Gov. Bill Lee indicated he will sign the bill but vowed not to accept any grant that reduces funding for the state.

Should the measure succeed, Tennessee would become the first, and only, state to fund its Medicaid health care program through a block grant.

Supporters of the block grant approach argue it will enable states to design more efficient Medicaid programs that provide better benefits, cover more people, and save money.

But opponents, including providers and patient advocacy groups, warn that capped models like block grants or per capita caps would lead to reduced Medicaid funding over time and require states to cut enrollment, benefits, and payment rates.

Grace Smith, executive director of the Council on Aging of Middle Tennessee, said she is concerned a federal block grant capping the amount of money Tennessee receives will lead to a reduction in services for everyone in the program. “Sixty-one percent of our nursing home care is funded by TennCare, so when older adults outlive their savings, TennCare is that safety net for the majority of residents,” she said.

The risk is particularly acute for older adults, since they are more likely to have chronic conditions that require expensive care not covered by Medicare. Because of the great expense, often running as much as $100,000 per year, many persons become Medicaid-eligible after spending their life savings for necessary daily care.

Older adults in nursing homes could be especially hard hit. TennCare is projected to spend $1.07 billion this fiscal year on nursing home care for about 24,000 people, according to an agency spokeswoman. It is one of the most expensive services TennCare provides. Should Tennessee run out of its annual capped federal funding, it could lead to a political fight for resources among different interest groups.

Opponents also worry that a block grant would deprive older Tennesseans of many protections provided by federal Medicaid law, such as provisions that keep married couples from being driven into complete poverty by one spouse’s need for long-term care. “It is important that our elected officials understand that the Medicaid block grant approach will impact everyone,” said Barbara McGinnis, Certified Elder Law Attorney and partner at Takacs McGinnis Elder Care Law, PLLC. “It’s not just TennCare beneficiaries who are at risk.”


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