Tennessee Becomes a Laboratory of Radical Medicaid Reform

It's often said that our federal system of government allows states wide latitude to experiment with ways to make government more efficient or just work better. There are numerous examples where pilot programs begun at the state level end up being adopted by Washington.

But such experimentation has never been tried on Medicaid reforms. Medicaid is run by the states but every state is reimbursed a certain amount by Washington for every program beneficiary. It's a program that cries out for drastic reforms.

The Medicaid program is racked with incompetence  and corruption. Just last year, it was discovered in an audit that the state of Illinois spent $4.6 million on paying Medicaid benefits to dead people. Back in 2013, the state in another audit discovered that nearly half of all Medicaid beneficiaries enrolled were actually ineligible to receive benefits.

Now the Trump administration wants to reform Medicaid not be tweaking the program here and there, but by radical surgery.

The Hill:

“There’s an aggressive point of view in CMS [Centers for Medicare and Medicaid Services] leadership which wants to do things with Medicaid. One of them was work requirements, but it hasn’t gone so well," Miller continued. "Another way is to do some sort of ... block grants.”

The administration is currently reviewing a plan from Tennessee to convert Medicaid into a block grant, a proposal that, if approved, could be the first in the nation.

Imposing block grants in Medicaid has long been a major conservative goal, and with time running down in President Trump’s first term, the administration is facing pressure to approve a plan advocates argue may not be legal without congressional approval.

Work requirements for Medicare has been the subject of dozens of lawsuits across the country. But what about the federal government sending states Medicaid money in a block grant? Administrative costs are reduced substantially, states have a freer hand in managing the money, and taxpayers save.

So what's not to like?

“Many states have expressed a willingness to be held accountable for improving outcomes in exchange for greater flexibility and budget certainty. Block grant and per capita cap proposals are two such alternative financing approaches,” Verma said. “We are encouraged by this interest.”

Block grants are popular with Republicans who want to constrain Medicaid spending, but are fiercely opposed by Democrats, who argue the changes require harmful cuts in the program.

Democrats say giving states Medicaid money in a block grant could result in some people not getting benefits while others would be kicked off the Medicaid rolls. Apparently, Democrats think the hearts of state Medicaid officials are two sizes too small.

Will Democrat's scare tactics work? Perhaps not in this case.

“This proposal will not result in any reduction in eligibility, no limits to benefits, and will bring more money into the state,” Roberts said. “We are not looking for flexibilities to deny people access to drugs, or to deny people benefits.”

Under Tennessee’s proposal, the state would receive a nearly $7.9 billion block grant from the federal government, which is based on projected Medicaid costs. The amount would be adjusted for inflation, but unlike a traditional block grant, it could increase in the future based on enrollment.

If enrollment drops, the block grant amount would not decrease.

It's ludicrous for Democrats to continue to treat the budget as if it's holy writ, not to be touched or even debated. This nation is spending itself to perdition and there's no urgency to initiate reforms that will prevent us from toppling over the cliff.

Every year that passes without reform of Medicare, Medicaid, and Social Security will make it that much harder when the day of reckoning happens.