“Restoring Medicaid,” What happens when states switch to Block Grants? I came across a NYT article citing Seema Verma’s approval of the Tennessee’s Block Grant recently. The Tennessee Block Grant is mentioned in section ” Revoke The Block Grant Initiative” of my post Restoring Medicaid.
What Are Block Grants?
Government funded normal Medicaid has established rules for coverage and benefits. In an exchange for greater freedom offered to states and an open-ended payment commitment, states pay a share of Medicaid. Using the Block Grant initiative and capped federal funding , states can decide what services to provide.
If the Block Grant spending is less, Tennessee can keep 55% of any savings. Savings can be used for anything related to healthcare and not just Medicaid. If the spending increases beyond the Cap, Tennessee makes up the difference. Program limitations can change to allow the spending cap to grow if enrollment increases such as what is happening during the Pandemic.
Medicaid pays for a wide variety of pharmaceuticals and pays the lowest price “today” of any pharmaceutical purchase in the United States. Under a Block Grant, Tennessee negotiates the drug pricing. One danger is if a drug is too expensive, Tennessee can reject covering it in its formulary.