A group of Tennessee Medicaid recipients has filed a lawsuit seeking to halt a plan that would make contentious changes to the state’s program designed to provide medical coverage to the poor.
According to the federal lawsuit filed this week in U.S. District Court for the District of Columbia, the Tennessee Justice Center — who is representing the recipients — claims the federal government under then-President Donald Trump exceeded its authority in approving the proposal. The complaint also argues Trump’s administration failed to provide enough time for the public to provide their feedback on the plan.
“Tennessee has a long history of mismanagement and bad Medicaid policy. Tennessee is the last state that should have an experimental waiver that puts vulnerable populations at risk,” said Michelle Johnson, executive director of the organization that regularly represents the state’s Medicaid recipients.
In Tennessee, the Medicaid program is called TennCare. It covers a limited group of about 1.5 million people, or about 22% of the state’s population, primarily low-income pregnant women, children up to age 21, the elderly and the disabled.
This week’s lawsuit comes after Republican Gov. Bill Lee declared in January that Tennessee had become the first state in the nation to be approved to receive funding in a lump sum for its Medicaid program through a block grant program. Trump’s administration signed off on the idea shortly before the former president left office.
The overhaul’s fate remains unclear under President Joe Biden. The Democrat who has opposed Medicaid block-grant efforts, can rescind the change, but has not taken any action on it to date.
Supporters had pushed for the idea, claiming that a block grant-style program would produce flexibility and savings inside TennCare that would then fuel additional health coverage offerings. Lee, and other supporters, said the new plan would do all of this without cutting benefits or eligibility.
Currently, the federal government pays a percentage of each state’s Medicaid costs, regardless of cost increases in any given year. For Tennessee, that means receiving approximately $7.5 billion in federal money for its $12.1 billion Medicaid program, or 66%.
Republicans argue the current system gives states little incentive to control expenses because no state pays more than half the total cost.
However, Democrats and health advocates have expressed concern that spending caps might cause states to purge their rolls or reduce services. They instead want to widen Medicaid eligibility.
The 65-page lawsuit argues HHS exceeded its statutory authority when it authorized the block grant program as an “experimental waiver.” The lawsuit describes the approval as “arbitrary and capricious and an abuse of discretion,” noting that the experiment received approval to be in place for 10 years.
The HHS agency did not immediately return a request for comment Friday.
“The (project) is not an experimental, pilot, or demonstration project, nor is it likely to promote the objectives of the Medicaid Act,” the suit claims.
TennCare officials disputed the criticism Friday, countering that the new changes will be a benefit to the state.
Under the block grant, if Tennessee’s rate of growth in expenditures is below the national trend, the state will receive a portion of the savings that it can reinvest in health initiatives.
“Seeking to vacate TennCare III’s approval only harms the very Tennesseans the organizations behind this lawsuit purport to advocate for,” the department said in a statement.