Year of Publication



Martin School of Public Policy and Administration

Degree Name

Master of Public Financial Management

Committee Chair

Dr. Merl Hackbart

Executive Summary

Medicaid is a federal-state partnership to provide health coverage benefits to certain vulnerable groups. Each state is responsible for administering its own Medicaid program in accordance with certain federal rules which include mandatory benefits for covered groups, namely, low-income children and their parents and aged, blind, and disabled individuals. There are additional groups which may be covered by Medicaid at the discretion of the state. As a partnership, the federal government covers a certain percentage of Medicaid expenditures in each state. This agreed upon rate is the federal medical assistance percentage or FMAP. Tennessee’s FMAP is set at 66.1% for 2021 (KFF 2021). Federal matching is unlimited for entitled groups meaning there is no upper limit on how much federal funding a state may receive in a budget period as long as the state is covering the mandatory population and matching expenditures with state dollars. The amount of federal funding received is based on the actual enrollment in the program and determined by the FMAP (Pellegrin 2017). States can apply for waivers which allow them to waive some of the federal rules and design their own state-specific Medicaid programs. Tennessee’s Medicaid program has been operating under a Section 1115 demonstration waiver1 since 1994 when the program first became known as TennCare (TennCare 2020). This waiver has been renewed every five years since that time with significant amendments made over the years with respect to which groups are entitled to the program and how the program is administered. Most notably, in 2005, TennCare was overhauled in response to a budget crisis and the new waiver amendment allowed for the disenrollment of uninsured and uninsurable adults from the program. This resulted in the 1 Section 1115 waivers “allow[s] the HHS Secretary to waive certain provisions of federal law in state Medicaid programs to test policies that are likely to promote program objectives” (Guth, Rudowitz and Musumeci 2021). disenrollment of approximately 170,000 adults and a reduction in spending of $1.7 billion (Pellegrin 2017).