Op-ed: This billion-dollar issue is waiting for TN's next governor

The Tennessean
By: Stan Soloway, CAMI Board Chair

With November fast approaching, Tennessee's gubernatorial candidates have centered their campaigns on a familiar set of issues, from affordability to education. One issue that hasn’t received enough attention, however, is meeting the One Big Beautiful Bill (OBBBA) Act’s Medicaid requirements in the Volunteer State.

Following the passage of President Trump’s OBBBA last year, states must set up systems to confirm Medicaid enrollee addresses and prevent simultaneous enrollment across states, meet new error rate standards that carry fiscal penalties and institute work or volunteer requirements for able-bodied adults, among other stipulations.

Getting implementation right is critical. In 2024, The Centers for Medicare & Medicaid Services (CMS) estimated $31.1 billion in improper Medicaid payments nationally, with nearly 4 in 5 resulting from insufficient documentation and missed administrative steps. Importantly, this suggests that the problem is less about overt fraud or abuse and more about systemic challenges that lead to substantial waste – the type of waste that accumulates in aging systems, in data that does not match across records and in arcane processes often underpinned by arcane administrative policies.

Tennessee is an excellent example.

Tennessee's problems with Medicaid

The state’s Medicaid program has faced documented problems with its Eligibility Determination System, which a federal court ruling found had “ingrained systemic errors” that contributed to the improper termination of coverage for thousands of enrollees. Moreover, an earlier investigation found that Tennessee had been paying managed care plans on behalf of beneficiaries assigned more than one Medicaid ID number – identifying roughly $15.6 million in payments for which Tennessee had claimed federal reimbursement.

These were not cases of deliberate fraud, but rather the result of fragmented records and outdated, disconnected data systems. These are data-integrity gaps that OBBBA's new verification and anti-duplication requirements are meant to close, and precisely the kind of error that modern, connected systems can catch before a dollar goes out the door.

Implementing the OBBBA’S requirements will be complex for every state – especially considering the current funding model, under which the federal government has borne 90% of the cost for new systems, and there were few penalties for failures. As a result, most states have not invested in the kind of technology expertise, program management and oversight to ensure its system performs as intended.

Now, those failures will carry financial penalties. And although Tennessee did not expand Medicaid under the Affordable Care Act, and thus carries a comparatively smaller Medicaid enrollment base relative to other states, the administrative burden of the new provisions is nonetheless real. And the consequences include fewer federal dollars to cover the costs of health care for low income adults without children or permanent disabilities.

Learning from Medicaid reform in other states

In light of this, Tennessee's next governor would be wise to take note of the mistakes and successes of its neighbors Georgia and North Carolina, whose experiences offer valuable insight for implementing Medicaid provisions like work requirements.

Georgia was the first state in the country to launch a Medicaid work requirement program in the first Trump term. Georgia was then held up as a national model, until a 2025 report from the nonpartisan Government Accountability Office found the state’s Pathways program spent $54.2 million on administrative costs between 2020 and 2025. That's more than twice what it spent on actual health care coverage for the very few low-income adults that signed up.

This implementation failed, in large part, because it outsourced essentially the entire program to contractors, who built a costly but ineffective data management system that ultimately enrolled very few eligible individuals.

Conversely, when North Carolina expanded Medicaid, it did not default to a massive government hiring surge, nor did it outsource all of the work to the private sector. Instead, the state worked in collaboration with contractors with proven track records, leveraging their expertise while maintaining strong state oversight and accountability. This combination led to one of the smoothest rollouts in the country.

Tennessee's new governor needs a Medicaid plan

Ultimately, whether Tennessee meets OBBBA’s requirements, or causes qualified beneficiaries to lose critical coverage, will hinge on whether its next governor has a plan to translate new federal Medicaid obligations into real results for taxpayers and patients. This means making program modernization a top priority. And it means striking the right balance between public-private collaboration and sustained oversight.

Ensuring that public benefits programs are administered well, that resources reach eligible patients and that billing is accurate is not a partisan issue; it is a basic obligation of good government. It's an obligation that treats the people who rely on these systems with dignity, while giving taxpayers confidence that their money is well spent.

If Tennessee gets this right, it will not just protect its own taxpayers and patients – it will set the standard for how states across the country should approach Medicaid system modernization.