U.S. Senator Lamar Alexander wants to resurrect what he calls a “grand swap” that would save states like Tennessee hundreds of millions of dollars a year.
The former Tennessee governor made the proposal Wednesday before a joint session of the Tennessee General Assembly.
The idea, in broad strokes, is that the federal government would handle the cost of Medicaid, whiles states like Tennessee would take over take over complete funding for education and smaller functions like workforce development.
Alexander, who served as Tennessee governor from 1979 to 1987, told state lawmakers that he made the same proposal in 1984 to then President Ronald Reagan.
“He liked the idea,” Senator Alexander told lawmakers, “but it went nowhere.”
Alexander thinks the time is right to consider the idea again.
He said Tennessee would save $371 million a year under such a “grand swap.”
The senator pointed to areas like tuition for Tennessee's 200,000 college kids as areas that would be helped.
He said the cost of Medicaid for states like Tennessee has meant cutting funding for state institutions which in turn has led to higher tuition.
By law, states handle about a third of the cost of Medicaid which was designed primarily for lower income individuals.
The federal government handles about two-thirds of the cost.
Medicaid costs in Tennessee take up more than a quarter of the state budget.