(Bloomberg View) — Republicans in some states are softening their opposition to expanding Medicaid — so long as the federal government grants the states increasing latitude over how to run the program. Done carefully, this could be good for everyone.
Have no illusions: Some of these changes would serve no good purpose. Charging premiums for coverage only dissuades people from signing up, for example, and requiring people to look for work as a condition of getting insurance is an invitation to bureaucracy. (Pennsylvania, which proposed a work requirement, said its plan would need 723 new workers, compared with dozens in other states.) The federal government should establish minimum conditions and stand by them.
But the rush of Republican-led (or -forced) innovations could also benefit Medicaid as a whole — either by improving quality and lowering cost, or by not. The trick will be using these lessons to improve Medicaid elsewhere.
Take Arkansas, where Democratic Gov. Mike Beebe sidestepped opposition in the Republican-controlled legislature by enrolling poor adults not in traditional Medicaid, but in the same exchange-based plans serving slightly wealthier Obamacare beneficiaries. That allowed Beebe to argue that he wasn't expanding Medicaid at all; instead, he was creating a new type of health-care program, called the "private option."
The maneuver wasn't perfect. Exchange coverage is more expensive than traditional Medicaid, and the private option is already 4 percent over budget. But the Arkansas experiment will help determine if paying health-care providers more to treat Medicaid patients leads to better health outcomes over time, potentially saving money.
And by putting all Affordable Care Act beneficiaries in the exchanges, Arkansas eliminates "churning" — when people are forced out of one plan and into another because their incomes changed during the year. Will that boost enrollment? By how much? Nobody's quite sure — but the experience in Arkansas might provide an answer.
Another state worth watching is Michigan, where those who are newly eligible for Medicaid can save money on doctors' visits by submitting to an annual health assessment. Many employers use such evaluations for their workers in order to spot problems early and intervene. Michigan's program will help show whether that approach lowers costs for poor people.
