Medicaid innovation could look like this. Photographer: Justin Sullivan/Getty Images
Medicaid innovation could look like this. Photographer: Justin Sullivan/Getty Images

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 Governor 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.

Finally, Iowa and other Republican-led states are making newly eligible Medicaid beneficiaries pay more for their care than they would under the traditional program. While charging premiums makes no sense, higher co-payments than in the normal program just might.

The key will be designing those payments to discourage less efficient care, such as nonemergency trips to the emergency room, without imposing undue hardship or keeping people from seeking the care they need. The results will show whether those states have succeeded -- or whether co-payments for the poor do more harm than good.

This wave of experimentation doesn't outweigh the harm done by politicizing Medicaid expansion. Some 5 million Americans can't qualify for health insurance because 24 states have so far refused to accept the new federal money. Of those states, only five are looking at waiver programs.

How can the federal government make the best of this? It can keep enticing states while steering them away from punitive policies. And the federal waivers now being issued generally run out after five years; if their innovations don't improve costs or health, the programs shouldn't be extended. If they work, the Medicaid agency should encourage their use elsewhere.

Meanwhile, the message to the remaining 19 holdout states is this: If you've got a smarter way to cover the poor, stop preening and prove it. Adopt the approaches that have worked the best so far or come up with something better. Y'all listening, Texas?

To contact the senior editor responsible for Bloomberg View's editorials: David Shipley at davidshipley@bloomberg.net.