LETTING STATES INNOVATE ON MEDICAID

In the realm of health care, proposals for change always provoke instant resistance. That reaction greeted Barack Obama when he proposed the Affordable Care Act — and re-emerged when Republicans tried to repeal it. So it’s no surprise that the Trump administration’s modification of Medicaid has come under fire.

But a reflexive attachment to the status quo is the enemy of progress. Medicaid is one of the nation’s biggest and most expensive social programs, covering one in seven adults under age 65 and costing nearly $600 billion in 2018. Making sure taxpayers spend no more than necessary and get the maximum benefit from every dollar is a worthy goal.

The Department of Health and Human Services plan will let states gain waivers from some federal rules in exchange for accepting block grants — a shift from open-ended individual entitlements. Currently, Washington covers from 50% to 75% of the cost of covering children, seniors, disabled people and pregnant women. In states such as Illinois that expanded coverage under the ACA to include low-income adults, the feds pay 90% of that cost.

Under the new HHS policy, states could apply new rules only to those adults covered under the ACA expansion. States that find ways to reduce costs would get to keep the savings. Supporters think better management can make the program more efficient, reducing costs without affecting the level of care. Critics fear that states will simply shrink coverage, to the detriment of needy recipients.

Either is possible. But there is no way to generate useful innovations without trying new things. Giving states more latitude, if they want it, offers policymakers the chance to adopt different reforms on a relatively small scale — and get answers that other states can learn from. Those governors and legislators who fail, of course, will have to answer to their constituents.

It’s worth remembering the dire warnings that were raised in 1996, when President Bill Clinton signed a welfare reform measure imposing work requirements and time limits on recipients’ benefits. In practice, though, the worst didn’t happen. Welfare rolls shrank and poverty rates declined.

Nor is the new Medicaid policy of value only to states that want to curtail coverage. “The new funding option could possibly have the effect of increasing the number of Medicaid beneficiaries in some states — namely the 14 that have not yet expanded Medicaid, who might see it as a more conservative way to move forward in covering poor adults,” reports The New York Times.

States that agree to the new arrangement would be allowed to impose premiums and copayments on recipients but could not require anyone to pay more than 5% of their income. That would discourage unnecessary visits and treatment.

States also could exclude some prescription drugs from coverage — a lever that could be used to extract lower prices from pharmaceutical companies. In 2018, the notably progressive state of Massachusetts wanted federal permission to try this approach to “avoid exorbitant spending on high-cost drugs that are not medically necessary.” But the Trump administration refused. Now Massachusetts will have the option. And should it seize the chance and realize successful results, other states could follow suit.

In all, the administration’s new rules are a modest, reasonable change. As Supreme Court Justice Louis Brandeis wrote in 1932, “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”

Will this Medicaid experiment be a success, a failure or something in between? There is only one way to find out.