For several months, the Trump administration has been engaged in an internal debate over the merits of allowing states to partially expand Medicaid under the terms of the Affordable Care Act (ACA). Now, after losing the House to Democratic control (and thus also losing any opportunity to repeal and replace the ACA until at least 2021), the administration is said to be ready to make a decision in favor of allowing partial Medicaid expansion to proceed under state waiver requests.

Federal law might be hard to change in Washington, but in some cases, states are able to take advantage of flexibility built into federal law to develop new programs and approaches. This is true under federal Medicaid law and it is also true under the ACA, which is why CMS recently stepped up efforts to support state-specific strategies to improve their individual health insurance markets and to develop alternatives to Obamacare that better meet the needs of their residents.

More than 12 million nondisabled, working-age Americans are enrolled in Medicaid. They receive medical care that is virtually free, and in most states they are under no obligation to work or seek work.

Sounds like a great deal.

Until you consider how much these “free” benefits may cost a recipient over the course of a lifetime. That could total more than $323,000 in foregone wages for men and over $212,000 for women, according to a study by the Buckeye Institute, an Ohio-based free-market think tank.

The scope of what can be changed under section 1332, at least in theory, is impressive. While states can’t alter the ACA’s protections for people with pre-existing conditions, or allow insurers to deny coverage or charge higher premiums to consumers with high expected health costs, they can:

  • use federal funding for the premium tax credits payable under the ACA to provide subsidies to individuals in a different manner;
  • alter the essential health benefit requirements of the ACA;
  • change other ACA insurance rules; and
  • terminate the ACA exchanges while building new mechanisms for establishing enrollment in health coverage.

As several states consider expanding Medicaid eligibility to able-bodied individuals above the poverty level, Virginia state officials have announced huge, unexpected Medicaid costs are threatening to siphon funding from programs such as education.

Although Virginia lawmakers insist the new cost burden is not related to Medicaid expansion, they acknowledge the program’s share of the budget has been growing for years and has led to $460 million in unforeseen Medicaid costs.

Officials in states across the U.S. showed little interest for years about looking into the black box of pharmacy benefit managers, the pharmacy supply-chain middlemen who have been shrouded in secrecy as they pour billions of dollars worth of prescription drug rebates into state coffers.

Louisiana’s legislative auditor wanted to know how the state’s expansion of Medicaid under Obamacare was doing, so he picked 100 people who were deemed eligible under the rules.

He found that 82 of them made so much money that they shouldn’t have qualified for the benefits they received.

Auditor Daryl G. Purpera, who issued his findings last month to little fanfare outside of Louisiana, figured if those statistics hold true for the rest of the expanded Medicaid population in his state, then the losses to ineligible beneficiaries could be as high as $85 million.

The Trump administration has again approved new rules for some of Kentucky’s Medicaid population, requiring them to either get a job, volunteer in the community or go to school to keep their government-funded health coverage.

The Kentucky Cabinet for Health and Family Services announced the approval on Tuesday, nearly five months after a federal judge blocked the state’s first attempt. State officials say the new rules can begin as soon as April 1 and will be phased in regionally over several months. They will require adults ages 19 to 64, with some exceptions, to complete at least 80 hours per month of “community engagement” to keep their health benefits. That includes getting a job, looking for a job, going to school, volunteering for community service or taking a job training course.

Texas v. Azar likely will incite another episode of Washington hysteria and irrationality. It also will give states the chance to divert health care policy from its calamitous course.

Congress should proceed deliberately and let states lead the way.

In May New Jersey imposed a health-insurance mandate requiring all residents to buy insurance or pay a penalty. More states will feel pressure to follow suit in the coming year as the federal mandate’s penalty disappears Jan. 1 and state legislatures reconvene, some with new Democratic majorities intent on “protecting” ObamaCare. But conflicts with federal law will make state-level health-insurance mandates ineffective or unduly onerous, and governors and legislatures would do well to steer clear.

While states can require citizens to purchase health coverage, they will have trouble ensuring compliance.