California has been an early and frequent booster of the Affordable Care Act (ACA) and the vast majority of the state’s politicians are committed to improving, rather than repealing, the law. But elections have consequences and so the best path forward for California is to seize the opportunities in the GOP effort to repeal and replace Obamacare.

There are at least two major areas where California could cooperate—even enthusiastically—with the Trump Administration and the Republican Congress. The first is on improving coverage and access for the working poor. The second is on controlling health care costs, particularly for small businesses and those who do not receive insurance subsidies.

The working poor in California gained coverage in two ways through the Affordable Care Act. More than one million received subsidies that allowed them to purchase new or newly affordable private health insurance. Nearly five times as many gained coverage through the massive expansion of Medi-Cal, the state’s Medicaid program for lower-income Californians. Though Medicaid is sometimes considered a program for people who are unable to work, fully two-thirds of adult recipients in the state are part of the labor force, according to an analysis by the Bay Area Council Economic Institute.

Helping the Working Poor in California

Working families often fall through the cracks in the current system. And they pass over these cracks frequently when their income fluctuates and they move “up” into private coverage through the state’s ACA marketplace, Covered California, or “down” into coverage through Medi-Cal. It also creates challenges for these families when parents qualify for subsidies for private insurance but their children end up on Medi-Cal, as is the case for people with incomes up to 250 percent of poverty.

More broadly, the transition to a new system of Medicaid financing, as many Republicans have proposed, presents both opportunities and challenges for California and its residents. Republicans in Congress have long supported more flexibility for state Medicaid programs. California should use this increased flexibility to manage the frequent churn between Medi-Cal and private coverage that many working poor experience. The transition between different types of insurance presents not only administrative difficulties for the working poor, but also threatens to disrupt the continuity of coverage and potentially access to care.

Republicans and Democrats have differences in views regarding whether Medicaid or private insurance providers ought to take the lead, but they should share the goal of creating a single health care program home for this population rather than two relatively stable platforms for the financing of care with a gaping chasm in between. States like Arkansas, for example, have innovated in this way. California’s solution may look quite different and embrace the values and priorities of the citizens of the Golden State, but the goal of providing seamless coverage to the working poor is the same.

Addressing Rising Health Care Costs

A second area of potential collaboration between California leaders and the new Republican leadership in Washington is in expanding access to affordable coverage more broadly to those who either do not receive subsidies through Obamacare or who work in small businesses that do not offer coverage to their employees. These Californians, more than any others, have seen increasing premiums, shrinking networks of providers, and mounting administrative burdens.

The challenge of rising health premiums is an issue that predates the Affordable Care Act but has remained a significant one even after passage of the law. Unfortunately, Democrats and Republicans have very different ideas regarding how to address rising costs. In particular, there appears to be a disagreement between the parties when it comes to how much financial exposure health care consumers should bear for the cost of their care. Republicans believe that financial responsibility generates incentives to control costs, while Democrats would advocate for more comprehensive, even first-dollar, coverage.

But we believe there is a way forward even on this seemingly intractable problem. The Affordable Care Act, in reality, already includes a great deal of cost-sharing. But the structure of that cost-sharing is flawed. California could seek permission from the federal government to introduce more value-based insurance design features in health plans offered on the state’s health insurance exchange.

Health care spending that should be encouraged, such as for preventive services, should be covered from the first dollar. But there should be even greater financial incentives for consumers to select higher value facilities, in particular, for elective procedures such as hip and knee replacements. This is one of many value-based insurance design features that could be added to leverage cost sharing more effectively and bring down health care costs for all.

Increasing Consumer Engagement

Furthermore, we believe that Californians ought to have access to a broader variety of consumer-directed health arrangements. The considerable acceptance amongst employers of health savings accounts, for example, suggests that they can be useful at responding to consumers’ desire for lower premiums and greater control over critical health care spending decisions — while also playing a role in reducing health spending more generally.

Although Californians were not a great source of support for Donald Trump or the Republicans in Congress during the recent election, that does not mean they cannot be the beneficiaries of new leadership in Washington, DC. As the debate over what might replace the Affordable Care Act heats up, California’s leaders can demonstrate that there is room for common ground in efforts to expand affordable coverage, reduce health costs, and encourage the move toward a truly value-based health care system.