Kentucky’s Gov. Matt Bevin (R). (Timothy D. Easley/Associated Press)

WHEN REPUBLICAN Matt Bevin won the Kentucky governor’s race last year, 400,000 low-income people seemed doomed to lose their health coverage. An ardent Obamacare opponent, Mr. Bevin swore during his campaign to roll back the state’s Medicaid expansion. The expansion had extended coverage to nearly half a million Kentuckians, halving the state’s uninsured rate, under a provision of President Obama’s signature health-care law. This reversal would have added Kentucky to the list of 20 states irrationally refusing federal Medicaid money to cover needy people, and it would have put pressure on Republican leaders in other states to withdraw coverage, too.

Thankfully, common sense prevailed. The governor announced Wednesday that he would seek to reform Kentucky’s Medicaid program rather than amputate it. To some conservatives, this will no doubt seem like more evidence that social benefits, once extended, can never be taken away. That impression would make more sense if the case against expanding Medicaid were stronger. Instead, Mr. Bevin’s announcement reflects two crucial points. First, state leaders interested in governing rather than simply campaigning have no reasonable basis on which to reject federal Medicaid funding. Second, because the federal government is willing to allow states to experiment with Medicaid’s design within their borders, conservative politicians have the opportunity to reform as well as expand the federal coverage program. Mr. Bevin is embracing this option, and so should Republicans in the states that continue to lag behind, such as Virginia.

Mr. Bevin’s plan is to seek a waiver from the federal government allowing him to tinker with how the state subsidizes health coverage for Medicaid recipients. Possibilities include requiring covered Kentuckians to pitch in, perhaps through new premiums or co-payments. Depending on the details, this could substantially increase the financial burden on the state’s needy. But that risk pales in comparison with the disaster Mr. Bevin would have inflicted by denying coverage entirely. This is why the Obama administration has rightly granted waivers to GOP leaders in other states, such as Indiana, allowing them to expand Medicaid on terms that Republicans are more comfortable with. Indiana’s waiver, for example, permits the state to charge monthly premiums and to offer people incentives to get preventive care.

In other words, Medicaid expansion means states get to extend health-care coverage to thousands, pay practically nothing for it and rewrite the program’s rules, if state leaders want to. No clear-eyed leader could see this as anything but a tremendous bargain. Yet somehow the leaders of Virginia’s General Assembly have managed to deny reality for the past several years, even when offered opportunities to address the problems they claim to have with Medicaid expansion. They just rejected a proposal from Virginia hospitals volunteering to help cover costs associated with expansion. Gov. Terry McAuliffe (D) got behind the idea, as he has with previously proposed compromises. Virginia Republicans, however, said no. Thousands of indigent Virginians will continue to pay the price for their intransigence.