Expanding Medicaid has been one of the most politically contentious parts of the Affordable Care Act. The decision is a complicated one, especially in Republican-led states such as Pennsylvania.

Gov. Tom Corbett may have kept an eye this week on his fellow Republican governor in Ohio, John Kasich, who bypassed his own Republican Legislature to expand the state's Medicaid program.

As part of the Affordable Care Act, states have the option to provide coverage to low-income adults, with the federal government picking up most of the tab. Only about half the states so far have planned to do that, starting Jan. 1, and Pennsylvania has, so far, not been among them.

But Corbett is now canvassing the state touting his new "Healthy Pennsylvania" plan. It includes reauthorizing the state's children's health insurance program, but also calls for accepting the generous federal Medicaid funding to expand the program with certain caveats.

At the St. Christopher's Hospital for Children in North Philadelphia recently, Corbett said, "We need a medical insurance program that's designed for Pennsylvania. One size does not fit all," and outlined his concept.

Healthy Pennsylvania would direct newly eligible people, mostly low-income adults without children, into the health insurance exchange where they could buy private coverage. That's in contrast to how it works now, where the state puts Medicaid patients into private managed care plans or sets the rates for what doctors and hospitals are paid. Corbett's idea is to use those new federal expansion funds to help subsidize people buying their own individual plans instead.

Corbett is passionate about the reasoning behind Healthy Pennsylvania.

"Most important, it's not putting 500,000 more people into an entitlement program. It's putting them in a program where they are invested in the program, they are invested in their health care, in a way where a person in Medicaid may not have that same personal investment," he said.

Letting states 'be creative'?

Last month, the federal government approved a plan by Arkansas that allows new Medicaid recipients to shop for coverage on the insurance exchange. The Arkansas decision shows that the feds are willing to let states be creative with the expanded program.

Corbett's plan differs from that of Arkansas though, so federal approval is not guaranteed. He'd also change some current Medicaid benefits and include a job-training component.

"The governor is looking for a way to draw down the federal money," says Nicole Huberfeld, a professor of health law at the University of Kentucky. She's not surprised by Corbett's latest move – she believes the federal money can be too much of an opportunity for any governor pass up.

"The legislature may or may not be on board, but the governor recognizes a lot of federal money to be had that will likely save the state a lot of money in the long run," she said.

When the Supreme Court gave the states the option last year to expand Medicaid, many Republicans didn't have an appetite to do it, no matter who paid the bill, according to Matt Baker, a Republican lawmaker in Pennsylvania who chairs the state's House health committee.

"The Democrats in Harrisburg by and large support a full blown Medicaid expansion. The Republicans do not," he said. "And we're very, very concerned about the cost."

But Baker doesn't view Corbett's plan as an expansion because of the shared responsibility element and proposed changes to the current Medicaid program. He said he won't fully support the plan until he gets more details, but it doesn't appear to be facing severe political backlash.

Exercises in flexibility

In fact, conversations about Medicaid began seeping into the political discourse months earlier, when New Jersey Gov. Chris Christie, also a Republican, opted for an expansion.

"It would be foolish to leave people uninsured," said Pennsylvania Senate Majority Leader Dominic Pileggi. That would leave hospitals and doctors providing free care to "uninsured individuals while money we send to Washington goes to other states to deal with their issues."

Democratic leaders worry Corbett's moving too slowly and say they, too, want more details.

But at least some advocates for a full expansion are cautiously optimistic, including Michael Race of Pennsylvania's Partnership for Children. He was hopeful early on something would surface, and "while we would have preferred to see Medicaid expansion put on the table, the governor put a plan on the table that can still have a net effect."

The whole plan isn't a done deal, but Huberfeld said one thing is clear. Federal officials at the Department of Health and Human Services have signaled from the outset that they're willing to work with states to give them maximum flexibility to expand Medicaid under their own terms.

This story is part of a collaboration that includes WHYY, NPR and Kaiser Health News.