Federalism in a Time of Coronavirus: The Trump Administration,Intergovernmental Relations,and the Fraying Social Compact

Abstract

This article examines Trump administration social welfare policies in order to better understand their implications for American federalism and the evolving welfare state. We focus particularly on the use of waivers and other administrative tools to promote work requirements and benefit restrictions in the two largest means tested spending programs: Medicaid and SNAP. These policies are accelerating the fragmentation of America’s welfare state and continued movement toward variable speed, “fend for yourself” federalism. This hyper-partisan, polarized, variegated model of federalism is resulting in increasingly diverse patterns of state implementation of national policies.

Keywords

Trump administration Medicaid variegated federalism welfare reform waivers

Introduction

In addition to its economic and public health effects, the COVID-19 pandemic has posed enormous governance challenges for the United States, including incoherent and ineffective federal policies, diverse and conflicting state responses, and fractious intergovernmental relationships. These failures are themselves symptoms of broader and more far reaching trends in American federalism and public policy. Both state and national responses to COVID-19 underscore the erosion of cooperative, technocratic federalism, which public health has traditionally exemplified, and continued movement toward what we have called a more variable speed form of federalism (Conlan et al. 2016). Variable speed federalism is akin to the concept of differentiated integration in Europe, wherein “European states, or sub-state units, opt to move out at different speeds and/or toward different objectives with regard to common policies” (Dyson and Sepos 2010, 4). In the U.S. context, it epitomizes an increasingly diverse set of federal-state relationships, in which polarized states respond in different ways to federal policy initiatives, such as rapidly or gradually expanding Medicaid under the Affordable Care Act, accepting it in modified form through a waiver process, or choosing to decline it altogether. A similar pattern of varied responses has been evident in fields ranging from immigration to environmental protection. The intergovernmental policies of the Trump administration are reinforcing this underlying trend in American federalism, and thus accelerating the fraying and fragmentation of America’s welfare state.

When implemented within a framework of variable speed federalism, this delegated, multi-sectoral governance model raises significant accountability and co-ordination issues amongst various stakeholders (Morgan and Campbell 2011). States have been allowed to deviate from normal statutory requirements and employ a variable speed model that permits the outsourcing of certain health care services and greater state reliance on market mechanisms (Bulman-Pozen and Metzger 2016). This approach has been accelerated by the Trump administration, which has actively deployed the tools of executive federalism and the administrative state (waivers, funding constraints and executive orders) to alter intergovernmental relations, expand opportunities for state variance from national standards, and disentitle the poor (Thompson, Wong, and Rabe 2020).

In this article, we examine recent policies toward critical means tested programs in order to better understand their implications for American intergovernmental relations, variable speed federalism, and the evolving welfare state. We focus on the two largest federal means tested spending programs that are administered by the states—Medicaid and SNAP—which together account for over two-thirds of all mandatory means tested federal outlays (Congressional Budget Office 2019). Specifically, we examine the Center for Medicare and Medicaid Services’ (CMS) efforts to utilize guidance letters and Section 1115 waivers to permit and promote state imposition of workfare requirements in Medicaid and to provide a backdoor entry for Medicaid block grants. We also examine the intergovernmental and social welfare implications of the Trump administration’s strengthening of work requirements in SNAP, by changes to the Able-Bodied Without Dependents (ABAWD) rule. Those investigations show that the Trump administration has sought to accomplish through administrative means a punitive and state-focused public welfare agenda that it has been unable to accomplish through statutory means. In sum, we seek to place contemporary public health challenges within the broader context of sustained efforts to further disaggregate and diminish America’s traditionally patchy welfare state, and what this portends for our evolving federal system.

Setting the Stage for Trump Administration Initiatives: The Use of Executive Discretion to Advance Variable Speed Federalism

The development and expanded use of waiver authority in the intergovernmental programs authorized by the Social Security act, as well as other tools of administrative discretion, laid a foundation for the Trump administration’s efforts to reduce social spending and increase state discretion. These efforts are examined in detail in the following section of this article. To place them into context, it is helpful first to examine the decades long dance between legislative and administrative attempts to expand state discretion in the administration and implementation of intergovernmental means tested programs, in which the legislative efforts at devolution under presidents Nixon and Reagan gave way to the expanded use of waivers and other administrative tools under subsequent administrations (Conlan 1988).

Waivers and Means-tested Programs

Section 1115 of the Social Security Act, first established in 1962, enables administrators at the federal and state levels to experiment with policy initiatives without modifications to the underlying statute. These waivers have been used extensively in programs authorized under the Social Security Act (particularly in Medicaid and welfare programs) to bypass a potentially recalcitrant Congress. Initially such experiments were restricted in scope and duration. However, by the late 1980s and early 1990s waivers were used to experiment with welfare program work requirements in several states with Republican governors (Williams 1994). Extensive waiver policy experiments in states like Wisconsin and Michigan paved the way toward a major statutory reform, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in August 1996 (Arsneault 2000).

Under this welfare reform act, AFDC was transformed from an entitlement into a block grant program—Temporary Assistance for Needy Families (TANF)—administered by the states. In place of open ended federal matching grants for cash assistance to the poor, states under TANF receive fixed sums of federal money (block grants) with considerable flexibility. TANF was thus a landmark in conservatives’ efforts to devolve means tested intergovernmental programs, and Section 1115 demonstrations played a major role in the lead up to its enactment.

Although PRWORA left the basic structure of the food stamp¹ program intact, the program was modified to require working adults aged eighteen to forty-nine (Able-bodied adults without dependents, ABAWDs for short) to work, volunteer or attend workfare programs a minimum of eighty hours a month or twenty hours a week in order to receive nutrition aid (Haskins 2007). ABAWDs who do not participate in employment and training programs have their benefits cut after three months. However, this too came with considerable state discretion. Indeed, states can request to waive the ABAWD time limit in areas with an unemployment rate above 10 percent. In 2005, before the recession, states had waivers for areas representing 35 percent of the U.S. population (Center Budget and Policy Priorities 2017).

The Bush administration also pursued a devolution agenda, proposing to block grant Medicaid (Lambrew 2005) and to enact a so-called superwaiver proposal as part of its TANF reauthorization plan (Allard 2007). Under the superwaiver proposal, “governors would be allowed to request discretion over the funding and administration of a host of programs: TANF, food stamps, the Child Care and Development Block Grant, the Workforce Investment Act, and temporary and public housing programs” (Allard 2007, 320). Both the Medicaid block grant and the superwaiver proposal faced congressional opposition and were dropped, but the Bush administration actively utilized section 1115 waivers to promote greater state diversity.

Considerable accommodations to state policy preferences continued under President Obama. The Affordable Care Act kept existing intergovernmental relationships largely intact and represented a compromise between a national insurance program and a cooperative federalist structure where national standards are open to interpretation by individual states and localities (Hacker 2019, 38–49). This accommodation to the underlying variability of the federal system was a deliberate strategy on the part of the Obama administration.

It was greatly reinforced after the Supreme Court rejected the ACA’s mandatory expansion of Medicaid coverage in NFIB v Sebelius. After Sebelius, several states that initially refused to expand their Medicaid programs were persuaded to do so through section 1115 waivers that entailed various personal responsibility measures (Richardson 2019, 443). These states were allowed to shape policies according to their own programmatic and ideological priorities, continuing a pattern of “patchwork federalism” for the poor, where experiences of the safety net vary tremendously depending on geographical location (Gilman 2019).

The implementation of health care reform thus illustrated the logic of “variable-speed” federalism, whereby liberal and conservative states are permitted to pursue very different policy agendas and adopt federal initiatives at different speeds (Conlan and Posner 2016; Conlan 2017). Under this logic, policy differences between states have become institutionalized and entrenched, resulting in an increasingly divided union. At the same time, conservatives since the 1990s have sought to apply the TANF playbook (work requirements as a condition of eligibility for assistance, block grants and time limits) to the rest of the American safety net, with a particular focus on food assistance and Medicaid (Daguerre 2017). These ideas have been at the core of various states’ experiments carried out by Republican governors, described by Gilman (2019, 85), as “welfare creep.” They were embraced by Donald Trump’s administration.

The Trump Administration: Deploying the Tools of the Administrative State to Erode Means-tested Programs

Although Donald Trump campaigned as a populist candidate in 2016, he expressed a willingness to sign legislation that would entail “big cuts in social programmes, especially health care, aggressive deregulation in finance, environmental and consumer protection, and, most of all, large tax cuts for the wealthy” (Pierson 2017, 111). Donald Trump, in Time to get tough (2011), advocated using block grants and expanding work requirements:

The secret to the 1996 Welfare Reform Act’s success was that it tied welfare to work. To get your check, you had to prove that you were enrolled in job-training or trying to find work. But here’s the rub: the 1996 Welfare Reform Act only dealt with one program, Aid to Families with Dependent Children (AFDC), not the other seventy-six programs which, today, cost taxpayers more than $900 billion annually. We need to take a page from the 1996 reform and do the same for other welfare reform programs. (Trump 2011, 116)

In part, this was a reaction to the Obama administration’s efforts to expand several low income programs, first through the American Recovery and Reinvestment Act (2009) and second through the ACA and Medicaid expansion. The Recovery Act suspended the SNAP time limits in 2009 and 2010; these waivers expired as the economy recovered, and time limits returned to historic levels in 2017 (Center on Budget and Policy Priority 2017). Medicaid/CHIP enrollment grew by 17 million individuals, or 30 percent, between 2013 and 2016, according to the Office of the Assistant Secretary for Planning and Evaluation (ASPE 2017). The share of health care in total federal obligations on low-income programs grew by 77 percent between 2008 and 2015 (Spar and Falk 2016). SNAP spending peaked in FY2013 at $83 billion, while Medicaid spending nearly doubled, from $251 billion in 2009 to $405 billion in 2019 (Congressional Budget Office 2019).

The Trump administration sought to reverse the Obama administration’s antipoverty legacy by dismantling or devolving safety net programs. The Trump White House (Domestic Policy Council, Office of Management and Budget) was filled by some of the most conservative elements of the Republican party, such as Mick Mulvaney, director of the Office of Management and Budget (2017–2020) and Chief of Staff Mark Meadows, both founders of the conservative House Freedom Caucus (Mahler 2018). Donald Trump nominated Tom Price to serve as his first HHS secretary because of his prominent role in congressional opposition to the ACA and appointed Seema Verma as director of CMS. Mike Pence, as governor of Indiana, hired Ms. Verma to design a constrictive and market-oriented version of Medicaid expansion, the Healthy Indiana Plan, which was approved by CMS in 2015 (Richardson 2019, 443). Together, they and others sought to utilize the tools of the administrative state to advance a conservative social policy agenda. Those efforts were evident in the two largest means tested welfare programs: Medicaid and SNAP.

Medicaid

As a candidate and commander in chief, Donald Trump promised to devolve more powers to the states and cut back on executive agencies’ capacity to monitor and enforce national policies. In theory, such a shift of power away from federal agencies and toward state governments can enable liberal policy innovations, allowing states to address social needs. Examples include past waivers granted for universal coverage in Massachusetts and the failed effort to create a statewide single payer system in Vermont. However, the Trump administration’s efforts built upon conservative state policies, such as resistance to the ACA, restrictions on abortion and contraception, and stiffened work requirements. These efforts are consistent with the administration’s broader use of expanded executive authority, in areas such as immigration and environmental protection, along with numerous budgetary proposals to reduce social welfare spending and threats to defund states and cities that oppose federal policies (Callen 2020, 156; Thompson, Wong, and Rabe 2020).

In the absence of a full-blown repeal of the ACA, which failed in Congress and thus far in the courts, the Trump administration encouraged states to restructure Medicaid according to free-market and personal responsibility principles. Accordingly, its section 1115 waiver policy differed radically from the Obama administration’s policy, which had focused on approving Medicaid expansion demonstrations, especially between 2014 and 2017 (Guth et al. 2020). By contrast, the Trump administration used section 1115 waivers to help implement various eligibility and coverage restrictions. Another policy change was the use of waivers to promote healthy behavior incentive programs. Healthy behavior programs use insights from behavioral economics to reward patients who make good health decisions. Thirty-seven were approved by CMS, as shown by Supplemental Figure 1, landscape of approved vs. pending section 1115 Medicaid demonstration waivers. (Kaiser Family Foundation, 23 December 2020). These healthy behavior Medicaid waivers did not give rise to litigation, in sharp contrast to work requirement demonstrations.

Work Requirement Waivers

Community engagement waivers were the most emblematic of the Trump administration’s efforts to restructure Medicaid in line with personal responsibility principles. In March 2017, Health and Human Services (HHS) Secretary Tom Price wrote a “Dear Governor” letter that criticized Medicaid expansion under the ACA as “a clear departure from the core, historical mission of the program,” and invited state waiver requests that would help prepare recipients to pay for coverage and increase community engagement and independence. On the 11th of January 2018, CMS published a letter to Medicaid state directors announcing: “Today, CMS is committing to support state demonstrations that require eligible adult beneficiaries to engage in work or community engagement activities (e.g., skills training, education, job search, caregiving, volunteer service) in order to determine whether those requirements assist beneficiaries in obtaining sustainable employment or other productive community engagement and whether sustained employment or other productive community engagement leads to improved health outcomes.”²

A day later, on 12th January 2018, HHS approved a waiver request from Republican Kentucky governor Matt Bevin, “KY HEALTH” (“Helping to Engage and Achieve Long Term Health”). The state plan required that working age, able-bodied adults (the Medicaid expansion population) work at least eighty hours each month as a condition of receiving coverage. The plan also included personal responsibility features such as increased premiums and more stringent reporting requirements. On the 24th of January 2018, fifteen plaintiffs challenged the waiver. On June 29, 2018, Washington DC district judge James Boasberg blocked the implementation of the Kentucky waiver (Huberfeld 2018). A pattern of legal challenges was established, with the Trump administration approving state work requirement waivers and the courts systematically striking down before they could be implemented (Rosenbaum and Somodevilla 2019). In fact, Arkansas was the only state that implemented Medicaid work requirements, for a limited period only, between June 2018 and 2019. The policy resulted in an estimated loss of coverage for more than 18,000 recipients (Wagner and Schubel 2020). However, in late March 2019 Judge James Boasberg blocked the implementation of the work requirements in Arkansas. The ruling also struck down for the second time the Medicaid work requirement demonstration in Kentucky, just before they were due to be implemented (Rosenbaum and Somodevilla 2019). In February 2020, the Court of Appeals for the District of Columbia upheld the lower courts’ ruling, stating that Section 1115 of the Social Security Act does not give HHS the authority to bypass Congress and re-engineer Medicaid on the sly (Goodnough 2020a). As of October 2020, eight states had approved waivers with work requirements; seven had such waiver requests pending, and four other states (AR, KY, MI, and NH) have had work requirement waivers set aside by the courts (Guth et al. 2020).

In addition to work requirement demonstrations, CMS has approved waivers that sought to impose restrictions on eligibility, enrollment and benefits. For instance, CMS approved states’ waivers that restricted or elimitated Medicaid retroactive eligibility.² Eleven states—AR, AZ, IA, IN, KY, ME, NH, NM, OK, UT and FL—had such requests approved (Flowers and Accius 2019). Several states submitted waivers requesting premiums (AZ, IN, IA, KY, ME, MI, MT, NM, WI and VA). For instance, Wisconsin’s BadgerCare Reform Demonstration required that childless adults who have incomes above 50 percent of the poverty line pay $8 monthly premiums (Hatch 2020).

In January 2020, Seema Verma encouraged state Medicaid directors to experiment with block grants (Goodnough 2020b). The letter stated: “The Healthy Adult Opportunity (HAO) initiative will allow states to carry out demonstrations under section 1115(a)(2) of the Social Security Act (the Act) to provide cost-effective coverage using flexible benefit designs under either an aggregate or per-capita cap financing model for certain populations without being required to comply with a list of Medicaid provisions identified by CMS.”³

In sum, prior to the COVID-19 epidemic, the Trump administration aggressively pursued a waiver strategy in Medicaid, as indicated by the large number of pending state waiver requests (Supplemental Figure 1, landscape of approved vs. pending section 1115 Medicaid demonstration waivers, Kaiser Family Foundation, 23 December 2020). However, its success in utilizing the tools of executive federalism to reshape Medicaid has been constrained by two sets of factors: 1—the degree to which conservative state actors are willing to take political and legal risks to experiment with Medicaid work requirements and block grants; and 2—the degree to which federal courts are willing to accept that the use of section 1115 waivers does not exceed Secretarial authority under the Social Security and Administrative Procedures Acts (for a review, see Rosenbaum 2018).

Consequently, the impact of Trump administration policies on Medicaid enrollment and spending patterns has been uneven. According to the Kaiser Family Foundation, between December 2017 and December 2019 there was a net decline in total Medicaid and CHIP (Children Health Insurance Program) enrolment of 2.3 million people, or 3 percent, from 74.3 million to 71.1 million (Kaiser Family Foundation 2019). The reasons for this decline (reversed since the COVID-19 crisis) were varied. They included individuals transitioning to other forms of health coverage as the economy improved; eligibility checks and state administrative procedures making it difficult for individuals to continue their enrolment; decreased federal funding for outreach campaigns and assistance in enrolment; and a shifting immigration policy climate, deterring families from renewing their enrolment; and or that of their children (Kaiser Family Foundation 2019). After two years of decline, Medicaid enrollment increased again in response to the Covid pandemic, by 5.3 million between February and August 2020 according to the Kaiser Family Foundation (Corallo and Rudowitz 2020).

Nutrition

SNAP was another prominent target for retrenchment efforts by the Trump administration. Conservative attempts to roll back SNAP were resurrected during the Obama presidency (Daguerre 2017), and they resurfaced again when SNAP came up for reauthorization in 2018. The House Farm Bill, backed by the GOP majority at the time, sought to raise “the age of those subject to the work requirement from 49 to 59, and extend the work requirements to adults with children ages 6 and older. The minimum work required would increase to 25 hours per week in 2026” (Farley 2018). These changes were endorsed by the Trump Administration but opposed by a bipartisan majority in the Senate. As a result, the final version of the Farm Bill dropped the restrictive work provisions. Nevertheless, USDA announced on the day of the bill’s signing that it was preparing a rule that would make it harder for states to qualify for an ABWAD waiver, clearly bypassing Congressional intent (Boudreau 2018). The final rule, published in January 2019, intended to limit the “widespread use of ABAWD waivers during a period of historically low unemployment” (Federal Register 2019).

The rule was due to come into effect in April 2020. Soon after the publication of the final rule (0584-AE57) in December 2019, Democratic state attorneys general challenged USDA in court. Washington DC District Court Judge Beryl Howell blocked the rule, agreeing with the plaintiffs that it was arbitrary and capricious. Although USDA initially planned to appeal the injunction, Trump administration officials have since returned to the original ABAWD rule (Fadulu 2020). Moreover, The Families First Coronavirus Response Act of March 2020 temporarily suspends the time limit for Able-Bodied Adults Without Dependents. As Table 1 shows, the numbers of statewide ABAWD waivers declined steadily from 2016 to 2019, reflecting the Trump administration’s restrictive approach. They only began increasing again in 2020 as a result of rising unemployment and the suspension of the SNAP time limit. Partial waivers (which apply only to certain geographical areas in a single state, for instance a county with a high unemployment rate) also reached their highest levels in five years.

Table 1.

Evolution of SNAP Waivers (By Type).

Year	Statewide ABAWD	Partial ABAWD	Without ABAWD
2016	32	28	16
2017	11	27	17
2018	9	29	17
2019	6	30	17
2020	12	32	34

Source: Food and Nutrition Service, US Department of Agriculture, authors’ calculations, 2020.

Currently, it has become politically and economically untenable to stick to the proposed cuts to means-tested programs as the country is facing an economic recession as the result of the COVID-19 pandemic. The economic and public health crisis has forced the Trump administration to drop its work requirements rules, with regard to both Medicaid and SNAP. Utah, the last standing with regard to Medicaid work requirements, suspended its waiver on April 3rd due to COVID-19. The Families First Coronavirus Response Act provided additional funding for SNAP and introduced a temporary increase in federal medical assistance percentages (FMAP). The Trump administration has also granted section 1135 and 1115 waivers request to ease access to Medicaid, partially reversing its former policies (Terry 2020).

Conclusion

The highly decentralized and regionally varied patterns of state responses to the COVID-19 virus are symptomatic of broader and ongoing changes in American federalism and social policy. The decentralization of social assistance since the 1990s has reinforced geographic variation and inequalities across a range of health care and social welfare policies. Extensive litigation, state by state variation, unstable funding streams and a pattern of state diversion of federal grants (Hammond 2017) have undermined the capacity of the American welfare state to protect its citizens against increased income insecurity, even in good economic times (Hacker 2019). Growing political polarization has further widened policy differences between increasingly homogeneous red and blue states, and the politicization of expertise has eroded the intergovernmental sinews of cooperative, technocratic federalism. The result has been a structure of variable speed federalism for the poor.

President Trump accelerated this process by exploiting the tools of the administrative state to devolve additional authority to states, especially in means tested programs such as Medicaid and SNAP. The aggressive use of administrative discretion through formal and informal rulings and the granting of waivers represents a pathway around multiple veto points in the US system—a pathway by which the Trump administration sought to achieve long term conservative social policy goals, such as heightened work requirements, block grants, and funding caps. Whereas delegations of authority to suspend statutory requirements have promoted state innovations and adaptations in prior administrations (Barron and Rakoff 2013), Section 1115 Medicaid waivers under Donald Trump have resulted in the erosion of health coverage and food assistance for low-income people. Thus, whereas Thompson and Burke (2007) found in 2007 that Medicaid waivers did not erode core program benefits and structures, Frank Thompson’s most recent research demonstrates that administrative actions on Medicaid under President Trump have been part of a strategy to “sabotage” Medicaid and the broader Affordable Care Act (Thompson, Wong, and Rabe 2020).

Executive federalism thus can be a two-way street that accentuates variable speed federalism. (Bulman-Pozen 2016; Bulman-Pozen and Metzger 2016). States have been allowed to run programs that are more generous than the federal baseline as well as programs that are more constrained or conservative. Either way, the evidence suggests that such variegated federalism accentuates geographic and regional inequalities among states. This is why some argue that waivers should be watched with a “wary eye rather than cheered” (Stiglitz 2017, 153).

In spite of their appeal to impatient presidents, the administrative tools of executive federalism have their disadvantages. One limitation is that administrative actions can be more easily reversed than statutory enactments, and this will pose a strategic choice for the Biden administration. The economic and social fallout from the COVID-19 crisis and the Black Lives Matter movement have created a demand for major structural reforms to US health care and welfare programs, with a stronger national infrastructure for the American welfare state. In response, the Democratic party platform has moved to the left and the progressive wing has gained strength. Given the razor-thin Democrat majority in the Senate and the governing system’s multiple veto points, however, it is likely that the Biden administration will be forced to pursue a more incremental strategy, rolling back some Trump administration executive actions, approving more liberal waivers, seeking a health insurance public option and modest Medicaid expansion, for example. Consequently, the basic structure of differentiated, variable speed federalism will remain and the patchwork welfare state is likely to continue.

Supplemental Material

Supplemental Material, sj-docx-1-slg-10.1177_0160323X21990881 - Federalism in a Time of Coronavirus: The Trump Administration, Intergovernmental Relations, and the Fraying Social Compact

Supplemental Material, sj-docx-1-slg-10.1177_0160323X21990881 for Federalism in a Time of Coronavirus: The Trump Administration, Intergovernmental Relations, and the Fraying Social Compact by Anne Daguerre and Tim Conlan in State and Local Government Review

Supplemental Material

Supplemental Material, sj-pdf-1-slg-10.1177_0160323X21990881 - Federalism in a Time of Coronavirus: The Trump Administration, Intergovernmental Relations, and the Fraying Social Compact

Supplemental Material, sj-pdf-1-slg-10.1177_0160323X21990881 for Federalism in a Time of Coronavirus: The Trump Administration, Intergovernmental Relations, and the Fraying Social Compact by Anne Daguerre and Tim Conlan in State and Local Government Review

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

ORCID iDs

Anne Daguerre

Tim Conlan

Supplemental Material

Supplemental material for this article is available online.

Notes

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