In its first months, the administration lobbed one legislative assault after another on Obama-era policy, but mostly failed to make much difference. Those challenges had precious little to show for themselves, except for the passage of the tax cut a year ago. But after a rocky start, Team Trump has finally figured out that it can get much of what it wants through a kind of Jenga federalism.
Instead of engaging in a direct federal-level attack on big policies with major legislation, Trump’s team is pushing more decisions to the states. Gumming up the works at the state level, through administrative actions on many fronts, turns out to be a lot easier than pushing for big legislative changes in Washington, where Congress is often gridlocked. Even with its 2018 losses, the administration has enough allies in governors’ mansions and state legislatures that it can get a lot of what it wants by indirect means.
Consider Obamacare. Trump won a significant victory in eliminating the tax penalty for individuals who don’t have health insurance. That pulled one large block from the Affordable Care Act tower. Individual states began looking into plans that pared back basic coverage, and some of them made a run at providing cheap plans that skirted many of the fundamental Obamacare rules on coverage, including protection for preexisting conditions.
A proposal in Idaho, though, proved too much even for the Trump administration. Seema Verma, administrator for the federal Centers for Medicare and Medicaid Services, told the state that it had gone too far when it allowed new plans that wouldn’t cover preexisting conditions or the basics mandated by Obamacare. But, at the same time, the administration signaled to the states that it was open to allowing skimpy plans for shorter periods. That led some state legislatures to offer cheap but limited coverage for healthy younger Americans. Meanwhile, the administration cut grants for “navigators,” the local experts who help individuals find their way through the complications of the program. Navigator grants dropped from $62 million in the Obama administration’s last year to $10 million in 2018. The combination of less money to encourage people to sign up, along with newer state-based plans providing less coverage for shorter periods, has had a big effect on insurance markets almost everywhere.
The Trump strategy has also led to huge differences in annual premium costs among states. In 2018, premiums for the mid-range “silver plan” dropped by 22.5 percent in Alaska, 15 percent in Minnesota and 10 percent in North Dakota. In contrast, premiums shot up 117 percent in Iowa, 74 percent in Wyoming and 71 percent in Utah. There have been wild swings in adjacent states: Premiums flew up 31 percent in Pennsylvania but just 10 percent in New York, and up 73 percent in New Mexico but down 2 percent in Arizona. These big differences have further unraveled the Affordable Care Act and made private insurers even more nervous about investing for the future. By pulling all these blocks from the program, the Trump administration hasn’t achieved its original goal of repeal and replace, but it has made the whole system enormously unstable.
The same strategy has spilled over into other programs. The Environmental Protection Agency allowed the states to create their own standards for emissions from coal-fired power plants, in a stark reversal of the Obama-era efforts to ratchet down greenhouse gases. Coal-producing states were elated by this, even though states downwind of big coal-fired plants were furious. Meanwhile, the administration went after California’s authority to regulate tailpipe emissions from cars, which had allowed the state to set de facto national standards for car manufacturers.
In education, Secretary Betsy DeVos sent out guidance that only the federal government, not the states, could regulate student loan collection companies. Many consumers had complained that the companies were abusing borrowers, and some states were moving to stop them -- until the feds blocked state oversight.
In his presidential campaign, Trump pledged a long list of legislative actions to reverse Obama-era policies, but he couldn’t get Congress to act. Jenga federalism, however, has allowed the administration to make significant headway on many of its goals.
Since 1932, when Supreme Court Justice Louis Brandeis championed the idea of states as “laboratories of democracy,” progressives have looked at the states as places where important new ideas could bubble up to Washington. Now the Trump administration has used this strategy in reverse, with states knocking down big ideas rooted at the federal level.
It’s a pragmatic strategy that emerged slowly as Team Trump learned its way around Washington. Devolution to the states can replace centralized federal decisions. Now with the shift in the congressional balance of power, Jenga federalism may continue to give the administration the leverage it wants -- in ways the Democrats could find hard to stop, even with their victories in November.
