The Administrative Presidency and
Fractious Federalism: The Case of
Obamacare
Frank J. Thompson* and Michael K. Gusmanoy
*School of Public Affairs and Administration, Rutgers-Newark Rutgers Center for State Health Policy in
New Brunswick; [email protected]
y
The Hastings Center
Growing executive branch discretion in the U.S. separation-of-powers system has elevated the
importance of the administrative presidency. However, research on this topic has paid scant
attention to federal policies that rely on the states to implement them. We seek to advance
knowledge of the administrative presidency under conditions of fractious federalism by examining
the nature and efficacy of the Obama administration’s efforts to secure state cooperation in
implementing the Affordable Care Act (ACA). This law sought to assure that nearly all Americans
would have health insurance. Despite strong partisan, ideological pressures on Republican policy
makers in the states to refrain from implementing the ACA, the Obama administration has had
some initial success in overcoming their resistance. Waivers have been a particularly valuable
presidential tool.
During a Republican presidential primary debate in September 2011, Mitt Romney
declared that one of his first acts as president would be to ‘‘put out an executive
order granting a waiver from Obamacare to all 50 states’’ (Turner 2011, 1). The
Republican Party platform reiterated this pledge when Romney won the
nomination in 2012. Romney’s pledge vividly illustrates an important political
development. The significant shift in discretion to the executive branch in the
separation-of-powers system has marched in lockstep with the surging importance
of the administrative presidency (Epstein and O’Halloran 1999; Posner and
Vermeule 2010). The commitment and capacity of the White House and top
political executives to shape who gets what from federal programs without changes
in law or congressional approval have become ever more manifest.
Students of American governance have for over three decades noted the importance
of the administrative presidency. Early studies zeroed in on such factors as the
president’s influence over high-level appointments,1 the budget, reorganizations, and
federal rules (e.g., Nathan 1983; Waterman 1989; Durant 1992). More recent analyses
Publius:The Journal of Federalism volume 44 number 3, pp. 426^450
doi:10.1093/publius/pju011
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Administrative Presidency and Fractious Federalism
427
stress that direct presidential action—a kind of ‘‘power without persuasion’’—
constitutes ‘‘the distinguishing mark of the modern presidency’’ (Howell 2003, 175).
These works affirm that presidents increasingly take unilateral action through
executive orders, proclamations, directives, signing statements, and the like (e.g.,
Cooper 2002). Illuminating as the ‘‘administrative presidency’’ or ‘‘unilateral-action’’
research has been, however, it has paid scant attention to programs that rely on the
states to implement federal policies (Durant 2009).
For their part, specialists in federalism and intergovernmental relations have
historically devoted little attention to the administrative presidency. Following the
great outpouring of federal grant programs in the sixties, these specialists tended to
portray implementation as dominated by a ‘‘professional bureaucratic complex’’
comprised of ‘‘similarly trained professionals’’ at the national and state levels (Beer
1978, 17–18). Within the parameters set by their shared professional vision, these
administrators would bargain and negotiate with each other when differences
surfaced over program implementation. To the extent that elected policy makers
intervened, members of key legislative committees rather than presidents or
governors loomed large. The picket-fence metaphor reinforced this version of an
administrative federalism dominated by professionals. The gradual emergence of
‘‘intergovernmental management’’ as a focus within public administration also
slighted the significance of the president, portraying such management as having a
low political quotient and being about incremental, rather than major, change
(Thompson 2013).
More recently, however, the role of presidents in shaping the fabric of
administrative federalism has garnered more attention. Rabe (2007), for instance,
has depicted environmental policy under President George W. Bush as a ‘‘collision
between the administrative presidency and state experimentation.’’ Other studies
have highlighted the ability of presidents in partnership with key governors to
transform intergovernmental programs via the administrative process. They have
underscored the dramatic importance of program waivers as a tool of the
administrative presidency (e.g., Gais and Fossett 2005; Shelly 2013; Thompson
2012; Weissert and Weissert 2008). These and a handful of other studies have cast
light on the administrative presidency and federalism, but exploration is
preliminary. We need to know more about the circumstances that prompt
concerted efforts by the White House to shape intergovernmental programs via the
administrative process, what presidents hope to accomplish, the strategies they
employ, and whether they succeed.
This study seeks to advance knowledge of the administrative presidency under
conditions of fractious federalism by examining the strategic response of the
Obama administration to the challenges of implementing the Affordable Care Act
of 2010 (ACA). This law (also called ‘‘Obamacare’’) constituted a major policy
breakthrough to assure that nearly all Americans would have health insurance. The
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F. J. Thompson and M. K. Gusmano
next section describes key provisions of the ACA and the concept of fractious
federalism. The article then probes the Obama administration’s strategies for
encouraging states to implement two key elements of the ACA—a major expansion
of the existing Medicaid program and the establishment of insurance exchanges.
Concluding sections assess the implications of the cases for efforts to advance
broader understanding of the administrative presidency and federalism.
This article rests on an inductive case study methodology that seeks to generate
initial insights for theory building rather than test an empirical model. In addition
to drawing on the scholarly literature, we systematically reviewed reports and
analyses from think tanks and other entities engaged in tracking the ACA’s
implementation.2 Archival evidence also came under the microscope—executive
branch documents, statutes, court decisions, regulations, congressional hearings,
waiver proposals, pertinent Web pages, and more. In addition, newspapers and
specialized health care media were scanned.3 Finally, we conducted seventeen semistructured interviews with key stakeholders and experts.4
Context: The ACA and Fractious Federalism
Approved by Congress in March 2010, the Patient Protection and Affordable Care
Act5 ran over 1,000 pages and covered a sea of topics. Above all, the law promised
health insurance to over thirty million Americans who lacked coverage. About half
of this number were to benefit through the expansion of the Medicaid program.
Established in 1965, Medicaid had become by far the largest grant program to the
states providing health insurance to over sixty-five million low-income people. The
ACA initially mandated that, with certain exceptions, all nonelderly, non-disabled
people with incomes up to 138 percent of the poverty line would qualify for
Medicaid.6 It called for the federal government to pick up the entire tab for the
newly eligible for three years starting in 2014. In 2017, this federal match will
gradually decline, leveling off at 90 percent in 2020. States that refused to comply
with this mandate risked having funding for their existing Medicaid program
reduced. Subsequently, however, the Supreme Court essentially converted the
Medicaid expansion from a mandate to a state option (discussed later).
State-based health insurance exchanges comprised the second major pillar of the
ACA’s coverage expansion. The law provided that those with incomes from 138
to 400 percent of poverty could purchase federally subsidized insurance through
these exchanges. These provisions of the ACA rested on a strategy of ‘‘partial
preemption.’’ The federal government would provide states with grants to plan and
establish their own exchanges. But if a state declined to do so, the federal
bureaucracy would step in to operate one. An insurance carrier participating in the
exchange would have to offer ‘‘essential health benefits’’ and pass muster on other
Administrative Presidency and Fractious Federalism
429
criteria to become a ‘‘qualified health plan.’’ The ACA imposed a tax penalty on
people who failed to obtain coverage through the exchanges or otherwise.
In forging the ACA, Congress delegated vast discretion to the executive branch.
More than forty ACA provisions require or permit the bureaucracy to interpret the
statute by issuing formal rules under the Administrative Procedure Act. Still other
provisions call upon federal administrators to establish programs and procedures
but make no mention of doing so via formal rulemaking (Copeland and Carey
2011). In these and countless other ways, federal and state administrators possessed
vast discretion to shape the ACA. By late 2013, the Obama administration had
published more than seventy final rules and issued scores of interpretive guidelines
(Rosenbaum 2013).
Intense partisan polarization surrounding the ACA meant that the administrative presidency, rather than the career bureaucracy, would be front and center
during implementation. In key respects, the ACA was the poster child for the well
documented trend toward partisan polarization in the United States over the last
several decades (e.g., Abramowitz 2010). The ACA passed Congress without a single
Republican vote. After the law’s passage, it continued to be the target of intense
ideological attacks by congressional Republicans, who repeatedly attempted to
derail the ACA’s implementation. With nearly every significant implementation
decision a political hot potato, the White House and top presidential appointees
naturally assumed center stage in the two cases we examine.
Polarization in Congress helped create a context of fractious federalism. This form of
federalism resembles what Conlan and Posner (2011, 444) define as an ‘‘ideological
model’’ of intergovernmental implementation where the partisan identities of actors
drive their behavior and ‘‘overshadow’’ more pragmatic considerations.7 Consistent
with this perspective, the defining elements of fractious federalism are (i) intense
attitudinal opposition to the ACA among many state policy makers rooted in their
partisan, ideological identities; (ii) the active efforts of these state partisans to weaken the
law through court action and intergovernmental lobbying; and (iii) reluctance by these
partisans to implement the ACA. ‘‘Fractious,’’ as employed here, entails concerted efforts
by key party elites and supporters to promote a vertical partisan coalition.8 This means
that state policy makers face pressure to act as committed, loyal party members in
the implementation process. They are encouraged and expected to shun more pragmatic
political, policy, and administrative considerations about the advantages and
disadvantages of implementing a federal program in their particular states.
The success of the Obama administration in achieving the coverage goals of the
ACA depended heavily on its ability to encourage Republican policy makers in the
states to defect from this vertical partisan coalition. This promised to be a
formidable challenge. In 2013 Republicans controlled the governorship and both
houses of the legislature in twenty-four states. In six of the twelve states with
divided governments, Republicans occupied the governor’s mansion.
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F. J. Thompson and M. K. Gusmano
Medicaid: The Participation Challenge
One manifestation of fractious federalism emerged soon after passage of the ACA.
Twenty-six state attorneys general (all, but one, Republican) joined a suit filed in
a federal district court in Florida to have the law declared unconstitutional.
Among other things, the suit claimed that the Medicaid expansion amounted to
unconstitutional federal coercion of the states. In June 2012, a 5 to 4 majority of
the Supreme Court agreed that the mandated Medicaid expansion was coercive.
The court prohibited the federal government from defunding a state’s existing
Medicaid program if it failed to implement the expansion, thereby making state
participation voluntary (National Federation of Independent Business v. Sebelius
(NFIB) 2012).
Administrative Strategies
Faced with the need to coax state participation, the Obama administration pursued
four primary strategies. First, it preserved an all-or-nothing approach to the
expansion. The Supreme Court ruling kindled efforts by Republican governors to
interpret the decision as a rejection of many of the ACA’s Medicaid provisions. Of
particular importance, some of these governors expressed interest in partial
expansions. Did the court ruling mean that states could enjoy the 100 percent
federal match to cover some portion of the newly eligible Medicaid population
rather than the entire group? Many Republican policy makers as well as the
director of the National Association of State Medicaid Directors thought so. About
two weeks after the court decision, the Republican Governors Association
submitted thirty questions to the Centers for Medicare and Medicaid Services
(CMS) including one related to a partial expansion (McDonnell 2012). Republican
governors and their congressional allies pressed CMS for clarification throughout
the late summer and fall. Finally, in December 2012, CMS announced that it would
not approve partial measures. In essence, the Obama administration gambled that
the ACA’s generous federal match as well as lobbying pressures from providers and
others would over time encourage most, if not all, states to expand Medicaid to all
those below 138 percent of the poverty line.
Second, the Obama administration reassured states that it would preserve the
ACA’s financial commitment to them. This required the administration to backtrack.
In mid-2011, President Obama’s quest to achieve a ‘‘grand bargain’’ with
Republicans over the budget deficit prompted him to propose a ‘‘blended’’ match
rate for Medicaid. Rather than have a different match for the newly eligible under
the ACA and those in the existing Medicaid program, the Obama administration
would devise a common rate. The blended rate would yield some Medicaid budget
savings for the federal government (Lotven 2012). Efforts to strike a grand bargain
with Republicans collapsed. But by mid-2012, it remained unclear whether in
Administrative Presidency and Fractious Federalism
431
subsequent budget proposals the Obama administration would seek to shift costs to
the states via the blended rate. This uncertainty stirred unease among state policy
makers about the financial risks of expanding Medicaid. During a meeting with
President Obama in early December 2012, the chair of the National Governors
Association, Jack Markel (D-Delaware), stressed that any uncertainty about
Washington’s financial commitment to the states would undercut the Medicaid
expansion (Dixit and Lotven 2012a). By the end of December, the Obama
administration assured the governors that it would no longer pursue the blended
rate or other significant reductions in Medicaid spending. The president’s budget
proposal for fiscal 2014 honored this commitment.
Third, the Obama administration sought to incentivize interest groups to pressure
state policymakers to expand Medicaid. Hospitals comprised a particularly attractive
target. Major hospital lobbies had supported the ACA largely on grounds that it
would reduce the amount of uncompensated care they delivered to the uninsured.
In recognition that hospitals would face less fiscal stress from this source, the ACA
cut funding for Medicaid’s disproportionate share hospital payments (DSH).
Authorized by Congress in 1981, DSH gave states the opportunity to draw down
federal dollars to subsidize hospitals serving a greater proportion of low-income
patients who were uninsured or enrolled in Medicaid. But the DSH benefits were
not limited to safety net hospitals. Given distributive political dynamics in the
states, many hospitals serving more affluent patients also found ways to garner
DSH subsides. Based on the premise that hospitals would now provide less care to
the uninsured, the ACA cut federal DSH allocations by 20 percent in the period
from 2014 to 2020.
At the time of the ACA’s passage state hospital associations had expressed
misgivings about its DSH provisions. Their leaders realized that many Americans
would remain uninsured and that Medicaid payment rates tended to trail
Medicare’s and those of private insurers. With the court ruling making the
Medicaid expansion voluntary, these misgivings morphed into alarm. Hospital
lobbyists wanted DSH cuts pared or eliminated in nonparticipating states.
However, this proposal had little appeal to the Obama administration since it
would reward recalcitrant states with more federal funds. Moreover, it would
reduce the incentive for hospital lobbyists to press state policy makers to support
the Medicaid expansion. Thus, when Secretary of Health and Human Services
Kathleen Sebelius met with leaders of the American Hospital Association and other
major hospital groups in July 2012 she offered no relief from the DSH cuts.
Instead, she urged them to solve the problem by lobbying vigorously in their states
for the expansion (Dixit 2012). The Obama administration budget proposal for
fiscal 2014 preserved the DSH reductions as did a formal rule issued in September
2013 (U.S. CMS 2013).
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F. J. Thompson and M. K. Gusmano
State hospital associations generally responded as the Obama administration had
hoped. Their support for the Medicaid expansion often rested on well-publicized
studies documenting its economic benefits. For instance, a study released by the
Missouri Hospital Association warned that failure to participate in the Medicaid
expansion would be tantamount to taxing the business community since it would
shift the costs of charity care to employer insurance. The report predicted that the
expansion would spur the creation of 24,000 new jobs and stimulate billions of
dollars in economic activity in the state. Noting that the expansion also had health
benefits, the executive director of the association (a former top official in the
second Bush administration) called it ‘‘a win-win for Missouri’’ (Dixit and Lotven
2012b). Though less significant, the Obama administration pursued a similar
incentivizing strategy with other business groups.9
Fourth, the Obama administration employed waivers to persuade states to launch
Medicaid expansions. Waivers derive from a congressional delegation of authority to
the executive branch to permit states to deviate from the ordinary requirements of
a law. The ACA provided CMS with comprehensive waiver authority starting in
2017. In the meantime, the Obama administration used existing waiver authority
under Section 1115 of the Social Security Act to serve its aims. Initially, CMS
granted waivers to supportive states to jump start implementation of the law prior
to 2014. In late 2010, for instance, CMS approved a Medicaid waiver for California
called ‘‘Bridge to Reform.’’ Among other things, the waiver promised federal
matching funds to counties in the state that got a head start implementing the
ACA’s Medicaid provisions.
After the 2012 Supreme Court decision, waivers became an attractive tool for
enticing state participation. In this vein, an episode in Florida underscores the value
of waivers as a vehicle for intergovernmental logrolling. It involved approving a
waiver not directly related to the ACA to encourage a governor to pursue the
Medicaid expansion. Shortly after taking office in 2011, the administration of
Florida Governor Rick Scott (R) proposed a controversial waiver. Among other
things, it would extend a market-oriented demonstration launched earlier in five
counties to the entire state and enroll elderly Medicaid beneficiaries and those
under sixty-five with disabilities in managed care. The proposal sparked strong
resistance from advocacy groups and many providers in Florida. More than 100
organizations, including the Florida Medical Association, urged CMS to reject the
waiver.
In mid-2012, Governor Scott announced that Florida would not expand
Medicaid. Meanwhile, waiver negotiations between the Scott administration
and CMS dragged on with Florida officials making some modifications to
their proposal. Finally, these negotiations entered a broader political phase.
Governor Scott met with Secretary Sebelius to stress the importance of the waiver.
He conveyed that federal approval of the waiver might well lead him to reverse
Administrative Presidency and Fractious Federalism
433
his position on the Medicaid expansion. The exact nature of Scott’s negotiations
with the Obama administration is unclear. But the evidence suggests it was no
coincidence that Scott’s endorsement of the Medicaid expansion and CMS’
approval of the Florida waiver both occurred in February 2013 (Alvarez 2013;
Webber 2013). The Florida House of Representatives refused to back Scott on a
Medicaid expansion in 2013. Still, the defection of a governor indentified with the
Tea Party signaled that the White House might eventually vitiate the vertical
partisan coalition opposed to the ACA.
An episode in Oklahoma points to another strategic use of the waiver process—
refusal to renew an ongoing waiver to encourage state participation in the ACA.
The Oklahoma Medicaid program had historically provided premium assistance to
low-income adults up to 200 percent of the poverty line via a waiver called ‘‘Insure
Oklahoma.’’ The state assisted enrollees in obtaining private insurance through
their employers or through purchase in the individual market. The state had
capped enrollment in the program at 35,000; about 8,600 of the waiver’s
beneficiaries had incomes below the poverty line. Oklahoma Governor, Mary Fallin
(R) announced in November 2012 that the state would not expand Medicaid.
However, she supported the renewal of Insure Oklahoma, which was due to expire
at the end of 2013. But CMS rejected this request noting that the passage of the
ACA negated the need for the initiative. Most of the Insure Oklahoma enrollees
could obtain coverage in the federally run exchange and the remaining beneficiaries
would remain insured if the state chose to expand Medicaid (Dixit 2013a).10
Waivers: The Special Case of Premium Assistance
Among its uses of waivers, the Obama administration’s flexibility in considering
premium-assistance initiatives loomed especially large. These waivers allowed
certain Republican policy makers in the states to distance themselves from
Obamacare while still supporting the Medicaid expansion. The Medicaid statute
had long given states the option to cover program enrollees through private
insurance. But requirements that premium assistance initiatives offer benefit
packages comparable to Medicaid, be no more expensive than the regular program,
and be voluntary rather than mandatory for enrollees, discouraged states from
adopting this approach (Alker 2013). To pursue the ACA’s Medicaid expansion via
premium assistance, state policy makers wanted a degree of flexibility that only
waivers could provide.
In early 2013, premium assistance began to attract support among some
Republican policy makers in the states. After an encouraging conversation with
White House senior advisor, Valerie Jarrett, Ohio Governor John Kasich (R)
expressed interest in the approach.11 A month later the Florida senate rejected
Governor Scott’s proposal to enlarge Medicaid, but then proposed an alternative
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F. J. Thompson and M. K. Gusmano
bill that would permit the expansion through private insurance. In the same period,
federal officials signaled to Arkansas Governor Mike Beebe (D) that they were open
to premium assistance. In April 2013, Beebe persuaded both houses of the Arkansas
legislature (which were controlled by Republicans) to expand Medicaid in this way.
With the exception of those with special medical needs, the legislation authorized
the state to enroll the ACA’s Medicaid cohort in the federal exchange. Arkansas
officials submitted a waiver request to CMS in August 2013 (Dixit 2013b).
Another, more limited, version of premium assistance emerged in Iowa.
Governor Terry Branstad (R) and the leadership of the Republican-dominated
house of representatives resisted the Medicaid expansion while the Iowa senate,
which Democrats controlled, favored it. Lobbyists for hospitals helped broker a
compromise between leaders of the two parties whereby the state would cover those
with incomes from 101 to 138 of the poverty line via premium assistance. The
newly eligible below this level would enroll in a modified version of the state’s
regular Medicaid program (Daly 2013). The Iowa legislature approved this
approach and state officials submitted the waiver request in August 2013.
Meanwhile, Governor Tom Corbett (R) of Pennsylvania approached the Obama
administration about a possible premium assistance waiver to expand Medicaid.
Republican supporters of premium assistance saw it as a market-oriented,
‘‘conservative’’ alternative to the traditional ‘‘broken’’ Medicaid program that
Obamacare sought to expand. As a Republican state senator from Arkansas put it,
the approach appealed to him ‘‘because it would use the markets to provide better
health care and to increase competition in the insurance industry, which could
drive down costs’’ (Pear 2013a). So too a Republican state senator from Florida
underscored that the approach would ‘‘empower people to have their own private
health insurance’’ (Alvarez 2013).
This framing of premium assistance as ‘‘conservative’’ was a political plus for the
Obama administration. Branded this way, the approach might serve as a way to
defuse the Medicaid expansion as a polarizing political issue. In the words of one
state official, it was a way ‘‘to produce a good shift in the conversation.’’12 Federal
officials also sensed the irony of framing premium assistance as conservative. In
drafting the ACA, Congress had assigned a large role to Medicaid primarily because
the Congressional Budget Office estimated that it cost 50 percent more per person
to insure the targeted group in the exchanges than in Medicaid (Ku 2013). Private
plans on the exchanges would tend to pay providers more than Medicaid thereby
affording enrollees greater access to ‘‘mainstream’’ health care. Use of the exchanges
might also reduce churning—people moving between Medicaid and the exchange
plans due to fluctuating incomes. It might therefore bolster participation rates
among the Medicaid expansion group and foster continuity of care. Hence, the
allegedly ‘‘conservative’’ alternative to Medicaid was in essence a more deluxe,
expensive model for serving the poor that could appeal to liberals.13 Responding
Administrative Presidency and Fractious Federalism
435
favorably to the Republican premium assistance proposal in Florida, a Democratic
state senator observed: ‘‘A rose, by any other name, is still a rose’’ (Alvarez 2013).
While appealing to the Obama administration in several respects, however, a
premium-assistance approach to Medicaid also presented challenges. A primary one
was the price tag. Demonstration waivers were supposed to be budget neutral
costing no more than the regular Medicaid program to serve enrollees. While CMS
could finesse this problem by accepting optimistic budget-neutrality estimates in
state waiver proposals, the cost problem could become severe if many states opted
for premium assistance.
Sensing the potential and pitfalls of the approach, CMS proceeded cautiously. In
late March 2013, the agency announced that it would consider approving a limited
number of premium assistance demonstrations. If approved, these waivers would
remain in effect until 2017 when new comprehensive waiver authority under the
ACA would commence. CMS stipulated that it would only consider waiver
proposals that offered Medicaid enrollees a choice between at least two insurance
plans on the exchanges. The agency also insisted that states limit cost sharing by
these beneficiaries and ‘‘wrap around’’ certain guaranteed Medicaid services if they
were not part of the essential health benefits offered in the exchanges. While the
guidelines reaffirmed that waiver requests had to be budget neutral, they left the
door open for sanguine financial estimates that premium assistance would cost no
more than a regular Medicaid expansion. In this vein, states could project savings
from reduced churning between Medicaid and the exchange plans as well as from
increased competition among insurance carriers eager to sign up the new Medicaid
enrollees.14
The extent to which premium assistance waivers in the states will emerge
as vehicles for the Medicaid expansion remained an open question as 2014
commenced. By this time, CMS had approved both the Arkansas and Iowa
proposals. Clearly, the Obama administration had strong political incentives to use
these waivers to encourage defections from the Republican partisan coalition.
Early Returns on State Participation
In response to the strategies of the Obama administration and other factors, how
many states have decided to participate in the Medicaid expansion? To what degree
have the partisan underpinnings of fractious federalism been muted? Table 1
presents an overview of state participation in the Medicaid expansion as of January
2014. At this point half the states (as well as the District of Columbia) were moving
forward with it; two others, Indiana and Pennsylvania, were actively considering the
possibility of such action. The remaining twenty-three states had ruled out
participation at least for the time being. As befits fractious federalism rooted in
partisan polarization, only 17 percent of states where Republicans controlled the
F. J. Thompson and M. K. Gusmano
436
Table 1. States moving forward on the Medicaid expansion by partisan control of state
government (January 2014)
Partisan control
in 2013
Total
Number
moving
forward
% Moving
forward
States
debating and
deliberating
Unified Republicana
Unified Democrat
Divided
Other—Nebraska
24
13
12
1
4
13
8
0
17%
100%
67%
0%
2
0
0
0
Total
50
25
50%
2
Source: Kaiser Family Foundation.
a
Virginia, a non-expansion state, switched from unified Republican to divided in 2014.
governorship and the legislature (Arizona, Michigan, North Dakota, and Ohio)
chose to participate while all states controlled by the Democrats signed up. Twothirds of the states with divided governments pursued expansion.
The Administration’s Approach to the Exchanges
Unlike Medicaid, the Obama administration knew from the start that state
implementation of the ACA’s exchanges would be voluntary. Under partial
preemption, a state could decide to operate these marketplaces under federal
guidelines. But if it did not do so, CMS would establish and run a ‘‘federally
facilitated exchange.’’ Whichever level of government was the operator, the ACA
called for the creation of two types of exchanges—one for individuals and another
for small businesses. A state could set up the exchanges as governmental or nonprofit
entities. Participating insurance companies would have to offer ‘‘essential health
benefits’’ and meet other requirements in order to become a ‘‘qualified health plan.’’
The exchanges were to be ready to enroll people by October 2013; coverage offered
through them would commence on January 1, 2014. (In 2013, the Obama
administration rebranded the exchanges as ‘‘Health Insurance Marketplaces.’’)
Why Encourage State Involvement?
The Obama administration faced a core strategic question: Should it actively
discourage or encourage state operation of the exchanges? Certainly, a case existed
for the former. During the health care reform debate, Democrats in the House of
Representatives favored the creation of nationally run exchanges. They ultimately
Administrative Presidency and Fractious Federalism
437
agreed to partial preemption because it was the only way to muster the votes
needed to pass the ACA. Proponents of a centralizing strategy believed that federal
direction and oversight would be enhanced if the national bureaucracy rather than
the states implemented the law. A federal exchange, they argued, would facilitate
more vigorous efforts to achieve certain policy goals, such as containing costs by
promoting competition among insurance companies participating in the exchanges
(McDonough 2011). Views such as these could have encouraged the Obama
administration to pursue an aggressive take-it-or-leave it approach with the
states—establishing exacting standards for state performance and making few
concessions to them. Or the White House might refine this strategy based on
whether it trusted a state’s policy makers to implement the law. This would mean
greater effort to encourage liberal Democratic states to participate (e.g., California,
New York) and less effort to involve conservative Republican ones (e.g., Georgia,
Texas).
Ultimately, however, the Obama administration rejected the nationalizing
strategy and avidly promoted state participation. Secretary Sebelius persistently
affirmed that the administration would prefer that states ‘‘take the lead’’ in setting
up the exchanges (Quinton 2012). During meetings with state insurance
commissioners in 2010 and 2011, federal officials underscored that they wanted
to maximize state involvement and did not want to take responsibility for such
traditional state functions as the regulation and certification of plans offered by
insurance companies.15
Several factors fueled federal commitment to state participation. First, the high
levels of professionalism in most states made their administrators attractive, capable
implementation partners for the federal government. Second, the ACA’s exchange
provisions called for a dramatic increase in federal intervention in a domain states
had historically dominated—insurance regulation. State participation would allow
CMS to enter the field gradually, relying on state expertise while it got up to speed
(Gluck 2011, 572). States also had more experience than CMS in encouraging
community outreach to facilitate enrollment. Federal officials saw this outreach as
crucial. The ultimate success of the exchanges depended heavily on enrolling large
numbers of young and healthy people to assure a more viable risk pool and contain
upward pressures on insurance premiums.
Third, the Obama administration understood the limits to funding for federal
involvement in the exchanges and the unwillingness of congressional Republicans
to proffer additional monies. The law provided only $1 billion for federal
implementation even though the Congressional Budget Office conservatively
estimated that from $5 to $10 billion was a more realistic figure. A state that
participated would have much more funding to get the exchanges up and running
than the federal government would. Congress rejected repeated requests from
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F. J. Thompson and M. K. Gusmano
the White House for more funds, including one in April 2013 for an additional
$1.5 billion in fiscal 2014 (Carey 2013; Kliff 2013).
Finally, state participation had symbolic importance. All else being equal, state
implementation of federal programs tends to make them ‘‘more politically palatable
to those who generally resist federal aggrandizement or prefer ‘smaller’ government
or local variation’’ (Gluck 2011, 572). Under conditions of fractious federalism
rooted in partisan polarization, this issue looms even larger. If states controlled by
Republican governors and legislatures agreed to operate state-based exchanges,
federal officials would begin to defuse the partisan polarization around health
reform.
Incentives for State Participation?
As it dealt with the challenges of partial preemption, the Obama administration
understood that states had some incentive to participate. Involvement would allow
state policy makers to shape the exchanges. Speaking at a meeting of the National
Governors Association in 2011, Mike Levitt, former governor of Utah (R) and
Secretary of Health and Human Services during the G. W. Bush administration,
stressed that ‘‘the federal government needs guidance here because the states know
best how to do it.’’ If states participate, ‘‘it will compel [the federal bureaucracy] to
write rules that provide for flexibility.’’ But ‘‘if there are 20 states who choose
to pursue this, and 30 who do not in any realistic way move forward,’’ the
federal government will be ‘‘licensed’’ to have ‘‘a nonflexible exchange’’ (American
Association of Health Administration Management 2011, 5).
States choosing to run the exchanges could count on federal subsidies. The ACA
requires the Secretary of Health and Human Services to award various grants to
help states set up the exchanges. States could draw on these grants until January 1,
2015, when the exchanges were expected to be self-financed. Federal monies did not
eradicate the concerns of some legislators about the possible costs of operating the
exchanges (Dash, Monahan, and Lucia 2013). Conservative think tanks released
estimates that the price tag to the states would be high. For instance, the Cato
Institute projected that the exchanges would cost each participating state between
$10 million and $100 million annually (Cannon 2012).
While the Obama administration realized that federal subsidies and state desires
to shape the exchanges might motivate them to participate, it also understood the
barriers to state involvement rooted in partisan polarization. In February 2011,
twenty-one Republican governors sent a letter to Secretary Sebelius affirming that
they did not want their states to participate unless they had ‘‘complete flexibility
in operating the exchanges.’’16 As CMS moved to provide states with
flexibility, Republicans in Congress implored state officials to uphold the vertical
partisan coalition. In July 2012, for instance, seventy-three Republican lawmakers
Administrative Presidency and Fractious Federalism
439
from both houses of Congress sent a letter to Republican governors urging them to
join their efforts to derail Obamacare by not creating state-based exchanges (Stein
2012).
Strategies to Entice Participation
Faced with this incentive structure, the Obama administration tried to encourage
state participation in the exchanges by accommodating their preferences (Haeder
and Weimer 2013). This flexible approach manifested itself in myriad ways—
extending several deadlines for state decisions on the exchanges, avoiding strict
limits on the amount of federal funds states could receive, and more (Lotven 2011).
Perhaps no better example of federal flexibility can be found than the reaction of
CMS to comments on a proposed rule governing the exchanges. Issued in 2011, an
array of stakeholders responded by urging the federal government to impose more
exacting requirements on state-operated exchanges. In the vast majority of cases,
the Obama administration declined to accept these recommendations and
preserved state discretion (U.S. Department of Health and Human Services 2012).
While federal flexibility in dealing with the states emerged in countless ways,
three pivotal strategies deserve note. First, federal administrators respected states that
had been ahead of the curve in establishing exchanges. Rather than direct them to
abandon or significantly reshape their institutions, federal officials accepted their
approaches as legitimate. For instance, they reassured Massachusetts officials that
they could continue to operate an exchange called the ‘‘connector’’ which the state
had created in 2006. More recently, in May 2013, CMS adopted a ‘‘bifurcated’’
approach to the exchange process by allowing Utah to continue operating its small
business exchange, called ‘‘Avenue H.’’ In turn, the federal government agreed to
run the Utah exchange for individuals.
Second, the Obama administration rejected an all-or-nothing approach to state
participation. Of critical importance federal officials established through the formal
rule-making process a ‘‘partnership’’ model whereby states could run some
exchange functions while ceding others to CMS (U.S. Department of Health and
Human Services 2011, 2012). This idea grew from conversations between the
Obama administration and members of the National Association of Insurance
Commissioners (an intergovernmental lobby for these state officials). Certain
commissioners from nonparticipating states wanted to play a role in certifying and
regulating insurance companies in the exchanges. Federal officials concurred and
entered into formal partnership agreements with several states. The partnerships
typically call on the federal government to create the computer-based infrastructure
(or portal) that would allow applicants to compare insurance options and enroll
with the appropriate federal subsidy. States in turn certify and monitor the
insurance companies in the exchanges. States might also facilitate enrollment in the
440
F. J. Thompson and M. K. Gusmano
exchanges, such as by recruiting and overseeing ‘‘navigators’’ to inform and
otherwise assist businesses and individuals.
The efforts of the Obama administration to encourage some form of state
involvement did not end with the partnerships. When officials from several
Republican states expressed their discomfort at openly signing formal partnerships,
the Obama administration provided them with political cover—participation
through ‘‘marketplace plan management.’’ This gave these states a role in regulating
insurance companies in the exchanges while shielding them from partisan rebukes
that they were abetting Obamacare.
Third, the Obama administration gave states significant latitude to define the
‘‘essential health benefits’’ insurance companies participating in the exchanges had to
offer. The ACA mandated ten general categories of benefits (e.g., ambulatory care,
hospitalization, prescription drugs). It also affirmed that the essential health
benefits offered through the exchanges be equivalent to those provided by a typical
employer health plan. Within these general parameters, the ACA delegated
substantial discretion to the Secretary of Health and Human Services to define
these benefits. The secretary could, for instance, decide whether certain high-cost
drugs should be covered. Key Democrats in Congress wanted the federal
government to be assertive in defining essential benefits so that coverage would be
comprehensive. A panel of experts at the Institute of Medicine also urged federal
officials to exert leverage but for a different purpose—to keep benefits from being
so expansive as to drive up premium costs (Levey 2012).
But the Obama administration believed that an aggressive posture on essential
benefits had major drawbacks. For one thing, federal officials frequently lacked
evidence that consistently demonstrated the precise value to health of specific
interventions. Instead, decisions on what health benefits were ‘‘essential’’ often
involved complex moral judgments in a context of empirical uncertainty. Under
these conditions, federal decisions on this issue seemed sure to be contentious.
Advocates for people with specific diseases would press hard for certain benefits.
Others would complain that the federal government was dictating too much about
health practices and rationing care—a symbolically loaded term that conservatives
had used in opposing the ACA. Rather than confront such tortuous politics,
the Obama administration punted to state policy makers. Regulations issued
in 2011 gave states multiple options for choosing a ‘‘benchmark’’ plan
defining health benefits. Officials could accept the definition of benefits
embedded in state requirements for small-group or commercial HMO plans.
Or they could adopt the benefits of insurance plans for state or federal government
employees. If a state failed to adopt a benchmark plan, it would default to the
benefits covered by the largest small-group plan. (More than half the states
subsequently defaulted.)
Administrative Presidency and Fractious Federalism
441
Strategy to Replace State Support
The dominant motif of the Obama administration’s exchange strategy involved going
the last mile to encourage state participation. But federal officials gradually
recognized that many states would do little or nothing to assist them. This awareness
prompted an effort by the Obama administration to seek assistance from another
level of the federal system—local governments (especially in nonparticipating states).
Many local officials vowed to cooperate including some Republicans. For instance,
Mayor Robert Cluck (R) of Arlington, Texas, observed: ‘‘Whatever we can do as
community leaders to help people understand the exchanges, it’s our responsibility to
do’’ (Pear 2013b). So too, the public health department in San Antonio pledged to
train its staff to foster exchange enrollment. Efforts to engage local governments did
not go unnoticed by Republican officials opposed to the ACA. In Missouri, for
instance, Republican legislators approved a measure forbidding local governments
from cooperating with the federal exchange (Pear 2013d).
State resistance and congressional failure to adequately fund the federal exchanges
also sparked fiscal creativity by the Obama administration. For instance, Secretary
Sebelius shifted money from a prevention fund created by the ACA to support grants
to bolster exchange enrollments. She also sought financial support from the private
sector for a nonprofit organization called Enroll America. Headed by a former White
House aide, this organization sought to maximize participation by those eligible for
ACA benefits. Secretary Sebelius persuaded the Robert Wood Johnson Foundation,
which had long funded enrollment initiatives in the health care arena, to provide a
significant grant. She also urged private corporations with a financial stake in the
success of the exchanges, such as H&R Block, to donate money to Enroll America.
The Republican partisan coalition fought these efforts. Congressional Republicans
denounced Secretary Sebelius’ fund-raising as akin to the Iran-Contra scandal of the
eighties.17 They asked the Government Accountability Office as well as the Inspector
General of the Department of Health and Human Services to investigate the legality
of Sebelius’ actions (Dixit 2013c; Pear 2013c). Republicans on the House Energy and
Commerce Committee also impeded federal enrollment initiatives. The committee
contacted groups that had won federal grants to serve as enrollment navigators
demanding that they provide detailed reports about their activities and plans. The
letter specifically probed whether the organizations had any contacts with Enroll
America (Goldberg 2013). Meanwhile, Republican officials in several states sought to
curtail the activities of navigators by requiring them to have state training and
certification similar to that of insurance brokers (Galewitz 2013).
Initial Returns on State Participation
The efforts of the Obama administration to encourage full state participation in the
exchanges had met limited success as of early 2014. As table 2 indicates, about a third of
F. J. Thompson and M. K. Gusmano
442
Table 2. States participation in the health insurance exchanges by partisan control of state
government (January 2014)a
Partisan control
in 2013
Total
Creating
state-based
health
insurance
marketplaces
% Creating
state-based
health
insurance
marketplaces
Creating
partnerships
or plan
management
options
% Creating
exchanges,
partnerships,
or plan
management
Unified Republicanb
Unified Democrat
Divided
Other—Nebraska
24
13
12
1
3c
10
5
0
13%
77%
42%
0%
5
3
5
1
33%
100%
83%
100%
Total
50
18
34%
14
64%
Source: Dash et al. (2013) updated.
The District of Columbia has also created its own health insurance marketplace.
b
Virginia, participating via a plan management option, switched from unified Republican to
divided in 2014.
c
Mississippi and Utah will operate small business exchanges while CMS runs the exchanges for
their individual markets.
a
the states seized this option. This picture of modest participation changes, however, when
we consider states willing to form ‘‘partnerships’’ or to assist via the plan management
option. When one adds these contributing states to those that agreed to operate at least one
exchange, nearly 65 percent of the states emerge as participants. Like Medicaid, fractious
federalism rooted in polarization has left its mark. Among the twenty-four states under
Republican control, only Idaho chose to operate both exchanges; Mississippi and Utah
opted to run the business exchanges. It deserves note, however, that 20 percent of
Republican-dominated states have opted for a partnership or to assist with plan
management. In contrast, all thirteen Democratically controlled states have become
involved in operating the exchanges with ten establishing their own. Three states,
Delaware, Illinois, and West Virginia, opted for the partnership model. Illinois policy
makers anticipate moving to full exchange operation in 2015. Over 80 percent of the
divided governments chose to be involved in running the exchanges, with one-third
(Kentucky, Nevada, New Mexico, and Rhode Island) assuming full responsibility.
The Administrative Presidency And Fractious Federalism:
Some Lessons
This article has sought to advance knowledge of the administrative presidency
under conditions of a fractious federalism. With the ACA a defining partisan issue
Administrative Presidency and Fractious Federalism
443
freighted with symbolic baggage, the White House and top political appointees,
rather than the professional bureaucratic complex, took the lead it dealing with the
states. In reviewing developments, three lessons stand out.
First, reliance on states as implementing agents under conditions of fractious
federalism complicates attainment of an effective administrative presidency but does
not doom it to failure. The problems that federalism poses for the administrative
presidency should be kept in perspective. The president typically faces an array of
challenges in imposing his strategic vision on administrative agents even in the
absence of federalism. While Howell (2003, 22) stresses the ability of presidents
to take unilateral action through executive orders, a kind of ‘‘power without
persuasion’’, he underscores that ‘‘when it comes to [their] implementation . . . the
power modern presidents wield very much depends on their ability to persuade.’’
Federal agencies and private contractors typically have ample means to drag their
feet and otherwise resist presidential initiatives.
Still, states possess certain distinctive qualities that enhance their leverage vis-àvis federal policy makers and pose special challenges for the administrative
presidency (Dinan 2014). States have constitutional standing to press their claims
in court and effectively used this resource to transform the playing field for the
Medicaid expansion. States also derived considerable influence from the voluntary
nature of their participation in ACA implementation and the fact that federal
officials could not easily replace them with other administrative agents. So too, the
intergovernmental lobby, especially governors, puts states in an advantageous
bargaining position in dealing with the White House (Thompson 2012, 214). These
and related factors make it very difficult for the administrative presidency to
achieve its goals in the face of substantial state opposition. Difficulties multiply
when the forces of vertical party integration are strong and the opposition party
controls substantial numbers of state governments. (Had Democrats controlled
most state governments, ACA’s status as a partisan litmus test would have cut the
other way and expedited implementation.)
Despite these obstacles, the Medicaid and exchange cases hardly point to a failed
administrative presidency. The Obama administration artfully drew on several
strategies to entice states to participate. It shaped state political dynamics by
incentivizing hospital lobbies to press governors and legislators in resistant
jurisdictions to enlarge Medicaid. It adroitly employed Medicaid waivers, especially
those involving premium assistance, to coax the participation of Republican policy
makers. In part due to these and related strategies, half the states had moved to
expand Medicaid as of 2014—a pace similar to that in evidence after passage of the
original Medicaid law in 1965.18 While certain states with large numbers of
uninsured people opted out, close to 45 percent of those who could benefit from
the Medicaid expansion were on track to obtain coverage in 2014 (estimate derived
from Rudowitz and Stephens 2013, 6). So, too, the Obama administration’s
444
F. J. Thompson and M. K. Gusmano
willingness to accept half-a-loaf participation in the exchanges contributed to some
form of implementation involvement by over 60 percent of the states. On balance,
the Obama administration’s strategies heightened prospects that ACA implementation might eventually shift from a partisan ideological model (Conlan and Posner
2011) to one where state policy makers more pragmatically calculated the benefits
and costs of the ACA for their particular jurisdictions.
Second, our study points to limits of partial preemption as a vehicle to enhance
federal leverage under conditions of fractious federalism, divided national government,
and limited funding. All else being equal, policies based on partial preemption tend
to enhance federal assertiveness in dealing with the states compared to grant
programs that depend completely on state cooperation. This appears to be the case
in certain regulatory arenas, such as occupational safety and health, which rely on
this approach (Conlan and Posner 2011). In the case of the ACA, however, the
fervor of the Obama administration’s efforts to entice state participation in
Medicaid and the exchanges did not differ appreciably. Certain intervening
variables help account for this pattern. For one thing, the ACA provided much
more funding to the states to establish exchanges than it did to the federal
bureaucracy. For another, the Republican takeover of the House of Representatives
in 2011 meant that the Obama administration had no chance of obtaining
supplemental funding from Congress to remedy this capacity problem. Finally, state
participation would help legitimate the ACA as something other than a ‘‘federal
takeover’’ of health care and might help defuse the partisan polarization engulfing
the law.
Third, waivers are a particularly valuable tool of the administrative presidency in
dealing with the states under conditions of fractious federalism. An implementation
perspective on the administrative presidency necessitates a focus on the interaction
of multiple leadership tools (Durant 2009). But in the context of federalism,
the value of waivers stands out. Waivers often grant extraordinary latitude to a
presidential administration to promote its ends. They are subject to far fewer
procedural requirements and to less judicial review than formal rulemaking.
Starting with the Clinton years, Medicaid waivers greatly escalated the role of the
administrative presidency (Thompson 2012). This article highlights their continued
importance under conditions of fractious federalism. Of particular note, the Obama
administration drew on waivers to accommodate Republican policy makers who
wanted to reframe the Medicaid expansion as a ‘‘conservative,’’ market-oriented,
premium assistance initiative. The premium assistance waivers also served one of
the Obama administration’s goals with respect to the exchanges—the avoidance of
adverse selection whereby sicker people would disproportionately enroll and drive
up premium costs. The waiver proposals from Arkansas and Iowa helped counter
this threat by funneling only the healthiest members of the Medicaid expansion
group into the exchanges. The medically ‘‘frail’’ remain in the traditional Medicaid
Administrative Presidency and Fractious Federalism
445
program. The ACA grants additional comprehensive waiver authority to the
executive branch in 2017.19 This will afford presidents new opportunities to pursue
their goals through the administrative process.
Limitations and Future Research
This study has limitations. A cornucopia of written documents afforded us
substantial insight into the Obama administration’s strategies for enticing state
participation. But our analysis would have benefitted from more extensive
interviews in the White House and at the top levels of the federal bureaucracy. At
a minimum, such interviews would have permitted a more nuanced assessment
of the role of the White House relative to that of political executives in the
Department of Health and Human Services in shaping the administrative
presidency. At the time of our research, we could not secure these interviews. More
fundamentally, the examination of a single case obviously provides a limited
foundation for broader generalizations about the administrative presidency and
federalism. Future progress in advancing theory therefore depends on systematically
comparing the ACA to other intergovernmental programs.
Given its stature as a major policy breakthrough, the evolution of the ACA
should remain a research priority. Will it eventually evolve from a contentious,
ideological model of implementation to a more instrumental one featuring
pragmatic bargaining and negotiation between federal and state officials? The
magnitude and nature of state variation in implementing the ACA should also
receive attention along with the variables that explain different patterns. Beyond
these issues, the early troubled experience with Healthcare.gov, the federal web
portal to expedite enrollment on the exchanges, begs for attention. This article
shows how in a context of fractious federalism the White House and top political
executives in the bureaucracy clearly recognized the need to be engaged fully in
shaping strategies to encourage state participation. Somehow, however, the complex
task of integrating the systems developed by myriad IT contractors into an effective
website for enrolling people was assigned to a mid-level career civil servant
with ‘‘little clout and no formal background in software engineering’’ (Lipton,
Austen, and LaFraniere, 2013, A17). The White House assumed major hands-on
responsibility for the function only after the website’s highly publicized startup
failure. This debacle undermined public confidence in the president and the ACA
while further fueling Republican denunciations of the law. What caused the White
House and top political executives to overlook the website as a potential
implementation landmine? More generally, this episode highlights the need for
researchers to focus on the dynamics that shape which issues get on the strategic
agenda of the administrative presidency in the first place.
446
F. J. Thompson and M. K. Gusmano
Notes
The authors thank Carol Weissert, J. Mitchell Pickerill, and three anonymous
reviewers for helpful comments on a prior draft.
1. For more recent analysis of this presidential tool, see Lewis (2008).
2. In this regard, the periodic releases of Health Reform GPS at George Washington
University, the Kaiser Commission on Medicaid and the Uninsured, and the Urban
Institute, were particularly helpful.
3. We conducted a search of all U.S. newspapers from 2010 to 2013 using Lexis/Nexis with
particular attention to the New York Times. In terms of health care publications, see
especially http://insidehealthreform.com.
4. The description and conclusions of this study overwhelmingly derive from the
written documents described in this paragraph. We used interviews to fill in a few gaps
left by these documents and to check the veracity of certain of our conclusions. Hence,
each interview sought unique information. They were conducted by phone and ranged
in length from an hour to twenty minutes. We promised anonymity to the respondents.
5. The term ‘‘Affordable Care Act’’ encompasses this law and a sidecar measure passed four
days later—the Health Care Education and Reconciliation Act of 2010.
6. The ACA formally sets the eligibility target at 133 percent of poverty, but a standard
earnings disregard effectively makes the eligibility threshold 138 percent. If a state does
not participate in the Medicaid expansion, those with incomes between 100 and 138
percent poverty may still enroll in subsidized insurance plans on the exchanges.
7. Fractious federalism can also be viewed as a type of ‘‘fragmented federalism’’ that more
specifically applies to intergovernmental implementation (Bowling and Pickerill, 2013).
8. Studies of federalism in other contexts have noted the potential role of vertical partisan
coalitions (Rodden 2006; Krause and Bowman 2005).
9. The Chamber of Commerce and the National Federation of Businesses complained
to the Obama administration that businesses in nonparticipating states would
pay penalties if employees with incomes from 100 to 138 percent of poverty enrolled
in the exchanges. The Obama administration urged these organizations to solve the
problem by lobbying state policy makers to expand Medicaid (Lotven and Wilkerson
2013).
10. CMS approved Oklahoma’s request for renewal of the demonstration waiver without
Insure Oklahoma.
11. Kasich later bypassed a recalcitrant legislature and facilitated a more conventional
Medicaid expansion.
12. Interview, Oklahoma official, June 24, 2013.
13. Nor was premium assistance an exercise in ‘‘privatization’’ compared to the regular
Medicaid program since states had increasingly contracted with private managed care
organizations to serve Medicaid enrollees.
14. See http://healthreformgps.org/resources/cms-releases-faqs-on-premium-assistance-formedicaid-expansion/.
15. Interview, official 2 at National Association of Insurance Commissioners, September 18,
2013.
Administrative Presidency and Fractious Federalism
447
16. Letter dated February 7, 2011. http://healthreformgps.org/resources/governors-writesebelius-requesting-more-control.
17. The scandal took root when in defiance of Congress the Reagan administration covertly
shifted money obtained from selling arms to Iran to support rebels fighting a leftist
government in Nicaragua.
18. Twenty-six states signed up to implement the original Medicaid program in 1966, its
first year of operation. It was not until 1970 that nearly all states were participating.
19. A state must show that its waiver would (i) not reduce access to health insurance,
(ii) offer services as comprehensive as those offered through the exchanges, and (iii) not
increase the federal budget deficit. Federal officials will possess wide latitude in judging
whether state proposals meet these criteria.
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