Demonstration Projects Yield Limited Results, Restrict Access to Programs

By Jessica Gehr

States are increasingly using waiver requests seeking federal permission to change how they operate their safety-net programs. Waivers were initially designed to foster true experimentation in new approaches of providing core safety-net services, such as health care, food assistance, and housing. However, the waiver process has steered off course from its original intent, and states are increasingly using it as a mechanism to create barriers to basic needs programs. While state flexibility and experimentation can be valuable, that value is lost when the intent is not to improve programs but rather to undermine them through the false narrative of “flexibility.”

Many basic needs programs in the United States, such as Medicaid and the Supplemental Nutrition Assistance Program (SNAP), are run through a federal-state partnership in which the federal government provides much of the funding and a broad policy framework, and states administer the programs. The policy framework specifies rules that protect both taxpayers and program participants. While this framework is mostly set by statute, the federal government has the administrative authority to grant states “waivers” of certain provisions to encourage innovation, experimentation, and learning. However, the Trump Administration is weaponizing state demonstration waivers so states can restrict access to basic needs programs.

A new report on Medicaid waivers from the nonpartisan U.S. Government Accountability Office (GAO) adds to growing evidence that many demonstration programs have not been rigorously evaluated, and waivers are often granted or extended even when similar projects have proved harmful to enrollees and costly to the state. For example, Indiana has a waiver that allows the state to charge Medicaid enrollees a premium for their coverage. These premiums brought in little money to the state but created additional paperwork and confusion for participants. A survey of Indiana enrollees who failed to pay the premium showed that more than half reported their primary reason was confusion about either the payment process or the plan, and another 13 percent indicated that they forgot. These beneficiaries, who must contend with added red tape and bureaucracy, are highly likely to be locked out of coverage, with severe consequences for their health. Nonetheless, the Trump Administration has approved an extension of Indiana’s waiver.  

Additionally, the Centers for Medicare and Medicaid Services (CMS) has welcomed work requirement waivers, which several states have requested. In their waivers, states have offered no plausible hypothesis for how work requirements will promote Medicaid’s goal, which is to provide health coverage to low-income adults, children, pregnant women, the elderly and people with disabilities. CMS’s interest in waivers has created a wave of these proposals (with two states already approved so far) even though there will be no evaluation of Medicaid work requirements soon. The purpose of waivers is to test new approaches, evaluate their success, and use that evidence to inform policymaking. However, a widespread invitation and approval of work requirements is an abuse of CMS’ administrative authority and runs counter to the original purpose of waivers. This overreach by the administration will result in people losing access to the health care they need. 

Similarly, the U.S. Department of Housing and Urban Development’s (HUD) Moving to Work demonstration allows certain housing authorities to waive federal statutes and rules in public housing and Housing Choice Voucher programs. As of 2015, nine public housing authorities had implemented work requirements in public housing, and seven agencies had work requirements in their Housing Choice Voucher program. However, HUD has not required authorities to provide any information about the impact and success of work requirements and the associated costs. Nonetheless, Congress has directed HUD to expand this program to 100 authorities over the next few years.

This adds to a long history of waivers being abused in basic needs programs. In the years leading up to federal welfare reform in the mid-1990s, Aid to Families with Dependent Children (AFDC) waivers became a way to bypass Congress by allowing states to reduce or cut off cash assistance to thousands of otherwise eligible mothers and children. The federal government’s willingness to approve virtually any state demonstration project led to a stampede of proposals that harmed low-income children and families and undermined the purpose of waivers to be legitimate experimental projects. Ultimately, despite the numerous waivers, many of the provisions implemented when Temporary Assistance for Needy Families (TANF) replaced AFDC had never been rigorously evaluated before they were made national policy.

Waivers should not be used as a backdoor to systemwide policy change.  And, the federal government should not approve waivers that have little evidence of success—or that have already been shown harmful.  When waivers are approved—particularly those that limit access to key supports—the federal government should require complete and timely evaluations from states to inform federal and state policy and deny similar waivers until these studies are complete. In practice, these waivers are undermining programs and are far from a serious attempt to improve them.