COVID and the Great Retrenchment

Document Type

Article

Publication Date

2026

Abstract

The past six years have seen at least two dramatic and stunning shifts in federal health and benefits policy. First, during the depths of the COVID pandemic the government dramatically expanded a variety of public benefits, including support for income, food, housing, and health care. These expansions had incredibly positive effects, and those who received the newly expanded benefits were largely satisfied with them. But the expansions were quickly followed by the second dramatic and stunning shift: after a relatively short time, Congress rolled back nearly all of the benefits expansion. But it’s worse than that. The immediate pullback from COVID-era expansions set the stage for even more significant retrenchments in the second Trump Administration. Where in 2023 the United States came the closest it has ever come to universal health care—with a record-low uninsured rate of 7.7%—the Trump Administration’s Medicaid cuts and its likely failure to extend enhanced marketplace subsidies will have wiped out essentially all of the gains we have made since adoption of the Affordable Care Act.

That is not what the drafters of the COVID-era expansions thought would happen. Rather, they thought people would come to rely on and appreciate the new benefits. That reliance and appreciation, they believed, would lead people to resist any efforts to roll them back—and would lead Congress, out of fear of a popular backlash, to extend the expansions and eventually make them permanent. And the drafters of the expansions did not come to those ideas unthinkingly. Those ideas have informed the domestic policy priorities of the Democratic Party for years now. They explicitly draw on a long line of work in political science that demonstrated—or seemed to demonstrate—the durability of benefits expansions.

From the COVID experience, we learned that universal benefits are not as politically durable as many believe, particularly in their early, vulnerable years. And we saw clearly that because universal (or more universal) benefits tend to give workers more bargaining power vis-à-vis employers, employers have a strong political incentive to fight against benefits expansion that moves towards generosity and universalism. Opponents of universal benefits recognized that whether benefits programs are understood as universal is not a purely objective matter. It is a matter of social meaning. When employers saw that the expansion of cash and health benefits programs threatened their bargaining power vis-à-vis their workers, they had a strong interest in describing those programs not as universal protections but as compassionate aid for deserving people going through hard times. They could then argue that allowing the expansions to continue was stretching the programs beyond that purpose . Unfortunately, they were so successful that they not only reversed the COVID-era gains but also provided the expressed policy basis for the even broader retrenchment effected by the Trump Administration.

Those who thought that COVID-era expansions would be durable relied on a particular story that drew on decades of work in political science—that new policies make new politics, and that new benefits in particular create constituencies for those benefits, who resist rollbacks. But the COVID experience shows that this story misses some important points. It treats the costs imposed by an expansion of cash or health benefits as diffused (basically just the costs of taxation to pay for the new benefits, spread across the population). It thus ignores the way that powerful economic actors can see new benefits programs as a particular, focused threat to their economic and workplace hegemony—a view that employers expressed and acted on during the COVID benefits expansion. And the policies-make-politics story thus also ignores the need to build up the political power of those with an interest in defending benefits expansions. Beneficiaries may have an incentive to defend benefits expansions, but the COVID experience raises serious questions whether those expansions can be durable if we do not first attend to imbalances of political power.

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