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State Discretion in Ftderal Categorical Assistance Programs: the Case of Medicaid

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  • Frank A. Sloan

    (Vanderbilt University)

Abstract

Categorical assistance programs to date have provided the most common method for transterring public funds from the federal government to states and localities. This study develops a model for a representative voter-taxpayer in which income redistribution is viewed as a public good. The model yields several unambiguous predictions about the effect of selected exogenous variables, including taxpayer income, the number of poor persons in the state, and the federal matching proportion for Medicaid (which varies by state) on the amount the Medicaid program pays doctors per procedure. An alternative view is that Medicaid payments are determined largely by interactions among government bureaucracies, private insurance carriers serving as fiscal agents for Medicaid, and physicians. Explanatory variables consistent with the bureaucratic view are included in some regressions. The most important result is that the federal matching proportion has a substantial impact on generosity of state Medicaid programs.

Suggested Citation

  • Frank A. Sloan, 1984. "State Discretion in Ftderal Categorical Assistance Programs: the Case of Medicaid," Public Finance Review, , vol. 12(3), pages 321-346, July.
    • Handle: RePEc:sae:pubfin:v:12:y:1984:i:3:p:321-346
    DOI: 10.1177/109114218401200303
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    References listed on IDEAS

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    1. Ronald J. Vogel & John F. Morrall III, 1973. "The Impact of Medicaid on State and Local Health and Hospitals Expenditures, with Special Reference to Blacks," Journal of Human Resources, University of Wisconsin Press, vol. 8(2), pages 202-211.
    2. Steinwald, Bruce & Sloan, Frank A, 1974. "Determinants of Physicians' Fees," The Journal of Business, University of Chicago Press, vol. 47(4), pages 493-511, October.
    3. Vogel, Robert C & Trost, Robert P, 1979. "The Response of State Government Receipts to Economic Fluctuations and the Allocation of Counter-Cyclical Revenue Sharing Grants," The Review of Economics and Statistics, MIT Press, vol. 61(3), pages 389-400, August.
    4. Frank A. Sloan, 1982. "Effects of Health Insurance on Physicians' Fees," Journal of Human Resources, University of Wisconsin Press, vol. 17(4), pages 533-557.
    5. Frank Sloan & Janet Mitchell & Jerry Cromwell, 1978. "Physician Participation in State Medicaid Programs," NBER Chapters, in: The Economics of Physician and Patient Behavior, pages 211-245, National Bureau of Economic Research, Inc.
    6. Olsen, Randall J, 1980. "A Least Squares Correction for Selectivity Bias," Econometrica, Econometric Society, vol. 48(7), pages 1815-1820, November.
    7. Orr, Larry L, 1976. "Income Transfers as a Public Good: An Application to AFDC," American Economic Review, American Economic Association, vol. 66(3), pages 359-371, June.
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    Cited by:

    1. E. Kathleen Adams & Martcia Wade, 2001. "Fiscal Response to a Matching Grant: Medicaid Expenditures and Enrollments, 1984-1992," Public Finance Review, , vol. 29(1), pages 26-48, January.
    2. Larry Howard, 2014. "Do the Medicaid and Medicare programs compete for access to health care services? A longitudinal analysis of physician fees, 1998–2004," International Journal of Health Economics and Management, Springer, vol. 14(3), pages 229-250, September.

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