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Politics and Health Care Spending in the United States

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  • Zack Cooper
  • Amanda E Kowalski
  • Eleanor N Powell
  • Jennifer Wu

Abstract

We uncover political dynamics that reward and reinforce increases in US health spending by studying the passage of the 2003 Medicare Modernization (MMA). We focus on a provision added to the MMA, which allowed hospitals to apply for temporary Medicare payment increases. Hospitals represented by members of Congress who voted ‘Yea’ to the MMA were more likely to receive payment increases. The payment increases raised local health spending and led to suggestive increases in health sector employment. Members of Congress representing hospitals that got a payment increase received large increases in campaign contributions before and after the program was extended.

Suggested Citation

  • Zack Cooper & Amanda E Kowalski & Eleanor N Powell & Jennifer Wu, 2017. "Politics and Health Care Spending in the United States," NBER Working Papers 23748, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:23748
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    References listed on IDEAS

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    Cited by:

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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