Working Paper: NBER ID: w23748
Authors: 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.
Keywords: health care spending; political economy; congress; lobbying
JEL Codes: I10; I18; H51; D72; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Medicare payment increases generated by the Section 508 program (I18) | hospital behavior (I19) |
| Medicare payment increases generated by the Section 508 program (I18) | local health spending (H51) |
| payment increases (J33) | inpatient Medicare cases (I18) |
| payment increases (J33) | health sector employment (I11) |
| Congressional votes (yea vs nay) (D72) | Medicare payment increases (I18) |
| increases in Medicare payments (H51) | campaign contributions to members of Congress (D72) |