Working Paper: NBER ID: w26094
Authors: Victoria Perez; Justin M. Ross; Kosali I. Simon
Abstract: A mainstream motivation for decentralized government is to enable public service investments to better align with political preferences that may differ by geographical region. This paper examines how political preferences determine local government provision of hospital services. We find that local governments in areas more supportive of public insurance expansion responded to such state action by increasing expenditures on hospitals, whereas those in areas that voted against such expansions used the savings to reduce property taxes. This finding suggests that local government financial responses indeed align with political preferences.
Keywords: local government; voter preferences; hospital financing; Affordable Care Act; Medicaid expansion
JEL Codes: H71; H72; I1; I11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Obama-voting areas (K16) | increased hospital expenditures (H51) |
| Romney-voting areas (K16) | reduced hospital expenditures (H51) |
| Romney-voting areas (K16) | lowered property taxes (H71) |
| Medicaid expansion (I18) | local government fiscal engagement (H70) |
| Voter preferences (K16) | local government fiscal responses (H79) |