Politics and health care spending in the United States: A case study from the passage of the 2003 Medicare Modernization Act

Zack Cooper, Amanda Kowalski, Eleanor Neff Powell and Jennifer D. Wu

Journal of Health Economics, 2024, vol. 95, issue C

Abstract: This paper analyzes the interplay between congressional politics, the actions of the executive branch, and hospitals’ regulated Medicare payments. We focus on the 2003 Medicare Modernization Act (MMA) and analyze a provision in the law – Section 508 – that raised certain hospitals’ regulated payments. We show, via our analysis of the Section 508 program, that Medicare payments are malleable and can be influenced by political dynamics. In the cross-section, hospitals represented by members of Congress who voted “yea” on the MMA were more likely to receive Section 508 payment increases. We interviewed the Secretary of Health and Human Services who oversaw the MMA, and he described how these payment increases were designed to win support for the law. The Section 508 payment increases raised hospitals’ activity and spending. Members of Congress representing recipient hospitals received increased campaign contributions after the Section 508 payment increases were extended. Ultimately, our analysis highlights how Medicare payment increases can serve as an appealing tool for legislative leaders working to win votes for wider pieces of legislation.

Keywords: Health care spending; Political economy; Congress; Lobbying (search for similar items in EconPapers)
JEL-codes: D72 H51 I10 I18 P16 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167629624000237
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:95:y:2024:i:c:s0167629624000237

DOI: 10.1016/j.jhealeco.2024.102878

Access Statistics for this article

Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

More articles in Journal of Health Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().