Politics and Health Care Spending in the United States

96 Pages Posted: 6 Sep 2017 Last revised: 23 May 2021

See all articles by Zack Cooper

Zack Cooper

Princeton University

Amanda Kowalski

University of Michigan at Ann Arbor - Department of Economics

Eleanor Powell

University of Wisconsin - Madison

Jennifer Wu

Yale University - Institution for Social and Policy Studies

Date Written: August 2017

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

Cooper, Zack and Kowalski, Amanda and Powell, Eleanor and Wu, Jennifer, Politics and Health Care Spending in the United States (August 2017). NBER Working Paper No. w23748, Available at SSRN: https://ssrn.com/abstract=3031719

Zack Cooper (Contact Author)

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Amanda Kowalski

University of Michigan at Ann Arbor - Department of Economics ( email )

Ann Arbor, MI
United States

Eleanor Powell

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

Jennifer Wu

Yale University - Institution for Social and Policy Studies ( email )

89 Trumbull Street
New Haven, CT 06515
United States

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