NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Benedic N. Ippolito

American Enterprise Institute
1789 Massachusetts Avenue
Washington, DC 20036

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NBER Working Papers and Publications

October 2017Implications of Medicaid Financing Reform for State Government Budgets
with Jeffrey Clemens
in Tax Policy and the Economy, Volume 32, Robert A. Moffitt, editor
Implications of Medicaid Financing Reform for State Government Budgets
with Jeffrey Clemens: w23965
We analyze potential reforms to Medicaid financing through the lens of fiscal federalism. Because substantial dollars are at stake, both the economic and political sides of intergovernmental transfers have high relevance in this setting. We show that changes in Medicaid financing formulas can shift amounts exceeding several hundred dollars per capita from "winning" states to "losing" states. In some cases, these amounts exceed 10 percent of states' own-source revenues. States' balanced budget requirements imply that such changes would, if not phased in gradually, require significant budgetary adjustment over short time horizons. We next show that alternative Medicaid financing structures have significant implications for states' exposure to budgetary stress during recessions. During ...

Forthcoming: Implications of Medicaid Financing Reform for State Government Budgets, Jeffrey Clemens, Benedic Ippolito. in Tax Policy and the Economy, Volume 32, Moffitt. 2017

August 2017Uncompensated Care and the Collapse of Hospital Payment Regulation: An Illustration of the Tinbergen Rule
with Jeffrey Clemens: w23758
Hospital payment regulation has historically been introduced to meet multiple policy objectives. The primary objective of "all-payer" rate setting regimes was to control costs through consistent, centrally regulated payments. These regimes were often linked, however, to an ancillary goal of financing care for the uninsured. We show that this secondary objective made states' all-payer regimes economically and legally unstable. Their economic instability reflected a feedback loop from surcharge rates to insurance coverage rates and back to the quantities of uncompensated care in need of being financed. The erosion of all-payer regimes' surcharge bases was particularly pronounced when health maintenance organizations were exempted from surcharge collections, creating a regulatory arbitra...
 
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