Politics and Health Care Spending in the United States

Zack Cooper, Amanda E Kowalski, Eleanor N Powell, Jennifer Wu

NBER Working Paper No. 23748
Issued in August 2017, Revised in February 2019
NBER Program(s):Health Care Program

This paper explores a link between politics and health care spending in the US. To win votes for the 2004 Medicare Modernization Act, legislative leaders raised Medicare payment rates for hospitals in an effort to entice the members of Congress representing those hospitals to vote for the law. Members of Congress representing hospitals that received a payment increase were more likely to vote for the law. Following their payment increase, hospitals treated more patients and increased their spending. There was also an increase in local hiring. Politicians representing hospitals that were awarded a payment increase subsequently received more campaign contributions.

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Document Object Identifier (DOI): 10.3386/w23748

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