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Do Local Governments Represent Voter Preferences? Evidence from Hospital Financing under the Affordable Care Act

Victoria Perez, Justin M. Ross, Kosali I. Simon

NBER Working Paper No. 26094
Issued in July 2019
NBER Program(s):The Health Care Program, The Health Economics Program, The Public Economics Program

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.

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Document Object Identifier (DOI): 10.3386/w26094

 
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