NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Eleanor N. Powell

University of Wisconsin-Madison
1050 Bascom Mall
Madison, Wisconsin, 53706

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: University of Wisconsin-Madison

NBER Working Papers and Publications

August 2017Politics and Health Care Spending in the United States
with Zack Cooper, Amanda E Kowalski, Jennifer Wu: w23748
We study the interplay between congressional politics and health care spending in the U.S. by examining events leading up to and following the passage of the 2003 Medicare Modernization Act (MMA). The MMA, which Congress narrowly approved, created prescription drug coverage for seniors. We focus on a provision in the law - Section 508 - which allowed hospitals to apply for Medicare payment increases that were awarded based on rules written after the MMA was passed. This paper provides evidence of a feedback loop that illustrates why provisions, like Section 508, which are common, get added to laws, raise spending, and then become exceedingly hard to eliminate. We present evidence that the Section 508 program was used to win political support for the MMA. We find that Representatives who vo...
 
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