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Limits on Medicaid Expansion: What Will States Do?

- June 28, 2012

The Court has held that Congress can (of course) expand Medicaid to enroll additional people at higher income thresholds, but it cannot take away states’ existing Medicaid funding if they refuse to participate in the expansion.  Of course, states right now are cash-strapped and will be reluctant to turn down federal dollars.  But some may.  Which ones?  Here’s some research that may help answer that question:

“How Do States Formulate Medicaid and SCHIP Policy? Economic and Political Determinants of State Eligibility Levels” (pdf)
Reagan Baughman and Jeffrey Milyo

We exploit the existence of substantial variation in state policies toward public health
insurance for children between 1990 and 2002 to estimate the economic and political
determinants of state eligibility levels. Controlling for state and year effects, eligibility
levels are not significantly associated with either the percentage of uninsured children in
the state or the eligibility policy of neighboring states; further, variation in eligibility
levels within state is negatively associated with both the federal matching rate and state
fiscal capacity. We also observe that state political preferences, measured by the
Democrats’ share of seats in the lower chamber of the state legislature, are a relatively
important a determinant of state eligibility levels. However, other political factors, such
as party control of state government, voter turnout, legislative term limits and campaign
finance regulations do not influence state eligibility levels.

“The Policy Consequences of Class Bias in State Electorates.” (pdf)
Kim Quaile Hill and Jan Leighley

bq. This paper tests the proposition that an electorate disproportionately representative of higher-class citizens will be rewarded with public policies in favor of its economic interests and at the expense of lower-class citizens.  We find a consistent negative relationship between the degree of class bias favoring the upper class and the generosity of indigenous state social welfare spending.  We also find that it is the underrepresentation of the poor, rather than the overrepresentation of the wealthy, that principally explains this relationship.

“The Political Economy of State Medicaid Policy” (gated)
Charles Barrilleaux and Mark Miller

bq. We develop and test a market-based model to explain variations in states’ welfare medicine policy decisions. The empirical results support the model of state policy outputs, indicating that states’ spending efforts for welfare medicine are most sensitive to the supply of services within their borders. We learn in addition that spending effort declines with demand for services, indicating that the states spending the highest proportions of total personal income for the program are those who need it most and can afford it least. Measures of political system development affect spending effort positively and significantly, suggesting that ideology, diversity of interests, and administrative professionalism increases states’ welfare efforts.