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Fiscal Shenanigans, Targeted Federal Health Care Funds, and Patient Mortality

  • Katherine Baicker
  • Douglas Staiger

We explore the effectiveness of matching grants when lower levels of government can expropriate some of the funds for other uses. Using data on the Medicaid Disproportionate Share program, we identify states that were most able to expropriate funds. Payments to public hospitals in these states were systematically diverted and had no significant impact on patient mortality. Payments that were not expropriated were associated with significant declines in patient mortality. Overall, subsidies were an effective mechanism for improving outcomes for the poor, but the impact was limited by the ability of state and local governments to divert the targeted funds. © 2005 MIT Press

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Article provided by MIT Press in its journal The Quarterly Journal of Economics.

Volume (Year): 120 (2005)
Issue (Month): 1 (January)
Pages: 345-386

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Handle: RePEc:tpr:qjecon:v:120:y:2005:i:1:p:345-386
Contact details of provider: Web page: http://mitpress.mit.edu/journals/

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  1. Cutler David M. & Meara Ellen, 2000. "The Technology of Birth: Is It Worth It?," Forum for Health Economics & Policy, De Gruyter, vol. 3(1), pages 1-37, January.
  2. Janet Currie & Jonathan Gruber, 1997. "The Technology of Birth: Health Insurance, Medical Interventions, and Infant Health," NBER Working Papers 5985, National Bureau of Economic Research, Inc.
  3. Mark Duggan, 2000. "Hospital Ownership and Public Medical Spending," NBER Working Papers 7789, National Bureau of Economic Research, Inc.
  4. David M. Cutler & Ellen Meara, 2000. "The Technology of Birth: Is It Worth It?," NBER Chapters, in: Frontiers in Health Policy Research, Volume 3, pages 33-68 National Bureau of Economic Research, Inc.
  5. Currie, Janet & Gruber, Jonathan, 1996. "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1263-96, December.
  6. Hope Corman & Theodore Joyce & Michael Grossman, 1987. "A Cost-Effectiveness Analysis of Strategies to Reduce Infant Mortality," NBER Working Papers 2346, National Bureau of Economic Research, Inc.
  7. Kominski, Gerald F. & Long, Stephen H., 1997. "Medicare's disproportionate share adjustment and the cost of low-income patients," Journal of Health Economics, Elsevier, vol. 16(2), pages 177-190, April.
  8. Nicholson, Sean & Song, David, 2001. "The incentive effects of the Medicare indirect medical education policy," Journal of Health Economics, Elsevier, vol. 20(6), pages 909-933, November.
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