The Effect of Political Control on Financial Performance and Structure of US Nursing Homes.
US health expenditures constitute a substantial portion of public spending and are therefore likely to be affected by Republican or Democratic political control. While the Medicare budget is determined at the federal level, the Medicaid budget is decided at the US state level. At this level, the Medicaid budget competes with other state spending priorities such as education, pensions and welfare. At 27. 4% of total state spending, Medicaid represents the largest single component of total state expenditures and more than 30% of nursing homes' revenues. The aim of this study is to produce evidence regarding how political control affects nursing homes' financial performance, structure, and outcomes and to explore whether the insights of the median voter theorem also hold in healthcare policy. A 19-year panel (1996-2014) was created by merging Centers for Medicare and Medicaid Services (CMS) cost reports with nursing home provider data and state election outcomes of the executive and legislative branches. For both parties, we coded a binary variable indicating a unified legislature in a session year. A legislature was considered unified if the same party held more than 50% of the seats in both chambers. Political control of the governorship was modeled using a binary variable. Several panel models with fixed effects of facility and year were generated using data from 13,737 nursing homes to determine the effect of political control on nursing homes. All estimations were calculated with Huber-White corrected standard errors. An F-test was used to analyze whether controlling the governorship in addition to holding both legislative chambers increased the partisan effect. Nursing homes clearly adapt to changes in the partisan environment. Republican political control is associated with lower nursing home profits (p < 0. 0272) and a shift in resident composition that reduces services for Medicaid patients (p < 0. 0239) and increases services for private-pay residents (p < 0. 0039). Democratic political control is associated with higher revenues (p < 0. 0219) and higher nursing home profits (p < 0. 0064), presumably without significant changes in resident composition (p>0. 05) and outcomes (p>0. 05). For-profit nursing homes are more strongly affected by political control than not-for-profit nursing homes. Political control affects nursing homes at the legislative level but not at the gubernatorial level. Therefore, our findings are consistent with the median voter theorem. Governors behave in a more politically centrist manner than the legislative chambers because they must appeal to the median voter of the whole state, while members of the legislature must appeal to the median voter in their district. Governors may therefore pursue different policy objectives because they serve a larger and more diverse group than legislators. Because governors are more centrist than the legislature, they do not foster or inhibit legislative ambitions of implementing politically partisan long-term care policies.