The influence of national policy change on subnational policymaking: Medicaid nursing facility reimbursement in the American states

This study proposes that exogenous shocks emanating from national governments can significantly change health policy processes among subnational units. The relevance of this insight for comparative health policy research is examined in the context of Medicaid nursing facility reimbursement policymaking in the American states. Event history techniques are used to model state adoption of case-mix methods for reimbursing nursing homes under Medicaid from 1980 to 2004. Case-mix adjusts Medicaid nursing home payments for patient acuity, thereby enabling states to pay more for residents with higher care needs and to pay less for residents with lower care needs. The goal is to improve access for more resource intensive Medicaid beneficiaries and to distribute payments more equitably across the providers who serve them. The most noteworthy national policy changes affecting case-mix implementation by state governments were adoption of nursing home quality reform with the Omnibus Budget Reconciliation Act (OBRA) of 1987 and case-mix by Medicare with the Balanced Budget Act (BBA) of 1997. In light of the 1990 and 1999 implementation of OBRA 1987 and the BBA, respectively, five models were estimated, which in addition to covering the entire time period studied (1980-2004) include pre-/post-BBA comparisons (1980-1998, 1999-2004) and pre-/post-OBRA 1987 comparisons (1980-1989, 1990-1998). Results suggest that in contrast to early adoption, which tended to be grounded in the capabilities of innovative states, later adoption tended to take place among less capable states influenced more by the changing federal policy environment. They also highlight the salience of programmatic and fiscal conditions but during the middle of the adoption cycle only. Future research should clarify the ways in which national policy changes influence health policy adoption at the subnational level, both in other nations and across different levels of government.