The Influence of Federal Mandates on State Medicaid and AFDC Decision-Making

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Abstract
This article focuses on the influence of federal Medicaid mandates on state AFDC and Medicaid policy decision-making. The results confirm certain concerns about federal mandates: the benefits of federal Medicaid mandates (eligibility expansions to pregnant women and infants) appear to be offset by state reductions in AFDC and other Medicaid policy areas. In particular, federal Medicaid mandates had a negative effect on AFDC and Medically Needy financial eligibility levels and Medicaid optional benefit coverage—areas where states maintained discretionary power. A political-economic theory is used to test the impact of federal Medicaid mandates where a different political process is postulated for each policy dimension. The model is estimated using panel data and a heteroskedastic, timewise autoregressive model.

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