Factors Affecting the State's SCHIP Spending and Coverage: The Role of Partisan Politics and Fiscal Determinants

This research examines the determinants of the state's SCHIP spending and coverage using data collected between 1999 and 2008. As influencing factors, we consider political determinants and fiscal conditions. Using panel data analysis, we find that partisan controls in the governorship, the state House, and the state Senate have a significant impact on SCHIP spending at the state level. Also, empirical results show that fiscal conditions-fiscal capacity, fiscal effort, and federal matching grants-are significant factors in predicting spending and coverage. A high fiscal effort has a positive impact on SCHIP spending and coverage. Also, we find that federal matching grants have a strong substitution effect on the state's SCHIP spending. In addition to direct effects, this study tests two-way interaction terms between independent variables.