Public preferences and organized interests in health policy: state pharmacy assistance programs as innovations

While Congress debated prescription drug coverage for more than a decade before amending the Medicare program in 2003, thirty-one states provided such benefits to their citizens. Why were the same special interests that were reputedly so effective in delaying prescription drug coverage at the national level seemingly incapable of stopping the majority of states from passing the same kinds of legislation? To answer this question, we develop and test a number of hypotheses about the determinants of health policy using Heckman models with data on the adoption, revision, and generosity of state prescription drug programs from 1990 through 2001. We find strong evidence that organized interests had little influence on the adoption of state pharmaceutical assistance programs but can influence their likelihood of revision and the generosity of their benefits. We conclude by discussing the balance of public preferences and organized interests' preferences on state health policy.