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Historically, the role of the states have reflected the desires of its residents in the formulation of public policy. Currently, as a result of the devolution of federal programs under the Reagan Administration, the environment that the states operate is expanding--including greater programmatic discretion, regulatory enforcement, and monetary generation capabilities. This dissertation has evaluated one area in which the states are afforded such discretionary powers--long term health care provision for the elderly financed via Medicaid. The increasing number of elderly in the population, their reduced mortality rate, and their demand for health care has placed a burden not only on their immediate families but also on society in general. States have the responsibility to provide any sustained or intermittent health care for the elderly under the Medicaid program. This research evaluated a model of state-federal provision of long term health care for the elderly. The model examined interstate variations in expenditures and program characteristics, including the influence of various political, socio-economic and state regulatory health policies on long term care expenditures, and selected program characteristics. Employing a pooled cross-sectional time series for the twelve year period from 1976 to 1987, these findings suggest that both politics and economics determine total program expenditures. Apart from demonstrating that these two characteristics do pose a constraint on policy makers, this study has suggested that program restrictiveness characteristics and the larger regulatory milieu do indeed have an impact on total program expenditures. However, some of the restrictiveness characteristics do not invoke the desired reduction in programmatic expenditures.