The politics of Medicaid funding allocation

The new expansion of health insurance for children in the US provides an excellent example of how Congressional politics influences the distribution of government funding across the US, and down to the regional and even city-wide level. Through political negotiation and bargaining, the legislators are able to funnel directed funding to specific hospitals, under the auspices of a universal legislation such as the Children's Health Insurance Program. Here is an excerpt a recent article by the New York Times describing the process in more detail:

One hospital, Bay Area Medical Center, sits on Green Bay, straddling the border between Wisconsin and the Upper Peninsula of Michigan, more than 200 miles north of Chicago. The bill would increase Medicare payments to the hospital by instructing federal officials to assume that it was in Chicago, where Medicare rates are set to cover substantially higher wages for hospital workers.
Lawmakers did not identify the hospital by name. For the purpose of Medicare, the bill said, “any hospital that is co-located in Marinette, Wis., and Menominee, Mich., is deemed to be located in Chicago.” Bay Area Medical Center is the only hospital fitting that description.