Regional healthcare decentralization in unitary states: equal spending, equal satisfaction?

ABSTRACT

Does regional decentralization threaten the commitment to regional equality in government outcomes and outputs? We attempt to shed a light on this question by drawing on unique evidence from the largest European unitary states to have engaged in countrywide health system decentralization: Italy and Spain. We estimate, decompose and run a counterfactual analysis of regional inequality in government output (health expenditure per capita) and outcome (health system satisfaction) during the expansion of healthcare decentralization in both countries. We find no evidence of an increase in regional inequalities in outcomes and outputs in the examined period. Inequalities are accounted for by differences in health system design and management by regional governments.

KEYWORDS:

• healthcare decentralization
• regional inequality
• healthcare
• Oaxaca decomposition

JEL:

• H7
• I3
• I18

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

SUPPLEMENTAL DATA

Supplemental data for this article can be accessed http://dx.doi.org/10.1080/00343404.2017.1361527.

ORCiD

Joan Costa-Font http://orcid.org/0000-0001-7174-7919

Gilberto Turati http://orcid.org/0000-0002-2146-7887

Notes

1. This movement may be counterproductive if healthcare delivery has large economies of scale and uniform needs and preferences. However, both limited-scale economies and heterogeneity in needs and preferences offer scope for welfare improvements from a tighter organization of authority and preferences.

2. However, it is possible to identify other motivations alongside wider economic objectives (e.g., Weingast, 2009).

3. That said, many do not question that uniformly run services might generate important regional disparities, too, which might be of an even larger magnitude. The latter is possible because regional disparities in public sector activity, such as healthcare activity, may result from differences in the clinical practices of physicians working in a specific location as well as intended regulations and organizational structures (Skinner & Fisher, 1997), all of which stems from the management of resources at the local level.

4. By ‘federal state’ we refer here to the constitutional definition of the state rather than the actual political and fiscal dynamics of the countries under study. Both Italy and Spain share some of the classical features of federal states.

5. According to the OECD (2016), in 2011 the sub-central tax revenue share of total tax revenue was 32.7% in Spain and 15.9% in Italy, against 35.7% in Sweden (the top in the EU). The corresponding figures for 1995 were 13.3%, 5.4% and 30.9%. As discussed below, the remarkable increase in decentralization experienced in both Italy and Spain is not limited to tax decentralization, but involved other dimensions, and was ratified at the constitutional level.

6. Both Italy and Spain have gone through two specific waves of decentralization: a first wave around 1980 (1978 in Italy and 1981 in Spain), and a second wave two decades later around 2000 (1999 in Italy and 2002 in Spain).

7. In the UK (at the time of the study), devolution has only affected Scotland, Wales and Northern Ireland, while England has remained centrally managed. In contrast, Italy and Spain exhibited a countrywide devolution in the second wave examined here.

8. The effects of such process-related outcomes can be captured in an overall health system satisfaction evaluation measures that are sensitive to changes in service quality in advanced economies (Blendon, Leitman, Morrison, & Donelan, 1990; Footman, Roberts, Mills, Richardson, & McKee, 2013).

9. Sen (1999) notes that no famines occur in countries where there are regular elections and a free press. Epidemiological research into the social determinants of health indicates that being subordinate to authority can have detrimental effects on mental and physical health (Marmot, 2004).

10. The first wave began with the transfer of healthcare responsibilities to Catalonia (completed in 1981), followed by Andalucia (1984), the Basque Country and Valencia (1988), Galicia and Navarra (1991), and ended with the transfer of healthcare responsibilities to the Canary Islands (1994). A second wave followed that bridged the gap between the regions with healthcare responsibilities, and the 10 remaining regions were invested with the same level of healthcare responsibilities in 2002. This will help identify two sub-periods in the process of consolidating decentralization in Spain.

11. For example, article 117 of the Italian Constitution assigns to the central state the exclusive right only to ‘define the Essential Levels of Services linked to civil and social rights to be guaranteed in the whole country’. Healthcare services are of course included, so that only the central government can identify the mandatory level of care to be assured in all regions, and it has the exclusive right to define the framework legislation.

12. Navarra and the Basque Country are two special regions with a specific funding system and have managed to claim their historical fiscal self-government rights. Unlike the other regions of Spain, they collect their taxes and transfer to the central government the estimated costs of centrally provided public services, with little contribution to the overall country redistribution.

13. In Italy in 2009, for instance, 54% of healthcare funding was provided by the central government when measured at the national level. The corresponding figure was 43% in the richest regions of the north and 80% in the poorest Southern regions (Turati, 2012). Similarly, in Spain in contrast, the central government only funds 3% of all healthcare spending, which varies between 1% and 5% depending on the region.

14. Education is another important policy, which is, however, decentralized in Spain but only in a couple of regions in Italy. See Turati, Montolio, and Piacenza (2016) for a comparison of the two countries on this issue.