More with Less? Fiscal Decentralisation, Public Health Spending and Health Sector Performance

Abstract

Decentralisation is considered a panacea for deficient public sector performance by many. However, recent trends of health sector recentralisation in several OECD countries suggest the opposite. Taking on a cross‐country perspective, I examine two hypotheses, namely that decentralisation leads to an increase in public health spending (H1) and to poor health sector outcomes (H2). The evidence I present suggests that decentralising spending tends to lead to larger public health sectors and to poorer health sector outcomes. However, decentralising tax authority has no effect on the size of the health sector and may actually have a positive effect on health sector performance. The broader lesson is that while general fiscal decentralisation research tends to imply that its conclusions are valid for all policy areas in a similar way, sector‐specific insights can reveal a more nuanced view on the consequences of fiscal decentralisation.

The differential impact of economic recessions on health systems in middle-income settings: a comparative case study of unequal states in Brazil

“…In Maranhão, state funds and federal transfers maintained positive real increases after the crisis, whereas local governments own sources registered negative average variation during the 2014–2018 period. Such findings seem to be consistent with studies showing that fiscal decentralisation can lead to increases of public health spending even during economic and financial crises,38 and, if confirmed, would lend support to those authors that have advocated the benefits of fiscal federalism for social sectors for other countries 39…”

The impact of decentralisation on the performance of health care systems

“…The sign of linear coefficients show that a higher degree of decentralisation tends to reduce public health spending and increase life expectancy. This is in line with the limited literature on this topic (Arendts, 2017;Channa and Faguet, 2016;Jimenez and Smith, 2005) that also reflects the fact that "the ability of decentralisation to achieve its objectives is complex and ambiguous" (Saltman et al, 2012).…”

How time horizons of autocrats impact health expenditure: a mixed methods research

“…the time horizons of autocrats). Second, while scholars of political economy emphasise the importance of institutional characteristics in explaining government expenditure on health [3][4][5][6][7][8][9][10][11][12], there is lack of comparative work on how the autocrat's time horizon influences health expenditure. Third, this research extends the unit of analysis to non-democratic regimes, beyond the scope of existing work that has been limited to OECD countries [7,9,10] or specific regions [5,6,8].…”

“…A country's expenditure on healthcare can significantly improve the health of its population [1,2]. Recent research has examined the determinants of health expenditure from the perspective of political economy; discussing themes such as political regime types and transitions [3,4], post-socialist restructuring of health funding and management patterns [5,6], the ideology of governing parties and political competition [7,8], fiscal decentralisation, [9,10], and the representation of women in politics [11,12]. However, no comparative study has examined how the threat perceived by leaders influences health expenditure and cross-national analyses of authoritarian regimes.…”