A note on standard costs criteria for allocating the Italian national health fund to Regions

The funding of National Health Service in Italy follows a top-down two stages decentralized system, according to which the central Government feeds the National health-fund with specific taxes and distributes it among Regions. Further, each Region funds the so called Essential levels of Assistance (LEA) expenditures of its local health authorities (Aziendesanitarie locali, ASL). This mechanism pursues equity aims, but it can be, as well, efficiency enhancing if based on standardized quantities, hence on a fixed-price type transfer, i.e. established ex-ante independently of actual expenditures and costs. This note provides a technical analysis of possible allocation criteria with this purpose, and, at the same time, coherent with the procedure established by D.L. 68/2011. The aim is at establishing feasible analytical procedures for combining both equity and cost-efficiency concerns in defining the distribution formula. The idea is to introduce in the latter some incentive elements, even if only as signals, for boosting Regions to control unitary costs of health-care services, besides to produce and provide adequate levels of them.