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The Impact of Devolution on Local Health Expenditures: Anecdotes and Some Estimates from the Philippines

Author

Listed:
  • Joseph J. Capuno

    (School of Economics, University of the Philippines, Diliman)

  • Orville C. Solon

    (School of Economics, University of the Philippines, Diliman)

Abstract

The Local Government Code of 1991 stipulates (1) the devolution of health facilities, functions and personnel from the national government to local government units, and (2) a corresponding increase in central transfers to local government units. However, interjurisdictional spillovers of local health programs and the locational bias of hospitals maintained by the national government are also the necessary consequences of decentralization. This paper presents estimates of the effects of devolved facilities, central transfers, cross-border use of facilities and the presence of retained hospitals on local health expenditure. Results show that (1) local health expenditures are positively affected by the number of devolved facilities in a given locality, (2) municipalities and cities are more responsive to block grants than provinces, and (3) poor localities or those which absorbed inordinate number of health facilities tend to free ride on their richer neighbours.

Suggested Citation

  • Joseph J. Capuno & Orville C. Solon, 1996. "The Impact of Devolution on Local Health Expenditures: Anecdotes and Some Estimates from the Philippines," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 33(2), pages 283-318, December.
    • Handle: RePEc:phs:prejrn:v:33:y:1996:i:2:p:283-318
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    File URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/112/730
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    Cited by:

    1. Abrigo, Michael Ralph M. & Ortiz, Danica Aisa P. & Tam, Zhandra C, 2017. "Decentralization and Health in the Philippines: A Systematic Review of Empirical Evidences," Discussion Papers DP 2017-58, Philippine Institute for Development Studies.
    2. Llanto, Gilberto M. & Kelekar, Uma, 2013. "Perspectives on Health Decentralization and Interjurisdictional Competition among Local Governments in the Philippines," Discussion Papers DP 2013-20, Philippine Institute for Development Studies.
    3. Manasan, Rosario G. & Gaffud, Romualdo & Gonzalez, Eduardo T., 1999. "Indicators of Good Governance: Developing an Index of Governance Quality at the LGU Level," Discussion Papers DP 1999-04, Philippine Institute for Development Studies.
    4. Harvy Joy Liwanag & Kaspar Wyss, 2018. "What conditions enable decentralization to improve the health system? Qualitative analysis of perspectives on decision space after 25 years of devolution in the Philippines," PLOS ONE, Public Library of Science, vol. 13(11), pages 1-20, November.

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