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The distributional impact of health public expenditure in Italian regions: what happens when cost-effectiveness and quality matter?

Author

Listed:
  • Laura Bianchini

    (Department of Transportation)

  • Santino Piazza

    (IRES Piemonte)

  • Alberto Cassone

    (Universita’ del Piemonte Orientale A. Avogadro)

Abstract

We evaluate the implications of in-kind health transfers on household income distribution in Italy, factoring in the quality of government-provided healthcare in different regions (which are responsible for health policy). The novelty of this approach is that we explicitly acknowledge differences in the value of in-kind transfers resulting from cross-regional variations in service quality. The aim of this paper is twofold. First we adopt a fiscal federalism approach to assess the distributional implications of adding health public expenditure to the disposable income of Italian households and we compare the distributional results across regions. We then take a yardstick competition approach to evaluate the distributional implications of accounting for the quality and efficiency of services. To analyze the distributional impact of health public expenditure, we show the difference of the Gini index between final income and disposable income for each region and the progressivity index (Kakwani index). The re-ranking effect and the average in-kind benefit rate (that is the ratio of total in-kind transfers to disposable income) are also computed. Our analysis provides convincing evidence that when health services are evaluated at production cost, in-kind benefits reduce overall inequality on the distribution of disposable income. However, this effect is seen to be lower when the yardstick competition approach is applied to account for quality and cost-effectiveness, and, more importantly, it shows a geographical pattern.

Suggested Citation

  • Laura Bianchini & Santino Piazza & Alberto Cassone, 2017. "The distributional impact of health public expenditure in Italian regions: what happens when cost-effectiveness and quality matter?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(3), pages 445-469, December.
    • Handle: RePEc:spr:epolit:v:34:y:2017:i:3:d:10.1007_s40888-016-0052-0
    DOI: 10.1007/s40888-016-0052-0
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    More about this item

    Keywords

    Health policy; Distributional impact; In-kind transfers; Public expenditure and service quality;
    All these keywords.

    JEL classification:

    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare

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