Elections and externalities of health expenditures

Purpose The purpose of this paper is to examine the determinants of local public health expenditure in a decentralized health system, taking into account the electoral calendar and the effect of central and local elections, besides spatial interaction among municipalities and political alignment. The authors state that the expenditure in public health at the local level is positively influenced by vicinity and by elections calendar. Design/methodology/approach The authors performed a Spatial Durbin Model with a balanced panel using the data from 399 Brazilian municipalities from 2005 to 2012. The authors use a distance-based spatial matrix, whose choose was based on simplicity and relevance of Moran's I and Geary's C coefficients for spatial autocorrelation. The authors also cluster the data in the estimations, according to the distribution of regional facilities in the entire period and considering the occurrence of regionalization in public health services. Findings The empirical contribution lies in four issues: first, the authors demonstrate a positive spatial effect in the public health expenditure. Second, the estimations show that election-year shifts public spent, as a response for vote-seeking incumbents' behavior. Third, reelected mayors increase local public health allocations, as well as single candidates and incumbents from the same party of central governments. Finally, populational concentration directly decreases health expenditure (even if those municipalities represent a lower unit cost of acquiring votes, the optimization of public health infrastructure and mobility in achieving public health services negatively affect health spent). Originality/value This study supports the statement that public health spent at local level is positively influenced by vicinity and by occurrence of elections.