Regional Institutional Quality and Territorial Equity in LTC Provision

We show how regional governments affect the appropriate – in terms of territorial equity - assignment of a national LTC benefit. We analyse a three-layers setting, where eligibility criteria are defined by the central government (which bears the fiscal cost of transfers) but the assignment decision is taken by regional medical commissions, while applications are activated by individual potential beneficiaries. Combining administrative and survey data, and accounting for regional variation in eligibility prevalence, we document large territorial disparities in need-adjusted benefit assignment. We investigate the determinants of such disparities both in terms of individuals' differential propensity to claim, and of regional discretionary behaviour, as shaped by the underlying quality of regional institutions. Regional discretion appears to play a major role, with local institutional quality accounting for about one fifth of explained variation in need-adjusted benefit coverage. Lower regional institutional quality results in more opportunistic benefit adjudication decisions, although the relationship is attenuated in highly deprived areas.