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Soft budget constraints in health care: evidence from Italy

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  • Rosella Levaggi

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  • Francesco Menoncin

    ()

Abstract

The reforms that have reshaped the public health care systems have often been coupled with devolution. However, this process has frequently been accompanied by widespread soft budget constraint policies. In this paper we argue that the soft budget constraint arises from a cooperative game between local authorities that force Central Government to bail them out. Our theoretical model is tested using data for Italian regions for the period 2002–2006 and our hypothesis is verified. Although the model uses Italy as a benchmark, we believe that the framework we propose could be extended to other federal contexts where resources are distributed unevenly and preferences are asymmetric. Copyright Springer-Verlag 2013

Suggested Citation

  • Rosella Levaggi & Francesco Menoncin, 2013. "Soft budget constraints in health care: evidence from Italy," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(5), pages 725-737, October.
  • Handle: RePEc:spr:eujhec:v:14:y:2013:i:5:p:725-737
    DOI: 10.1007/s10198-012-0417-4
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Rosella Levaggi & Marcello Montefiori, 2013. "Patient selection in a mixed oligopoly market for health care: the role of the soft budget constraint," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(1), pages 49-70, March.
    2. repec:ctc:serie1:def9 is not listed on IDEAS
    3. Emanuela Marrocu & Silvia Balia & Rinaldo Brau, 2016. "A spatial analysis of inter-regional patient mobility in Italy," ERSA conference papers ersa16p127, European Regional Science Association.
    4. S. Balia & R. Brau & E. Marrocu, 2014. "Free patient mobility is not a free lunch. Lessons from a decentralised NHS," Working Paper CRENoS 201409, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    5. Claudio Pinto, 2017. "Perceived quality and formation of inter-regional networks of health care migration," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 7(3), pages 1-5.
    6. Ercolani, Valerio & Pavoni, Nicola, 2014. "The Precautionary Saving Effect of Government Consumption," CEPR Discussion Papers 10067, C.E.P.R. Discussion Papers.
    7. Elenka Brenna & Federico Spandonaro, 2014. "Does federalism induce patients’ mobility across regions? Evidence from the Italian experience," DISCE - Working Papers del Dipartimento di Economia e Finanza def009, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    8. repec:spr:epolit:v:34:y:2017:i:3:d:10.1007_s40888-016-0052-0 is not listed on IDEAS

    More about this item

    Keywords

    Soft budget constraint; Health care provision; Patient mobility; Panel data; I18; H77;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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