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Fiscal federalism and European health system decentralization: a perspective


  • Costa-i-Font, Joan


How does fiscal decentralisation affect the development of a health system? Evidence from health care decentralisation in Europe can offer some insights to the question above. This paper addresses the effects of health care decentralisation in Europe, and reviews some of the key questions on the design of a health system. We argue that contrary to old mobility argument, the effects of health care decentralisation result from tighter political agency, which generally stands as an alternative to health care privatisation. However, whether efficiency improves after a process of decentralisation depends heavily on the incentives fiscal design exerts on cost –containment, inter-jurisdictional competition, policy innovation and diffusion. Experiences of health care decentralisation highlight important concerns associated with vertical imbalances and limited horizontal imbalances. Finally, health care decentralisation can give rise to a new regional political cycle where citizens can reward or penalise the performance of health policy.

Suggested Citation

  • Costa-i-Font, Joan, 2012. "Fiscal federalism and European health system decentralization: a perspective," LSE Research Online Documents on Economics 47881, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:47881

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    References listed on IDEAS

    1. Katherine Baicker & Jonathan Skinner, 2011. "Health Care Spending Growth and the Future of U.S. Tax Rates," Tax Policy and the Economy, University of Chicago Press, vol. 25(1), pages 39-68.
    2. Goodspeed, Timothy J., 2002. "Tax competition and tax structure in open federal economies: Evidence from OECD countries with implications for the European Union," European Economic Review, Elsevier, vol. 46(2), pages 357-374, February.
    3. Koethenbuerger, Marko, 2008. "Revisiting the "Decentralization Theorem"--On the role of externalities," Journal of Urban Economics, Elsevier, vol. 64(1), pages 116-122, July.
    4. Dan Stegarescu, 2005. "Public sector decentralisation: measurement concepts and recent international trends," Fiscal Studies, Institute for Fiscal Studies, vol. 26(3), pages 301-333, September.
    5. Rosella Levaggi & Roberto Zanola, 2004. "Patients' migration across regions: the case of Italy," Applied Economics, Taylor & Francis Journals, vol. 36(16), pages 1751-1757.
    6. Guillem Lopez-Casasnovas & Joan Costa-Font & Ivan Planas, 2005. "Diversity and regional inequalities in the Spanish 'system of health care services'," Health Economics, John Wiley & Sons, Ltd., vol. 14(S1), pages 221-235.
    7. Peter Wagner, 2011. "The democratic crisis of capitalism: Reflections on political and economic modernity in Europe," LEQS – LSE 'Europe in Question' Discussion Paper Series 44, European Institute, LSE.
    8. Laffont, Jean-Jacques, 2001. "Incentives and Political Economy," OUP Catalogue, Oxford University Press, number 9780199248681.
    9. Joan Costa-Font & Francesco Moscone, 2008. "The impact of decentralization and inter-territorial interactions on Spanish health expenditure," Empirical Economics, Springer, vol. 34(1), pages 167-184, February.
    10. Bordignon, Massimo & Turati, Gilberto, 2009. "Bailing out expectations and public health expenditure," Journal of Health Economics, Elsevier, vol. 28(2), pages 305-321, March.
    11. Wagner, Peter, 2011. "The democratic crisis of capitalism: reflections on political and economic modernity in Europe," LSE Research Online Documents on Economics 53209, London School of Economics and Political Science, LSE Library.
    12. Seabright, Paul, 1996. "Accountability and decentralisation in government: An incomplete contracts model," European Economic Review, Elsevier, vol. 40(1), pages 61-89, January.
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    Cited by:

    1. Izabela Rydlewska-Liszkowska, 2015. "Publiczne i prywatne finansowanie ochrony zdrowia – mo¿liwoœci i ograniczenia analizy na poziomie regionalnym (Publiczne i prywatne finansowanie ochrony zdrowia – mozliwoœci i ograniczenia analizy na ," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 13(53), pages 165-180.

    More about this item


    health systems decentralisation; fiscal federalism; health care; political agency;

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health


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