Political Economy of Healthcare Provision: Evidence from India

The public provision of healthcare is common in democracies. Yet very little is known as to how political-economic factors are related to healthcare service delivery. In this paper, we examine the role of electoral participation and political competition in affecting healthcare service delivery at the sub-national level in India. However, examining this issue is less than straightforward for many reasons: first, systematic biases in health perceptions and priming of the electorate to ambient health means that existing health conditions affect expectations of the electorate from the government regarding healthcare provision; secondly, elected leaders favor providing more visible public goods vis-a-vis less visible ones to increase their chances of electoral success. And third, weak enforcement mechanisms perpetuate conditions conducive to rent-seeking. All these factors, create conditions for the presence of multiple equilibria in public provision. A least squares approach that focuses on the conditional mean alone misses this important point. We therefore employ a quantile regression method that examines the impact of political-economic factors at different points along the conditional distribution to yield a more comprehensive picture. We find signiffcant differences in the impact of political-economic variables along the conditional distributions of healthcare access and system capacity variables. Our results are also consistent with the 'visibility-effect' hypothesis in public provision: elected leaders respond differently to political-market characteristics when the public good is more, rather than less, visible. We find that health care access improves with greater electoral participation and diminishes with political competition whereas, it is the opposite for system capacity. The combined effect however limits access and increases provision of system capacity.