IDEAS home Printed from
   My bibliography  Save this paper

The Political Economy of Diagnosis-Related Groups


  • Bertoli, P.
  • Grembi, V.


We provide a political economy interpretation of the variations in the prices of 6 obstetric diagnosis-related groups (DRGs) using Italy as a case study. Italy provides a unique institutional setting since the 21 regional governments can decide to adopt the national DRG system or to adjust/waive it. Using a panel fixed effects model, we exploit the results of 66 electoral ballots between 2000 and 2013 to estimate how obstetric DRGs are affected by the composition and characteristics of regional governments. We find that the incidence of physicians among regional politicians explains variations in DRGs with low technological intensity, such as normal newborn, but not of those with high technological intensity, as severely premature newborn. We further investigate these results by exploiting the implementation of a budget constraint policy. Applying a difference-in-difference strategy, we observe a decrease in the average levels of DRGs after the policy implementation, but the magnitude of this decrease depends on the presence of physicians among politicians and the political alignment between the regional and the national government. Finally, we rely on patient data (6,500,000 deliveries) to assess whether any of the political economy variables have a positive impact on the quality of regional obstetric systems. We find no effect.

Suggested Citation

  • Bertoli, P. & Grembi, V., 2016. "The Political Economy of Diagnosis-Related Groups," Health, Econometrics and Data Group (HEDG) Working Papers 16/33, HEDG, c/o Department of Economics, University of York.
  • Handle: RePEc:yor:hectdg:16/33

    Download full text from publisher

    File URL:
    File Function: Main text
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Bracco, Emanuele & Lockwood, Ben & Porcelli, Francesco & Redoano, Michela, 2015. "Intergovernmental grants as signals and the alignment effect: Theory and evidence," Journal of Public Economics, Elsevier, vol. 123(C), pages 78-91.
    2. Nicholas Bloom & Carol Propper & Stephan Seiler & John Van Reenen, 2015. "The Impact of Competition on Management Quality: Evidence from Public Hospitals," Review of Economic Studies, Oxford University Press, vol. 82(2), pages 457-489.
    3. Amaral-Garcia, Sofia & Grembi, Veronica, 2014. "Curb your premium: The impact of monitoring malpractice claims," Health Policy, Elsevier, vol. 114(2), pages 139-146.
    4. Arulampalam, Wiji & Dasgupta, Sugato & Dhillon, Amrita & Dutta, Bhaskar, 2009. "Electoral goals and center-state transfers: A theoretical model and empirical evidence from India," Journal of Development Economics, Elsevier, vol. 88(1), pages 103-119, January.
    5. Martinussen, Pål E. & Hagen, Terje P., 2009. "Reimbursement systems, organisational forms and patient selection: Evidence from day surgery in Norway," Health Economics, Policy and Law, Cambridge University Press, vol. 4(02), pages 139-158, April.
    6. Eugenio Anessi-Pessina & Elena Cantù & Claudio Joninii, 2004. "Phasing Out Market Mechanisms in the Italian National Health Service," Public Money & Management, Chartered Institute of Public Finance and Accountancy, vol. 24(5), pages 309-316, October.
    7. Bordignon, Massimo & Grembi, Veronica & Piazza, Santino, 2017. "Who do you blame in local finance? An analysis of municipal financing in Italy," European Journal of Political Economy, Elsevier, vol. 49(C), pages 146-163.
    8. Ellis, Randall P., 1998. "Creaming, skimping and dumping: provider competition on the intensive and extensive margins1," Journal of Health Economics, Elsevier, vol. 17(5), pages 537-555, October.
    9. Kifmann, Mathias & Siciliani, Luigi, 2014. "Average-cost pricing and dynamic selection incentives in the hospital sector," hche Research Papers 2014/08, University of Hamburg, Hamburg Center for Health Economics (hche).
    10. Melanie Lisac & Kerstin Blum & Sophia Schlette & Hans Maarse & Yvette Bartholomée & David McDaid & Adam Oliver & Ignacio Abásolo & Beatriz Lopez-Valcarcel & Gianluca Fiorentini & Matteo Lippi Bruni & , 2008. "Health Systems and Health Reform in Europe," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 43(4), pages 184-218, July.
    11. Davis, Carolyne K. & Rhodes, Deborah J., 1988. "The impact of DRGs on the cost and quality of health care in the United States," Health Policy, Elsevier, vol. 9(2), pages 117-131, April.
    12. Eugenio Anessi-Pessina & Elena Cantù & Claudio Joninii, 2004. "Phasing Out Market Mechanisms in the Italian National Health Service," Public Money & Management, Taylor & Francis Journals, vol. 24(5), pages 309-316, October.
    13. Valérie Paris & Marion Devaux & Lihan Wei, 2010. "Health Systems Institutional Characteristics: A Survey of 29 OECD Countries," OECD Health Working Papers 50, OECD Publishing.
    14. Joseph J. Doyle Jr. & John A. Graves & Jonathan Gruber & Samuel A. Kleiner, 2015. "Measuring Returns to Hospital Care: Evidence from Ambulance Referral Patterns," Journal of Political Economy, University of Chicago Press, vol. 123(1), pages 170-214.
    15. Joseph J. Doyle, 2011. "Returns to Local-Area Health Care Spending: Evidence from Health Shocks to Patients Far from Home," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 221-243, July.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Paola Bertoli & Veronica Grembi, 2017. "Exploring the Nexus between Certainty in Injury Compensation and Treatment Selection," CERGE-EI Working Papers wp603, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    2. David C. Chan, Jr & Michael J. Dickstein, 2018. "Industry Input in Policymaking: Evidence from Medicare," NBER Working Papers 24354, National Bureau of Economic Research, Inc.
    3. repec:eee:socmed:v:216:y:2018:i:c:p:97-106 is not listed on IDEAS

    More about this item


    Diagnosis-related Groups; Regional Governments; difference in differences;

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • I1 - Health, Education, and Welfare - - Health

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:yor:hectdg:16/33. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Rawlings) The email address of this maintainer does not seem to be valid anymore. Please ask Jane Rawlings to update the entry or send us the correct email address. General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.