Effects of Decentralization and Cost Containment Policies on the Public Share of Health Expenditure in Italy

The Italian adherence to the European Economic and Monetary Union has demanded a strict contro1 of public experiditure, following a trend already consolidated in other advanced economies. The effects of these cost containment policies have been particularly incisive on public health expenditure, thus leading to a decrease in the public share. In addition, starting from 1992 a set of reforms was specifically designed to increase the autonomy and responsibilities of regions in both the financing and delivery of health care. This paper aims at evaluatiiig the effects of such policies on the public health expenditure share, in the light of the legislative mandate to equalise regional financial resources. Using pooled time-series cross-section observations over the period 1990-2003, different regression models for the share of public health expenditure as well as for private health spending are estimated at a regional level. Among the other findings, there is evidenee that national health transfers to regions are not sufficiently able to mitigate regional inequalities in the levels of health expenditures, especially those due to income divergences.