Decentralization and the Spanish Health System: Soft Budget Constraint Modernization?

  • Joan Costa-Font


Spain is a country of paramount importance for healthcare decentralization scholars given its deep process of devolution of health and education to region states. Such a process dates back to a strategy of democratization of a centralistic state as well as a modernization mechanism to improvising the efficiency in the delivery of public services. However, there is an unintended agenda. More precisely, by creating different regional health services a health system takes advantage of welfare gains associated with interjurisdictional competition and innovation and at the same time encourages local healthcare preference matching. These can take place if citizens exert the so-called “vote with one’s feet” exit option. Or, under restricted mobility but visible political and fiscal accountability it can open up political mechanisms of the political action to exercise voice, and more generally electorally reward regional incumbents benchmarked against those of similar jurisdictions (Besley and Case 1995; Revelli 2002). As discussed in Chapter 2 on fiscal federalism, both mechanisms are important to incentivize incumbents to improve the performance of public services, and are generally absent in centralized health system


Region State Health Expenditure Basque Country Regional Inequality Yardstick Competition 
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© Joan Costa-Font and Scott L. Greer 2013

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  • Joan Costa-Font

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