Abstract
There are several myths about the impact of decentralization of health care governance. These include a worsening of regional inequalities, greater privatization of health care, greater inefficiency resulting from duplication of managerial activities such as human resource policies, and lower productivity. These myths have partly arisen from a lack of rigorous assessments of the effects of decentralization.
Reforms that aim at redistributing power and resources in health systems are never exempt from controversy. Recent history in many European countries indicates almost without exception, that health systems have evolved from the progressive functional integration of scattered and ill funded services to centrally controlled institutions within welfare programmes. Hence, it is no surprise that health care decentralization is contemplated with some degree of suspicion by those who expect a conspiracy underpinning any power-sharing agreements or hidden political agendas. The latter nurtures several myths, some of which are ideological in nature, others simply emerging from assumptions or from speculations that have limited empirical support. Academics should turn those myths into stylized facts or, when proven wrong, reject them as unjustified.
Topping the ‘myth list’ are the claims that devolution is associated with an increase in regional inequalities, health system privatization, inefficiencies resulting from duplicities and lower productivity. 1 As decentralization encompasses the creation of new administrative arrangements, the obvious questions are, does decentralization cause excessive expenditure and, as the literature suggests, is it a backdoor to privatization? Other concerns are more political and refer to power distribution; there are those who think that decentralization can weaken the sovereignty of the nation state, which is an argument that as we argue does not stand if one accepts a classical notion of governance based on notions of “command and control” of health system policies, agencies and stakeholders.
Decentralization of responsibilities to regions or sub-national bodies is at the forefront of the reform in most health systems. However, models of devolved governance are heterogeneous and exhibit different shapes depending on allocation of responsibilities, the allocation of public outlays and fiscal revenues, and political accountability that defines policy legitimacy and credibility. It might be expected such variability will mean that decentralization produces different effects in different institutional and political settings.
Nonetheless, it is surprising how little is known about the effects of decentralization on health care outcomes and outputs. There is more research on the effects on social citizenship, 2 its democratic legitimacy 3 and the extent of diversity. 4 However, whether and how much to devolve is still politically incandescent, nurturing ideological reactions, funded often on anecdotal evidence with a short term perceptive. However, health policy reformers should be able to separate policy and institutional reform from their fears of how the world will look like. Five myths, in particular, need quashing.
Myth 1. Devolution widens regional inequalities
A conventional concern in the social and health policy literature is that increasing territorial choice and power decentralization can hamper the equity in the access to health services. This view lies in the notion that allowing regional heterogeneity in health policies introduces diversity. The latter is perceived as a negative quality of a health system. The risks of this view, besides that of a narrow conception of equity, is that it ignores that devolution makes relative inefficiencies of one region or state more apparent, and hence the political incentives can be put in place to punish or reward those regional incumbents that perform better. Similarly, autonomy gives rise to experimentation at a local level, which if policy learning take place, successful experiments might diffuse to all regions. This evidence is consistent with the findings that regional inequalities decline, rather than increase after devolution. This is the case of regional per capita health expenditure in Spain 5 as well as in Italy and the UK. 6
Myth 2. Devolution always triggers inefficiency and is limited by provider capture
Decentralization, by opening up the health system to mobility and strengthening of the alliance between politically accountable managers and potential users of the system, triggers different forms of spatial interdependence. It makes different forms of spatial or jurisdictional competition possible. This can be true and it improves health services if there are the right mechanisms in place for regions to compare outcomes (mortality, waiting times) that citizens can use to evaluate the health system. In the UK, some scholars have put forward the idea that devolution to Northern Ireland, Scotland and Wales has permitted provider capture and inefficiency in the devolved jurisdictions. 1 However, evidence from Spain suggests the opposite with drug companies struggling to capture all 17 regional health systems.
Myth 3. Devolution triggers privatization (the ‘race to the bottom’ argument)
Traditional fiscal federalism literature argues that devolution gives rise to fiscal competition, which leads to a race to the bottom on expenditure. Jurisdictions with excellent health systems would be welfare magnets and the health system would be financially unsustainable. Such evidence, however, ignores that voters in Europe regard health care as the top public policy priority, and that competition takes place on quality rather than on price. 7 Choice, rather than taking place through mobility, is often nurtured though political incentives that affect the changes of incumbent reelection which, if successful, is suggestive of the potentially key role of good health governance. 8
Myth 4. Devolution introduces vetoes to health reform
Increasing participation allows regionally scattered agents to veto health reform. Yet, this evidence is mostly centered in the slow development of US public health services due to its federal structure. Even when the latter is true, devolution is only an institutional structure that caters heterogeneity of preferences. Legislation veto takes place when policies require a countrywide consensus to be implemented. However, in the US (e.g. Massachusetts) or in Spain (e.g. Andalucáa, the Basque Country and Catalonia), decentralization has been a pro health reform devise. Decentralization might have not always managed to encompass national reform but at least when support for it is high enough in certain regions, reform takes place regionally without waiting for a national proposal. 6
Myth 5. Devolution leads to a loss of health system command
One of the commonest arguments assumes that only traditional governance based on regulation is applicable, and that cooperation and soft governance are less valid forms of command. However, whether command is undermanned or not is an empirical question that has received limited attention. Instead, some evidence suggests that a certain level of competition between regional health services and the central state can result in policy diffusion and ultimately improve the relative efficiency of health systems. 7
Based on these arguments more research on the effects of decentralization on health systems is needed. Such research should attempt to produce ‘myth free evidence’ so as to ground policy and reforms in more rigorous evidence.