Mechanisms to promote inter-regional equity in the finance of the National Health Service in Spain

Abstract

Regional governments in Spain have considerable autonomy for the provision and financing of healh care and other public services. The Act of 2001 set up redistributive transfers (fondo de suficiencia) between regions to ensure that at least a minimum level of basic common services could be provided to each citizen, weighted for need. This article develops an economic model of the financing of public services in Sapin and examines whether this system of redistribution has continued to maintain equity since its establishment, given variation in rates fo economic and demographic growth between regions. The results indicate that the system of transfers established in the Act of 2001 has not kept pace with changes in the distribution of population needs and economic activity in Spain. Assuming that need matched finance in all regions in 1999, we calculated the Gini coefficient in 2005 to be 0,018. However, this summary measure may obscure the magnitude of changes for individual regions. To maintain equity of health care provision in 2005 compared with 1999, transfers from the sufficiency fund would have to increase faster than national economic growth in Valencia, Canarias, Cataluña, La Rioja and Murcia, and increase slower than national economic growth in Cantabria, Aragón, Extremadura, Asturias, Castilla y León and Andalucía. Contributions to the suffieciency fund by Madrid and Baleares would need to reduce over time. These results are based on a very simple aggregate model of public finance. Further, more detailed work is needed to verify the findings, to construct a robust formula that reflects relative need for health-care services, and to clarify how the sufficiency fund will operate if rates of economic growth are negative.