Political fragmentation and health financing in a sub-national framework

Although there is a burgeoning empirical literature on the rapid growth of health expenditures, there has been little systematic examination of the influence of central government financing behavior. In addition, studies examining the effect of political variables are relatively few and, as they seem to suffer from the omitted variable bias problem, generate improper inferences on health financing dynamics. Moving from this literature, and drawing on recent developments in the coalition governance, as well as researching on fiscal decentralization, in this paper the authors aim to gain insight into the Italian health care financing scenario taking into account the behaviors of government intervention in the sector. Specifically, they analyze regional political fragmentation and competition for effective political power between majority and opposition coalitions and the authors test if the fragmentation of both coalitions is the key variables that determine their effective political power. The authors test their hypothesis in the Italian framework with a new dataset. Data include financial, demographic and political variables. The empirical analysis is conducted with a panel of 15 Italian regions from year 2000 to 2010.