Abstract
Does austerity in healthcare affect health and healthcare outcomes? We examine the intended and unintended effects of the Italian austerity policy Piano di Rientro aimed at containing the cost of the healthcare sector. Using an instrumental variable strategy that exploits the temporal and geographical variation induced by the policy rollout, we find that the policy was successful in alleviating deficits by reducing expenditure, mainly in the southern regions, but also resulted in a 3% rise in avoidable deaths among both men and women, a reduction in hospital capacity and a rise in south-to-north patient migration. These findings suggest that - even in a high income country with relatively low avoidable mortality like Italy - spending cuts can hurt survival.
Highlights
While in most industrialized countries expenditures on health care have kept rising for decades, both in absolute level and as a share of gross domestic product (GDP), estimates of the marginal health benefits of health care spending vary widely between studies, because they often refer to very different times and places, and because they rely on different methodologies
We have taken advantage of the natural experiment of the Piano di Rientro (PdR) austerity policy that was implemented in selected regions in Italy to revisit an old question in health economics: at the margin, what does additional spending buy in terms of health gains? Interestingly, this was a period of fairly severe cuts in health spending in a relatively high‐income and high‐spending country, where it has often been argued that what is achieved at the margin is not extension of life expectancy but mainly improvement of quality of life
Confronted with rising health budget deficits, PdR reforms were implemented in 10 of 20 regions—mainly those located in the south of Italy—with the main goal to reduce these deficits by reducing expenditure
Summary
While in most industrialized countries expenditures on health care have kept rising for decades, both in absolute level and as a share of gross domestic product (GDP), estimates of the marginal health benefits of health care spending vary widely between studies, because they often refer to very different times and places, and because they rely on different methodologies. Most have focused on attempting to estimate the marginal health gains of additional spending. A large literature has addressed the relationship between healthcare spending and mortality in an attempt to identify the marginal health effects of additional healthcare spending. Much of this literature (e.g., Bokhari, Gai, & Gottret, 2007; Moreno‐Serra & Smith, 2015) has exploited cross‐national variation and has adopted a variety of methods to try to identify causal effects. Other studies have used subnational regional panel data to estimate health effects of public health spending in Health Economics. Other studies have used subnational regional panel data to estimate health effects of public health spending in Health Economics. 2020;1–17
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
