Does devolution influence the choice and quality of public (vs private) health care?

Abstract

Government decentralisation also called ‘government devolution’ (GD) can provide an alternative to the ‘build in’ accountability mechanism of markets by influencing both the choice as well as the perceived quality of public versus private health care. To test this hypothesis, this paper exploits the gradual decentralisation of the political stewardship of the Spanish National Health System (NHS) using a difference-in-differences design. We find that GD (abandoning centralised governance) increases the choice and quality of (measured by the preference for, perceptions of, and satisfaction with) public health care (NHS) compared to private health care. Consistently, we also find that the GD reduces the uptake of private health insurance among higher income and education groups. These effects are mainly driven by improvements in health care quality as well as policy innovation and diffusion.