Fiscal Decentralization, Public Health Expenditure and Public Health–Evidence From China

Abstract

Since the beginning of the COVID-19 outbreak and the launch of the “Healthy China 2030” strategy in 2019, public health has become a relevant topic of discussion both within and outside China. The provision of public health services, which is determined by public health expenditure, is critical to the regional public health sector. Fiscal decentralization provides local governments with more financial freedom, which may result in changes to public health spending; thus, fiscal decentralization may influence public health at the regional level. In order to study the effects of fiscal decentralization on local public health expenditure and local public health levels, we applied a two-way fixed effect model as well as threshold regression and intermediate effect models to 2008–2019 panel data from China's 30 mainland provinces as well as from four municipalities and autonomous regions to study the effects of fiscal decentralization on public health. The study found that fiscal decentralization has a positive effect on increasing public health expenditure. Moreover, fiscal decentralization can promote improvements in regional public health by increasing public health expenditure and by improving the availability of regional medical public service resources. In addition, fiscal decentralization has a non-linear effect on public health.