Private health care expenditure and quality in Beveridge systems: Cross-regional differences in the Italian NHS

Abstract

Private health care expenditure ranges from 15% to 30% of total healthcare spending in OECD countries. The literature suggests that there should be an inverse correlation between quality of public services and private expenditures. The main objective of this study is to explore the association between quality of public healthcare and private expenditures in the Italian Regional Healthcare Systems (RHSs). The institutional framework offered by the Italian NHS allows to investigate on the differences among the regions while controlling for institutional factors. The study uses micro-data from the ISTAT Household Consumption Survey (HCS) and a rich set of regional quality indicators. The results indicate that there is a positive and significant correlation between quality and private spending per capita across regions. The study also points out the strong association between the distribution of private consumption and income. In order to account for the influence of income, the study segmented data in three socio-economic classes and computed cross-regional correlations of RHSs quality and household healthcare expenditure per capita, within each class. No correlation was found between the two variables. These findings are quite surprising and call into question the theory that better quality of public services crowds out private spending, or, at the very least, it undermines the simplistic notions that higher levels of private spending are a direct consequence of poor quality in the public sector. This suggests that policies should avoid to simplistically link private spending with judgements or assessments about the functioning or efficacy of the public system and its organizations.