Quasi-market and cost-containment in Beveridge systems: The Lombardy model of Italy

Abstract

In the very recent past, the Lombardy health care system – established in 1997 on the quasi market model – has caught the interest of researchers and politicians in different OECD countries 1 1 See for example the Wall Street Journal, Tuesday, April 13, 2010, R2. . Its merits, compared to other Italian regional systems, are the control of health care spending and the balanced budget, in a frame of good quality of services and patient choice. From the theoretical point of view, an appealing aspect of the Lombardy model is its gradual shift from a quasi market (QM) to a “quasi administered” system, which maintains all the typical features of the QM orientation – separation between purchasers and providers, the co-presence of public, not for profit and public providers, and patient free choice – but has deliberately sacrificed competition in order to control health expenditure. Another aspect of the Lombardy model is the sharp presence of private providers: the evidence that private sector is mainly concentrated in the long term care, where risks of complications are lower and financial remuneration is higher, suggests that a closer control should be exerted on hospital activity. Furthermore, possible distortions such as cream skimming and cherry picking by the private providers need more consideration. Another concern is linked to health spending control: equity issues could arise when observing a still relatively high share of private (out of pocket) health care expenditure. The paper stems from a literature review and tries to analyse the evolution of this regional system, the institutional path that brought to the implementation of the model, its theoretical basis, its merits and criticism. The period considered ranges from 1997, when the reform was enacted, to 2010.