Regional institutional quality and territorial equity in LTC provision

Abstract

We show how regional governments affect the appropriate – in terms of territorial equity – assignment of a national LTC benefit. We analyse the case of Italy, featuring a three-layers setting, where eligibility criteria are defined by the central government (which bears the fiscal cost of transfers), but the assignment decision is taken by regional medical commissions, while applications are activated by individual potential beneficiaries. Combining administrative and survey data, and accounting for regional variation in eligibility prevalence, we document large territorial disparities in need-adjusted benefit assignment. We investigate the determinants of such disparities both in terms of individuals’ differential propensity to claim, and of regional discretionary behaviour, as shaped by the underlying quality of regional institutions. While several data limitations recommend caution, the empirical results suggest – in line with our conceptual framework – that regional discretion plays a role in LTC provision: in more detail, lower regional institutional quality appears related to more opportunistic benefit adjudication decisions.