Healthcare and Federalism: A Political Economy Approach

Abstract

Decisions over public healthcare are very intertwined with national political debates. The aim of this work is to analyze the features of public healthcare with the tools of political economy. When the provision is not redistributive, a coalition of middle income voters will be opposed by poorer and richer individuals. When taxation and healthcare provision are decentralized to regions, which differ among themselves in terms of income distribution, two effects are in action on the equilibrium level of healthcare spending: an income effect and an inequality effect. The latter effect will be the strongest if the system is not redistributive.