What Happens to Interregional Redistribution Upon Fiscal Decentralisation Reforms? Evidence from the Italian NHS

In this paper we explore how pressures for an increased decentralization of taxing powers and expenditure competencies to sub‐national governments may affect the degree of income redistribution across regional territories currently accomplished by the Italian National Health Service. In Italy, political responsibilities for health care are decentralized to regional governments, but the central government retains a critical role in ensuring that all citizens have uniform access to health care. To this end the central government runs a scheme of expenditure needs equalization to top up regional governments own resources. However this system is currently put under question by strong political pressures calling for a weakening of central government involvement. We evaluate the impact of these instances on the degree of interregional redistribution by the NHS on the basis of different assumptions on the degree of taxing powers decentralization and on total resources devoted to health care financing.