Cross Border Health Care Provision: Who Gains, Who Loses

What is it about?

We study the possible effects of cross border provision of health care in a context where health care is a merit impure local public good whose consumption is subsidised and whose access is free, but not unlimited. The impure local public good aspect means that the production of health care spreads its benefits beyond the geographical boundaries of the Region where it is produced. Finally, we include the (optional) provision of an equalisation grant that allows to reduce fiscal imbalance among Regions. We show that devolution is always sub-optimal for the whole community: the lack of coordination means that the impure public good is under-provided. However, more efficient Regions may be better off because of the impure public good nature of health care.

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