Decentralization: A handicap in fighting the COVID-19 pandemic? The response of the regional governments in Spain

The COVID-19 pandemic has provided an ultimate testing ground for evaluating the resilience and effectiveness of federal and decentralized systems. The article analyses how the Spanish asymmetrical system of decentralization has responded to the pandemic, focusing on the management developed by the sub-central governments (Autonomous Communities) during the first two waves of the pandemic in 2020. The research, which is both quantitative and qualitative, employs multidisciplinary tools and information sources, analyzing and linking fiscal and budgetary sources with the available statistics and information on health. Although the health, economic and social crisis caused by COVID-19 has highlighted appreciable shortcomings related to the decentralized model of territorial organization - in questions of both regional financing and health management - the research concludes that decentralization has not per se been a handicap when confronting the pandemic in Spain.

Battling COVID-19 with dysfunctional federalism: Lessons from India

The Indian federation is highly centripetal, and historically, this has left states without the requisite legislative and fiscal authority to take independent action and initiate policies of significance. Consequently, India's response to the global COVID-19 pandemic was to impose a very severe countrywide lockdown using the mandate of the Union (federal) government. This centralized one-size-fits-all diktat was imposed despite high variations across states in resources, healthcare capacity, and incidence of COVID-19 cases. We argue that India's dysfunctional federalism is the reason for the centralized lockdown, preventing state and local governments from tailoring a policy response to suit local needs. Using mobility data, we demonstrate the high variation in curtailing mobility in different states through the centralized lockdown. We find that India's centralized lockdown was at best a partial success in a handful of states, while imposing enormous economic costs even in areas where few were affected by the pandemic.

Fiscal federalism vs fiscal decentralization in healthcare: a conceptual framework

INTRODUCTION

Fiscal federalism and fiscal decentralization are distinct policy options in public services in general and healthcare in particular, with possibly opposed effects on equity, effectiveness, and efficiency. However, the pertinent discourse often reflects confusion between the concepts or conflation thereof.

METHODS

This paper performs a narrative review of theoretical literature on decentralization. The study offers clear definitions of the concepts of fiscal federalism and fiscal decentralization and provides an overview of the potential implications of each policy for healthcare systems.

RESULTS

The interpretation of the literature identified three different dimensions of decentralization: political, administrative, economic. Economic decentralization can be further implemented through two different policy options: fiscal federalism and fiscal decentralization. Fiscal federalism is the transfer of spending authority of a centrally pooled public health budget to local governments or authorities. Countries like the UK, Cuba, Denmark, and Brazil mostly rely on fiscal federalism mechanisms for healthcare financing. Fiscal decentralization consists of transferring both pooling and spending responsibilities from the central government to local authorities. Contrarily to fiscal federalism, the implementation of fiscal decentralization requires as a precondition the fragmentation of the national pool into many local pools. The restructuring of the pooling system may limit the cross-subsidization effect between high- and low-income groups and areas that a central pool guarantees; thus, severely affecting local equality and equity. With the limited availability of local public resources in poorer regions, the quality of services drops, increasing the disparity gap between areas. Evidence from Italy, Spain, China, and Ivory Coast -countries with a strong fiscal decentralization element in their healthcare services- suggests that fiscal decentralization has positive effects on the infant mortality rate. However, it decreases healthcare resources as well as access to services, fostering spatial inequities.

CONCLUSION

If public resources are and remain adequate, allocation follows equitable criteria, and local communities are involved in the decision-making debate, fiscal federalism -rather than fiscal decentralization- appear to be an adequate policy option to improve the healthcare services and population's health nationwide and achieve health sector economic decentralization. HIPPOKRATIA 2020, 24(3): 107-113.

Fiscal transfers based on inputs or outcomes? Lessons from the Twelfth and Thirteenth Finance Commission in India

Background

There is limited empirical evidence about the efficacy of fiscal transfers for a specific purpose, including for health which represents an important source of funds for the delivery of public services especially in large populous countries such as India.

Objective

To examine two distinct methodologies for allocating specific‐purpose centre‐to‐state transfers, one using an input‐based formula focused on equity and the other using an outcome‐based formula focused on performance.

Materials and Methods

We examine the Twelfth Finance Commission (12FC)'s use of Equalization Grants for Health (EGH) as an input‐based formula and the Thirteenth Finance Commission (13FC)'s use of Incentive Grants for Health (IGH) as an outcome‐based formula. We simulate and replicate the allocation of these two transfer methodologies and examine the consequences of these fiscal transfer mechanisms.

Results

The EGH placed conditions for releasing funds, but states varied in their ability to meet those conditions, and hence their allocations varied, eg, Madhya Pradesh received 100% and Odisha 67% of its expected allocation. Due to the design of the IGH formula, IGH allocations were unequally distributed and highly concentrated in 4 states (Manipur, Sikkim, Tamil Nadu, Nagaland), which received over half the national IGH allocation.

Discussion

The EGH had limited impact in achieving equalization, whereas the IGH rewards were concentrated in states which were already doing better. Greater transparency and accountability of centre‐to‐state allocations and specifically their methodologies are needed to ensure that allocation objectives are aligned to performance.