Health Care Goes Local
Does decentralization improve the delivery of medical services?
Decentralization has emerged as a major tool for improving the delivery of health services in Latin America. But has it worked? This is a crucial question for policymakers in the region—and elsewhere—and not only in the health sector. One of the major public policy debates of our time is to what extent decentralization of government decision making promotes or reduces the effectiveness of policy initiatives. This is directly related—especially in our region—to the larger challenge of how to strengthen institutional capacity in areas ranging from education and security to public investment.
Discussion of decentralization has been dominated by anecdotal evidence that is used to support arguments for or against the practice. There have been few systematic, evidence-based evaluations of the region’s experiments with health care decentralization.
In fact, the region’s health care decentralization efforts over the past two decades ought to serve as a laboratory for deeper and more scientific studies that could help policymakers choose what kinds of decentralization are more likely to achieve policy objectives.
During the 1980s in Chile, for example, a major reform effort under the military government shifted responsibility for primary care clinics to municipalities throughout the country. The municipalities took over human resource functions such as hiring and firing and setting salary levels—thus becoming responsible for, on average, one-third of the expenses of running the system. However, the role of setting standards for the kinds of health services provided by municipalities remained defined by the central government.
Colombia followed suit in the 1990s by decentralizing almost all the country’s health services, including hospitals, to the provinces and municipalities. Each level was given fairly wide authority over human resources and budgeting. The national budget assigned to localities significantly increased, and the formula for assigning resources became more equitable. Before decentralization, the richer municipalities received more than six times more per capita funding from the central government than the poor municipalities; after decentralization the difference was minimal. In addition, and perhaps more unexpected, before decentralization richer municipalities had, from their own local revenues (taxes and other sources), allocated forty-two times more than the poor municipalities. After decentralization, that gap was reduced to twelve times.
Brazil and Mexico also initiated major decentralization reforms but with different nuances. Mexico granted significant new powers to the states, but little decentralization occurred from the states to municipalities. In Brazil, states were progressively given greater financing and managerial responsibilities, and municipalities were categorized by their differing capacities, with the wealthier and more effective municipalities gaining greater responsibilities for management and regulatory decisions. Later, however, those functions were recentralized to the states...