The role of socio-economic determinants in the interregional allocation of healthcare resources: Some insights from the 2023 reform in the Italian NHS

Abstract

• A reform in 2023 introduced new criteria for allocating healthcare funding in Italy. • Socio-economic variables were included among the criteria for allocating funding across Regions. • We simulate the new scheme and compare it with an alternative in which age and socio-economic indicators are jointly considered in estimating health needs. • It turns out that more resources would be allocated to the Regions with greater deprivation. This paper discusses a reform recently implemented in the Italian National Health Service, aimed at adding some socio-economic indicators to the criteria adopted for allocating healthcare funding to Regions. The reform is based on international experience in healthcare financing in decentralized settings and provides a case study of special interest since Italy is a country with significant territorial disparities and severe budget constraints. The paper first discusses the long-standing debate between Italian Regions which led to the reform. Second, it reviews the main features of the reform which provides for the inclusion of socio-economic indicators via a simplified formula. Moreover, a possible revision of the reform is proposed, fully exploiting the information on the heterogeneity of health needs according to age and socio-economic indicators. By integrating the information on deprivation inside the risk adjustment mechanism, the weight of the different drivers is determined by the distribution of needs and not on a discretionary basis. Simulating the proposed revision suggests that more resources could be allocated to the Regions with higher levels of deprivation compared to a scenario that closely replicates the reform.