Regional public health care spending in Switzerland: An empirical analysis

Abstract

In this study we attempt to explain variations across the Swiss regional states (cantons) in public health care expenditures. The large autonomy of the cantons in the organization and financing of health care services creates strong heterogeneity. Per capita public expenditures in health care are assumed to depend on the median tax share, intergovernmental grants, and some structural factors. The empirical analysis shows that cantonal behavior is sensitive to federal subsidies. Moreover, changes in median income seem to have significantly larger effects on budgetary behavior than do equal changes in grants from the federal state, leading to a result which is contrary to part of the empirical literature on the flypaper-effect.