Fiscal Decentralization System and the Efficiency of Local Fiscal Expenditure on Health Care

Fiscal decentralization is a basic financial system arrangement after the reform of China’s tax sharing system, which determines the mode, efficiency and level of financial resource allocation. Based on provincial panel data of China from 2002 to 2018, the data envelopment analysis method was used to calculate the efficiency of local financial medical and health expenditure, and analyze the impact of fiscal decentralization system on the efficiency of local financial medical and health expenditure. The results show that the efficiency of local financial medical and health expenditure is not high, and there are obvious regional differences. Both fiscal revenue decentralization and fiscal expenditure decentralization have significant negative effects on the efficiency of local fiscal health expenditure, and this conclusion is still robust after a series of robustness tests. The heterogeneity test shows that fiscal decentralization is more effective in restraining local fiscal expenditure on health care in the economically developed eastern region, but not in the economically underdeveloped western region; whether in the fiscal revenue equation or in the fiscal expenditure equation, the improvement of economic development level and residents’ education level can effectively promote the efficiency of local fiscal medical and health expenditure. The higher the degree of opening up and the scale of government consumption, the more detrimental it is to the efficiency of local fiscal medical and health expenditure. In the fiscal revenue equation, the increase of population density can effectively promote the efficiency of medical and health expenditure. In the fiscal expenditure equation, the urbanization rate and the reform of medical and health system have a significant impact on the efficiency of medical and health expenditure.