Welfare State Retrenchment in the Age of Permanent Austerity: The Subnational Dimension

Welfare state retrenchment, and in particular the role of partisanship’s role in it, has attracted significant scholarly attention since the early 1990s and the rise of “permanent austerity.” However, the literature on the politics of welfare state retrenchment has only focused on politics at the national level. This paper adds a subnational dimension to the analysis of the relationship between partisanship, fiscal austerity and welfare retrenchment with a study of the politics of health care spending in Italy. As the political responsibility for health care is shared between national and subnational governments (regions), the paper assesses not only the impact on health care spending of country-level variables (the extent of fiscal consolidation and the political orientation of national governments), but also how they have interacted with the political orientation of regional governments. At the national level, it finds that the left spends more than right on health care, that fiscal consolidation reduces health care spending, and that the impact of fiscal consolidation is strongly conditioned by the partisanship of national governments (as in times of retrenchment the right decreases health spending and the left actually increases it). With regard to the relationship between national and subnational politics, the paper shows that political alignment (copartisanship) across national and subnational governments modifies the impact of government partisanship and fiscal austerity. When (right) national governments cut health spending, the cuts are concentrated in the regions governed by the opposition.