For social policy outcomes, timing and sequence matter. For equity enhancing reform to take place and be implemented, particular constellations of commitment, capacity, and territorial distribution of authority at particular moments in the reform process influence how redistributive the reform is likely to be. Starting points cannot be ignored. Most forms of decentralization should, by definition, increase regional variation if the starting place were a very high level of equity. When the starting point is a high level of inequity under centralization, the possibilities are more complex.
Many of the causal variables hypothesized here are more important for successful
18Paraphrasing Peter Spink, expert in municipal policy innovation at the Funda¸c˜ao Getulio Vargas,
“In a small municipality, one committed and capable person can make a very large difference. In large cities, it takes much greater commitment and capacity to achieve the same results because the systems are exponentially more complex.”
equity-enhancing reform at certain moments and generally exhibit patterns of increas- ing returns—with decisions made early in the reform process carrying more weight than at later moments (Pierson 2000). The crucial moments for the health system are constitutional guarantee/organic law, enabling legislation, implementation, and consolidation. If a universal health system of sufficient quality and coverage can be established, commitment is somewhat less important later on. Popular social bene- fits become accepted and thought of as social rights, which makes certain types of fundamental reform unpalatable for any governing party. Actors opposed to equity- enhancing reform understand this process and often fight reforms the hardest at the beginning when they believe there will be little chance of overturning them once they are implemented. Lacking government committed to equity at these key points in the reform process tends to diminish the equity-enhancing nature of the policy.
The importance of sequence for capacity is more complex. Variation in capacity will have more impact over the life cycle of the policy and the minimum level needed for successful system consolidation at the outset is hard to define ex ante. While a certain level of capacity is required at the moment of implementation and for consol- idation (to keep a reform from being marginalized as residual), if the policy gains a foothold socially and politically, demands for increased capacity can force actors to generate resources and invest in administrative capacity that can improve the system gradually over time. Low capacity can diminish the equity-enhancing character of a reform at any point, since budget shortfalls or inept management can quickly dete- riorate social services. Financing can also be made more regressive even when the policy itself is untouched, which makes it less progressive immediately.
The sequence of particular types of decentralization matters for social policy pro- vision primarily because of how it interacts with capacity. Because experience with managing budgets and governance institutions should increase overall administrative
capacity, for regions without a history of self-government a lag between the creation of decentralized political institutions and the assumption of major social policy re- sponsibilities should improve the way administrative capacity can be leveraged in implementing equity-enhancing reforms. Gaining policy responsibilities without ca- pacity when a major reform is first being implemented can lead to inequalities in the system that become entrenched and difficult to remedy later. This has been prob- lematic in Spain, where the logic of health devolution had nothing to do with proof of capacity to manage service provision and several relatively low-capacity ACs took on health responsibilities early. Devolution without capacity was also the standard in Brazil in the early 1990s, as well as in several states that were uncommitted to equity-enhancing reform and devolved greater authority to municipalities regardless of their level of capacity. Losses in capacity later matter, but are less likely to shape the fundamental nature of the system. Tables A.1 and A.2 summarize the patterns of commitment, capacity, and decentralization at different stages of health reform in Spain and Brazil. The cut off points are not exactly the same for each variable
The public-private split in health provision is a particularly good example. If capacity is low in what should be a universal public system, the demand for alterna- tive private services and insurance will be high from the beginning. The chances of the system being stigmatized as a poor resource for the poor then increase, just as qualified personnel will not see the public system as a viable place to make a dignified career. This has been a particularly daunting problem in Brazil.
Problems of corruption are generally worse where the rule of law is weakest, demo- cratic institutions and accountability are weakly established, and problems of poverty and inequality are high. This suggests an additional boon to a lag between politi- cal decentralization (institutional depth and representation) and extension of policy scope. Especially in new democracies, allowing time for civil society to develop and
establish mechanisms of accountability and oversight with public institutions before granting broad policy making authority and resources to those entities should produce better outcomes across the board, and a more programmatic attention to policies for the poor in particular.
Finally, decentralization itself likely exhibits increasing returns. Once political actors come to think of particular spheres of responsibility as “theirs,” taking them away is challenging. When theory suggests that higher levels of decentralization will make equity-enhancing social policies harder to implement across a country, the best chances for redistributive social policies is to consolidate them prior to decentraliza- tion. In this sense, Brazil is a somewhat mixed case because states and municipalities had a high level of social policy authority coming out of the democratic transition, but so did the center, and the center controlled most of the money.
Spain, however, offers a telling illustration. When health reform was passed cen- trally from 1984-1986, health competences had already been devolved to several ACs and they were partially beyond the reach of central policy implementation, with sev- eral more following before consolidation of the health system had progressed much. Indeed, Catalonia battled the center in the courts to prevent its encroachment in this new area of responsibility and ended up being the latest AC (by two years) to implement the reform. The extension of the equity-enhancing primary care reform of 1984 was much more uneven in the early decentralizers than in those that took over health after the consolidation of the reforms, and the poor regions that were early decentralizers have not performed as well as those that took on responsibilities later.