Hardening subnational budget constraints via administrative subordination: The Italian experience of recovery plans in regional health services.

Since 2007, Italian regions running large deficits underwent recovery plans (Piani di Rientro) imposed by the central government. The goal was twofold: regions were asked (i) to restore a balanced budget and (ii) to continue supply the set of services defined by the constitution. We investigate whether recovery plans have reached their objectives. Our evidence suggests that recovery plans have proved to be an effective mechanism to eliminate subnational governments deficits. We also do not find any significant effects on health care utilization and on citizens' health. Overall, spending efficiency has likely improved.