Medicine or Poison: Effects of corruption in Public Health indicators

Discussions about funding and the need for budget increases for public health have been raised recently (Heijink, Koolman and Westert, 2013). Besides budgetary issues, there are also questions about corruption and... [ view full abstract ]

Discussions about funding and the need for budget increases for public health have been raised recently (Heijink, Koolman and Westert, 2013). Besides budgetary issues, there are also questions about corruption and mismanagement. Despite all the precious seminal effort carried out by the rising literature concerned about the effects of corruption on health care, the analysis carried out are based on correlation tests mainly, evaluating the relationship between corruption measures and health systems performance (Gupta, Davodi and Tiogson, 2000). Furthermore, the results are usually showed in an aggregate level ignoring many times what happens in states and cities. Analyzing these units are crucial for universal systems like the Brazilian one. The main contribution of this paper is to present an accurate measure for corruption applied to a never explored context improving in such a way the discussions about the effects of corruption on public health also subsidizing policy decisions in a way that accountability and efficiency in budget spending is enhanced. The dataset came from the Brazilian General Auditing Agency. For each auditing process undertaken by this agency, a report is filed out and released; the information of all these reports from 2004 until 2010 are the main data source used. This information enabled us to build the corruption measure here developed. It is worth mention that the cities chosen for these auditing checks were chosen by random picking processes guaranteeing the randomization of our data set. The models used to assess the impacts of corruption on public health are based on the instrumental variables approach where Brazilian cities are the main unity of analysis. The econometric model was developed based on the current literature about corruption, corruption on health systems, and health policy in Brazil making possible the link between corruption and public health in Brazilian municipalities. The dataset reveals that the biggest amount of corruption signals come from the absence of receipts for the expenses done and from the bidding processes carried out in order to get supplies for hospitals and other branches of the health care system. The dataset also shows that 65.29 per cent of all municipalities had at least one corruption scam on their records during the period of analysis and that 95 per cent registered at least one case of mismanagement. The results show evidence that corruption is related to the of health care indexes. The most affected health care index by corruption scams is the one measuring primary health care. Also, corruption scams seem to increase the number of deaths inside hospitals. These results might be being driven by some sort of monetary resources bad allocation since there is evidence that cities with high corruption indexes are those where the budget is mainly spent on investments which according to the literature is a kind of expense where sone can see more corruption (Mauro, 1998). The results claim for a more adequate way to deal with public auctioning turning these processes more accountable for the citizenry then reducing corruption and increasing health care indexes.