Abstract
Does austerity in health care affect health and healthcare outcomes? We examine the intended and unintended effects of the Italian austerity policy Piano di Rientro aimed at containing the cost of the healthcare sector. Using an instrumental variable strategy that exploits the temporal and geographical variation induced by the policy rollout, we find that the policy was successful in alleviating deficits by reducing expenditure, mainly in the southern regions, but also resulted in a 3% rise in avoidable deaths among both men and women, a reduction in hospital capacity and a rise in south‐to‐north patient migration. These findings suggest that—even in a high‐income country with relatively low avoidable mortality like Italy—spending cuts can hurt survival.
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