How budget cuts increase inappropriate health care and infant health outcomes

Abstract

Using data from Spain, we show the impact of significant health-sector budget cuts introduced in 2012 on the rates of cesarean sections and on infant health outcomes at birth, which we use as a proxy for the quality of birth centers. Exploiting a difference-in-differences fixed-effects approach at the hospital level, we estimate a 3% increase in C-sections as a result of the budget restrictions, with no significant consequences on health outcomes at birth. Given the additional evidence in the literature on the negative short- and long-term effects of non-medically indicated C-sections, our paper provides important policy implications for population health.