Federative coordination and territorial inequality: the effectiveness and limitations of the Brazilian Federal Government’s redistributive policy on health at the municipal level

Abstract: Federal coordination of Brazilian subnational governments via financial induction has reduced health inequalities at the municipal level. At the same time, federal health policies depend on the adherence and conditions of subnational governments, which may favor municipalities with greater state capacity and, consequently, reproduce inequities. Against this backdrop, this article advocates that attacking the asymmetry of municipal state capacities is a more effective instrument for creating sustainable conditions for achieving equity in healthcare among Brazilian citizens. The research aims to analyze the federal government’s role in reducing health inequities in municipalities. It classifies municipalities into clusters based on their state capacities in health and analyzes the profile of transfers from the federal government by observing the Variable Basic Health Care Floor (variable-BHCF), which is a component of Brazil’s primary healthcare financing system, for each cluster. The clustering method considers nine indicators of state capacities in health from 2005 to 2017. The results indicate that clusters of municipalities with lower state capacities receive larger transfers when considering variable-BHCF per capita. Additionally, the largest clusters are those formed of municipalities with the lowest state capacities during this period. This research contributes to the federalism literature by introducing new analytical perspectives on horizontal inequalities and the federal government’s role in mitigating them.