A growing research agenda shows the importance of local welfare systems in understanding socio-spatial inequalities in health. Welfare services provided by local governments overlap with those provided by other levels of government. Thus, differences in the provision of welfare services between municipalities could explain differences in residents' health, moderating the magnitude of health inequalities if local governments deploy actions capable of positively influencing the social determinants of health. This article attempts to analyse this idea in the Spanish case, exploring the influence of local policies according to the orientation of municipal spending on three indicators of the population's health status: self-perceived health, healthy practices and activity limitations due to health problems. A multilevel cross-sectional study was designed using information from two waves of the 2006-2007 and 2011-2012 National Health Survey for the population aged 15 years and older (N = 31,378) residing in Spanish municipalities of 20,000 inhabitants or over (N = 373). The results show that the magnitude of inequalities in self-perceived health, in the adoption of healthy practices and in daily activity limitations by social class are smaller as municipalities" spending was oriented towards policy areas considered as redistributive. Therefore, the proposed institutional overlap thesis could help understand the role of subnational governments on the magnitude of health inequalities, as well as in comparative analysis between countries with institutional systems in which local governments have a greater or lesser capacity to provide welfare services.
Keywords: Spain; contextual analysis; health inequalities; local welfare system; urban policies.