Publication: Paying for Health Care : Quantifying Fairness, Catastrophe, and Impoverishment, with Applications to Vietnam, 1993-98
Date
2001-11
ISSN
Published
2001-11
Author(s)
Abstract
The authors compare egalitarian concepts
of fairness in health care payments (requiring that payments
be linked to ability to pay) and minimum standards
approaches (requiring that payments not exceed a
prespecified share of prepayment income or not drive
households into poverty). They develop indices for both sets
of approaches. The authors compare the "agnostic"
approach, which does not prespecify exactly how payments
should be linked to ability to pay, with a recently proposed
approach that requires payments to be proportional to
ability to pay. They link the two approaches using results
from the income redistribution literature on taxes and
deductions, arguing that ability to pay can be thought of as
prepayment income less deductions deemed necessary to ensure
that a household reaches a minimum standard of living or
food consumption. The authors show how both approaches can
be enriched by distinguishing between vertical equity (or
redistribution) and horizontal equity, and show how these
can be quantified. They develop indices for
"catastrophe" that capture the intensity of
catastrophe as well as its incidence and also allow the
analyst to capture the degree to which catastrophic payments
occur disproportionately among poor households. Their
measures of the poverty impact of health care payments also
capture both intensity and incidence. To illustrate the
arguments and methods, the authors use data on out-of-pocket
health spending in Vietnam in 1993 and 1998-an interesting
application, since 80 percent of health spending in that
country was out-of-pocket in 1998. They find that
out-of-pocket payments had a smaller disequalizing effect on
income distribution in 1998 than 1993, whether income is
measured as prepayment income or as ability to pay (that is,
prepayment income less deductions, regardless of how
deductions are defined). The underlying cause of the smaller
disequalizing effect of out-of-pocket payments differs
depending on whether the benchmark distribution is
prepayment income or ability to pay. The authors find that
the incidence and intensity of catastrophic payments-in
terms of both prepayment income and ability to pay-declined
between 1993 and 1998, and that both the incidence and the
intensity of catastrophe became less concentrated among the
poor. They also find that the incidence and intensity of the
poverty impact of out-of-pocket payments diminished over the
period. Finally, they find that the poverty impact of
out-of-pocket payments is due primarily to poor people
becoming even poorer rather than the nonpoor becoming poor
and that in Vietnam in 1998 it was not expenses associated
with inpatient care that increased poverty but nonhospital expenditures.
Citation
“Wagstaff, Adam; van Doorslaer, Eddy. 2001. Paying for Health Care : Quantifying Fairness, Catastrophe, and Impoverishment, with Applications to Vietnam, 1993-98. Policy Research Working Paper;No. 2715. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/19429 License: CC BY 3.0 IGO.”
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