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L7 uhc-inequality-jk

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L7 uhc-inequality-jk

  1. 1. Under JPG Teaching Fellowship Permission from JPGSPH CoE-UHC
  2. 2. Equity in Healthcare Financing: Principals and Measurements Jahangir A. M. Khan, PhD Head, Health Economics Unit, icddr,b Associate Professor, JPGSPH, BRAC University 2
  3. 3. What is equity? Principle of being fair to all, with reference to a defined and recognized set of values. 3
  4. 4. Equity concepts     Market mechanism is considered fair/Nozick. Maximising greatest happiness for greatest numbers, but ignores distributional aspects /Utilitarianism. Goods are distributed so that the position of the least well off in society is maximized/ Rawls Equal shares of a distribution of a commodity which means equality in health and health care/ Egalitarianism 4
  5. 5. Equity in what ?     Health Health care delivery Health care utilization Health care financing 5
  6. 6. Dimensions in Equity  Vertical equity The principle that says that those who are in different circumstances should be treated differently.  Horizontal equity The principle that says that those who are in identical or similar circumstances should be treated equally. 6
  7. 7. Measurements The range The index of dissimilarity The slope and relative indices of inequality The Gini-coefficient The concentration index 7
  8. 8. Criteria to be a good measurement of inequality in health 1. It reflects the experiences of the entire population. 2. It reflects the socioeconomic dimension of health. 3. It is sensitive to changes in the distribution of the population across the socioeconomic groups. The objective of the study determines which measurement of inequality is best. 8
  9. 9. GINI-COEFFICIENT 9
  10. 10. Lorenz Curve Lorenz curve plots cumulative proportion population (ranked from the sickest to the healthiest one) in x-axel against cumulative poportion payments in y-axel. 10
  11. 11. Equal distribution of healthcare payments EXCEL EXAMPLE 11
  12. 12. Cumulative proportion Payments Lorenz curve with perfect equality B 100% 80% 60% 40% 20% O C 20% 40% 60% 80% 100% Cumulative proportion population 12
  13. 13. Inequal distribution of payments EXCEL EXAMPLE 13
  14. 14. Gini-Coefficient 2 * (Area under diagonal – area under lorenz curve) 14
  15. 15. Calculating Gini-Coefficient Brown’s formula Index = Y = Cumulative proportion population X = Cumulative proportion health or ill-health k = Number of individuals i = Individual and corresponding health in specific position 15
  16. 16. Gini-coefficient Pop 1 1 1 1 1 1 1 1 1 1 10 Prop Cum. pop Prop. Pop (X) 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 1 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 Xi-Xi-1 (A) 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Income Prop income Cum Yi+Yi-1 prop (B) income (Y) 2 0.02 0.02 0.02 4 0.04 0.06 0.08 6 0.06 0.12 0.18 7 0.07 0.19 0.31 9 0.09 0.28 0.47 11 0.11 0.39 0.67 12 0.12 0.51 0.9 14 0.14 0.65 1.16 15 0.15 0.8 1.45 20 0.2 1 1.8 100 Sum = Gini-coefficient = 1-sum(A*B)= A*B 0.002 0.008 0.018 0.031 0.047 0.067 0.09 0.116 0.145 0.18 0.704 0.296 16
  17. 17. CONCENTRATION INDEX 17
  18. 18. Concentration curve A variant of Lorenz curve. Socioeconomic dimension of health is included in the concentration curve. Concentration curve plots cumulative proportion population (ranked from the poorest to the richest socioeconomic condition) in x-axel against cumulative poportion payments in y-axel. 18
  19. 19. Concentration curve of payments B 100% Cumulative proportion payments   80% B´  60% 40%  20% O C 20% 40% 60% 80% 100% Cumulative proportion population (ranked from poorest to richest) 19
  20. 20. Concentration Index 2*(area under diagonal – area under concentration curve) 20
  21. 21. Calculating concentration index Pop 1 (Poorest) 1 1 1 1 1 1 1 1 1 (Richest) Prop pop 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 1 Cum. Xi-Xi-1 Prop. Pop (A) (X) 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Payments Prop sickdays Cum Yi+Yi-1 prop (B) payments (Y) 0.184 0.184 0.184 0.158 0.342 0.526 0.132 0.474 0.816 0.118 0.592 1.066 0.105 0.697 1.289 0.092 0.789 1.487 0.079 0.868 1.658 0.066 0.934 1.803 0.039 0.974 1.908 0.026 1 1.974 14 12 10 9 8 7 6 5 3 2 76 Concentration Index = 1-sum(A*B)= A*B 0.018 0.053 0.082 0.107 0.129 0.149 0.166 0.18 0.191 0.197 1.271 -0.271 21
  22. 22. Measuring progressivity Kakwani Index = Concentration index of payments minus Gini- coefficient of income Kakwani Index ranges between -2 and +1 (-) Regressive (0) Proportional (+) Progressive 22
  23. 23. Check if Gini-coefficient and concentration index satisfy the following criteria. 1. It reflects the experiences of the entire population. 2. It reflects the socioeconomic dimension of health. 3. It is sensitive to changes in the distribution of the population across the socioeconomic groups. 23
  24. 24. Application of Gini coefficient and concentration index Redistributive Effects of the Swedish Social Insuarnce System European Journal of Public Health 2002; 12: 273-278. Jahangir Khan, MSc Bjarne Jansson, PhD Ulf-G Gerdtham, PhD 24
  25. 25. Background Four principles are used to distribute payments via the Swedish social-insurance system in cases of temporary or permanent illness and death. This paper studies the redistributive effects on income of these four principles. 25
  26. 26. Types of payment and the payment principles No Insurance Principle Coverage Regulation Expected distribution 1 Sickness allowance (SA) Compensates lost income Universal Insured persons earning at least 897 US$ during the year and on sick leave longer than 14 days CI < 0 2 Cash benefit to closely related persons (CBR) Compensates lost income Universal Payments for 30 days per year per person CI (?) 3 Rehabilitation benefit (RB) Compensates lost income Universal Workplace-related CI < 0 4 Survivor’s pension (SP) Compensates lost income Universal CI < 0 5 Occupational injury (OI) Compensates lost income Gainful workers CI < 0 6 Child care allowance (CC) Flat-rate Universal CI (?) 7 Municipal housing supplement (MHS) Means-tested Universal CI < 0 8 Handicap allowance (HA) Need-based Universal CI < 0 9 Disability pension (DP) Compensates lost income and flat-rate Universal CI < 0 26
  27. 27. Methods The analysis is based on aggregate social-insurance data from the 25 municipalities that comprise Stockholm County in Sweden. For nine different types of social-insurance payments based on the four principles, the degree of income redistribution is measured according to concentration indexes and differences between Gini coefficients with social-insurance payments excluded and included. 27
  28. 28. Results Municipalities IGW SA CBR RB SP OI CC MHS HA DP TP Norrtälje 20269 614.60 0.46 94.08 338.67 57.43 40.28 110.64 26.43 1000.47 2283.06 Södertälje 22182 658.81 0.49 114.78 280.38 48.00 29.89 140.98 26.54 1080.21 2380.07 Botkyrka 22227 670.95 0.56 100.03 161.33 39.63 28.47 108.36 18.57 842.29 1970.21 Nynäshamn 22706 557.73 0.73 83.73 260.24 20.24 22.41 64.31 20.65 776.94 1806.98 Sundbyberg 23004 515.96 0.36 95.86 343.79 31.75 16.51 111.37 27.46 946.78 2089.84 Haninge 23423 510.84 0.41 88.16 170.18 65.92 30.06 98.40 19.07 796.77 1779.79 Upplands-Bro 23438 512.78 0.29 78.65 155.53 21.08 23.10 79.67 21.88 634.01 1526.99 Sigtuna 23946 565.62 0.12 88.60 200.00 31.88 24.70 65.88 21.98 641.60 1640.35 Solna 24051 498.61 0.28 73.04 384.39 16.96 18.82 93.66 27.49 910.69 2023.94 Huddinge 24215 555.35 0.39 96.88 198.35 66.29 26.90 82.59 19.87 789.34 1835.95 Värmdö 24230 549.88 0.19 84.03 179.15 40.94 29.26 42.72 25.18 765.31 1716.66 UpplandsVäsby 24380 559.82 0.27 45.30 171.12 46.63 28.91 67.06 21.14 619.01 1559.27 Vallentuna 24649 371.92 0.67 26.74 200.37 24.45 38.76 58.78 17.31 503.26 1242.26 Salem 24768 529.30 0.35 109.82 166.27 28.90 30.46 60.75 22.74 510.31 1458.89 Stockholm 24813 524.72 0.38 104.94 371.25 39.96 25.91 130.82 29.02 882.18 2109.19 Vaxholm 24873 565.13 0.90 76.93 293.26 38.54 48.69 38.37 17.75 551.33 1630.91 Österåker 24963 439.10 0.39 84.16 167.65 64.93 32.97 69.49 16.59 532.49 1407.77 Tyresö 25321 518.50 0.44 89.99 179.61 47.19 29.16 73.25 19.06 683.13 1640.32 Järfälla 25904 425.17 0.36 74.43 207.30 36.13 23.67 78.08 22.85 685.33 1553.32 Ekerö 26054 420.28 0.83 87.39 189.02 26.19 28.34 44.84 19.76 408.98 1225.63 Sollentuna 27145 433.23 0.36 68.80 224.68 35.63 28.62 71.31 19.85 591.91 1474.39 Nacka 27309 520.77 0.40 88.45 263.03 31.07 23.80 69.87 19.02 653.20 1669.60 Täby 29731 343.85 0.46 49.26 241.25 13.95 25.95 44.76 19.08 483.43 1221.99 Lidingö 31016 452.72 0.64 62.63 402.43 17.34 25.37 51.81 22.13 507.29 1542.36 Danderyd 35291 323.14 0.71 45.31 381.37 9.27 25.37 34.40 21.06 426.42 1267.04 Mean 24963 518.66 0.41 90.83 289.79 39.31 26.87 100.33 24.39 785.09 1875.69 CI (t-value) -0.0587 (-5.330) 0.0184 (0.546) - 0.0390 (-1.650) 0.0334 (0.974) -0.0787 (-2.182) -0.0158 (-0.910) - 0.0598 (-1.695) -0.0089 (-0.420) - 0.0686 (-3.556) - 0.0469 (-2.773) p-value 0.000 0.590 0.113 0.340 0.040 0.372 0.104 0.678 0.002 Weight 0.2765 0.0002 0.0484 0.1545 0.0210 0.0143 0.0535 0.0130 0.4186 1.000 Absolute -0.0162 0.0000 - 0.0019 0.0052 -0.0016 -0.0002 - 0.0032 -0.0001 - 0.0287 - 0.0469 Relative (%) 34.65 - 0.01 -11.00 3.52 0.48 0.25 61.26 100.00 IGW+SA IGW+CBR IGW+SP IGW+OI IGW+CC IGW+MHS IGW+HA IGW+DP IGW+TP IGW 4.03 IGW+RB 6.83 0.011 Gini coefficient (t-value) 0.0437 (7.387) 0.0416 (7.299) 0.0437 (7.387) 0.043 (7.419) 0.0442 (7.160) 0.0435 (7.398) 0.0436 (7.388) 0.0433 (7.432) 0.0436* (7.392) 0.0405 (7.448) 0.0379 (7.624) p value 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 28
  29. 29. Results The concentration indexes for payments from the nine social-insurance schemes in total is –0.0469. The Gini coefficient falls from 0.0437 excluding insurance payments (i.e. for income only from gainful work, IGW) to 0.0379 when including insurance payments with income from gainful work (IGW+TP). That is, the Gini coefficient is 15% lower when insurance payments are included. Decomposition by payment shows that the largest redistribution effect on income inequality is made by disability pension. 29
  30. 30. Conclusions Municipalities with low average income are favoured by the Swedish social-insurance system. Payment principles can be ranked according to their redistributive capacity: mix of compensating-lost-income and flat-rate, compensating-lostincome, means-testing, flat-rate, and need-based respectively. The nine social-insurance schemes contribute very differently to income redistribution. Disability pension and sickness allowance contribute most to income redistribution and reducing income inequality. 30

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