Benefit Incidence Analysis Are Government Health Expenditures : More Pro-Rich Than We Think?
It is generally accepted that government health expenditures should disproportionately benefit the poor. And yet in most developing countries the opposite is the case. This paper examines the implications of a central assumption of benefit incidenc...
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| Language: | English |
| Published: |
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100310092201 http://hdl.handle.net/10986/3720 |
| Summary: | It is generally accepted that government
health expenditures should disproportionately benefit the
poor. And yet in most developing countries the opposite is
the case. This paper examines the implications of a central
assumption of benefit incidence analysis, namely that the
unit cost of a government-provided service bears no relation
to the out-of-pocket payments paid by the patient. It argues
that a more plausible assumption is that larger
out-of-pocket payments for a given unit of utilization
reflect more (or more costly) services being delivered. The
paper compares -- theoretically and empirically -- the
standard constant-cost assumption with two alternatives,
namely that the cost of care in a specific episode of
utilization is (a) proportional to or (b) linearly related
to the amount of money paid out-of-pocket by the patient. An
interesting special case of the linear relationship is where
subsidies are focused on a basic unit of care and additional
costs are met dollar-for-dollar by additional fees. The
paper shows that if fees are more pro-rich than utilization,
government spending will be least pro-rich under the
constant-cost assumption and most pro-rich under the
proportionality assumption. The linear assumption results in
a concentration index for subsidies that lies between these
two extremes. These results are borne out in an analysis of
the incidence of government health spending in Vietnam (a
country where fees are more pro-rich than utilization);
indeed, under the constant-cost assumption, subsidies are
pro-poor while they are pro-rich under the proportionality
assumption. The paper also considers the biases created by
not allowing for insurance reimbursements. |
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