Measuring inequalities in health Adam Wagstaff Abdo Yazbeck

Today’s menu Concentration curves and indices (AW) Combining levels and inequalities into a single achievement index (AY) Benefit incidence analysis (AY) Inequalities in financial burden of health care payments (AW)

Concentration curves and indices Adam Wagstaff

Which country is less equal?

CI = 2 x area between 45 0 line and concentration curve CI < 0 when variable is higher amongst poor U5MR concentration curves

Setting data up for CC chart

Computing CI: grouped data

Computing CI: micro-data Can use where variable of interest (y) defined and measured at individual level—not case with U5MR Use “convenient covariance” result Compute: mean of y—call it  Generate individual’s fractional rank in SES distribution—call it R Then compute CI = 2 cov(y,R) /  If data are weighted, –generate a weighted fractional frank, and –compute a weighted covariance

Computing std errors for CIs Grouped data case: –Are variances of group means known? If they are, can get a more precise estimate –Use formulae in TN #7—compute in Excel; spreadsheet available from Bank team Micro-data case –Estimate  in regression below using Newey-West estimator in Stata: equals CI; std error is robust std error of CI

Health care payments Adam Wagstaff

Different concerns over health care payments Health care payments affect HHs’ ability to purchase other things that matter to their well being—food, shelter, etc. But what’s an equitable distribution? –One where payments don’t absorb more than x% of income—i.e. aren’t catastrophic –One where payments don’t push HHs into poverty or further into poverty if already there? –Or one where payments are proportional to ability to pay?

Rural China—payments relative to income

Rural China—payments relative to 15% threshold

Rural China—payments relative to poverty line

How much catastrophe? Vietnam case study 18% of Vietnamese population in 1993 had out-of-pocket expenditures in excess of 25% of non-food consumption

How much catastrophe? 1. Incidence of catastrophic costs can be measured as proportion (headcount) exceeding threshold level z cat : H cat 2. Intensity of catastrophic costs can be measured as the average excess (or gap) : G cat 3. If, in addition, we want to take into account that the incidence of catastrophic costs matters more for the poor, we can use the rank-weighted intensity, defined as where C O is the concentration index of the “ overshoot ” spending. Clearly, if excesses concentrated amongst the poor, C O will be negative and

Catastrophe in Vietnam

How much poverty impact? Cum % sample Poverty line Pre-payment income Income A = pre-payment poverty gap Pre-payment headcount

How much poverty impact? Cum % sample Poverty line Pre-payment income Income Post-payment income A = pre-payment poverty gap Pre-payment headcount Post-payment headcount C B deepening poverty of pre-payment poor addition to poverty gap from the new poor

Out-of-pocket payments for health care pushed 2.6m Vietnamese into poverty in Increased headcount by 23% and poverty gap by 25% Impoverishment in Vietnam

How progressive? Regressive: OOPs larger (as a % of income) at lower income levels;  less inequality in OOPs than in pre-payment income; Cf. progressive Lorenz curve shows income inequality; concentration curve shows OOPs inequality Gini is twice area between Lorenz curve & 45 0 line; concentration index is twice area between CC and 45 0 line Kakwani index is twice area between CC and Lorenz curve, or ; positive when progressive

How regressive are OOPs? 22 Sources: Wagstaff, van Doorslaer, et al. (1998), authors’ calculations