1. Equity, then Social Insurance … Allen C. Goodman © 2013

2. What is equity? Horizontal equity -- Equals should be treated equally. Usually thought of with respect to taxes. Vertical equity - Unequals should be treated unequally. For example, rich should pay more than poor, but … should rich pay higher percentage than poor? General sense of equity in health care has to do with everyone getting some.

3. Access v. Utilization Possibly unique to the health field, we break these up. Do people have access to care, even if they don’t use it? This is different from utilization, which refers to visits, days, etc.

4. Equity in the Delivery of Health Care: Some International Comparisons van Doorslaer and Wagstaff argue that most accept the premise that health care should be financed according to ability to pay, but should be delivered according to “need.” How do we address equity in the delivery of health care. They note that there is some contention between those who want to use utilization as a measure, and others who want to use access as a measure.

5. Equal treatment for equal need Link between provider incentives and patient income is likely to be important in determining how close a health care system comes to achieving “equal treatment for equal need.” The most obvious way that the income of a patient might influence provider behavior is if the provider is paid differently depending on whether the patient is being treated publicly or privately. General proposal: Assessment of equity in the delivery of health care ought to be based on treatment differentials adjusted for differences in “need.”

6. Tests for inequity Medical Expenditures  p +  p h i + u pi Poor m i =  r +  r h i + u ri Rich  p,  r are expected expenditures if healthy –  p,  r are increments if you get sick. Test: Equity if  r =  p,  r =  p. You want, of course, to adjust this stuff for demographics, health status, etc.

7. Equity and Inequity health expenditures rr rr pp pp InequityEquity h* 1.0 00

8. 2 part models You would want to measure these with 2 part models –Do people use care (or have access to care) –If they use (have access), how much do they use, spend, etc. Also propose a type of Gini coefficient that basically works across income classes. They ask “How much would each income group have received on average if its age structure and morbidity levels had been the same as those of the population at large?” Use the expenditure shares based on the equations above to estimate shares for groups of the population ordered by income levels.

9. Gini Coefficients Not quite a standard Gini. Suppose we have this: Income quartileExpendituresCumulative 0-251515 25-503550 50-753585 75-10015100 Standard Gini would be {15, 15, 35, 35} – Comes out to be 0.2. You should calculate it. Lowest Expend. Cumulative %

10. Calculating Lorenz Curves Cumulative Percentage of Population = F Cumulative Percentage of Care = F 1. Define:  =(F - F 1 )/  2  = (F + F 1 )/  2 Define Lorenz curve function as:  = a   (  2 -  )  In logs, estimate regression: log (  ) = log (a) +  log  +  log (  2 -  ) Gini G is: G = 2 (3 +  +  )/2 a B(1+ , 1+  ), Where B is the statistical Beta function.

11. Gini Coefficients Not quite a standard Gini. Suppose we have this: Income quartileExpendituresCumulative 0-251515 25-503550 50-753585 75-10015100 This Gini turns out to be 0. If spending favors rich, curve will be below diagonal -- Gini > 0; if vice versa, Gini < 0. Income Quartile Cumulative %

12. Concentration Index y i = health care utilization of income group i, = mean health care use in the population R i = cumulative fraction of the population in fractional income group i

13. So, Bias favoring the rich gives a positive covariance  positive C M. Bias favoring the poor gives a negative covariance  negative C M.

14. To get need … Regress doctor visits on “need indicators”. They then create CN (similar to CM) using same equation as above. This gives: HI = C M – C N Think of HI as a health care inequality after removing the underlying variation that can be attributable to need.

15. Bias toward poorBias toward rich