Health Equity and Financial Protection: Part II
from friends or relatives to cover health care expenses. Household expenditure gross of out-of-pocket payments does not correspond to the consumption that would be realized in the absence of those payments. For these and other reasons, a simple comparison between poverty estimates that do and do not take into account out-of-pocket health payments cannot be interpreted as the change in poverty that would arise from some policy reform that eliminated those payments. Nonetheless, such a comparison is indicative of the extent of the impoverishing effect of health payments.
Progressivity and Redistributive Effect Note 19: Measuring Progressivity The most direct means of assessing progressivity of health payments is to examine their share of ability to pay as the latter varies. If we observe a tendency for this share to rise with total expenditure, this would indicate some degree of progressivity in financing. ADePT graph P3 can be used for such an analysis. A less direct means of assessing progressivity, defined in relation to departure from proportionality, is to compare shares of health payments contributed by proportions of the population ranked by ability to pay with their share of ability to pay—that is, to compare the concentration curve for health payments, LH(p), with the Lorenz curve for ability to pay, L(p). If payments toward health care always account for the same proportion of ability to pay, then the share of health payments contributed by any group must correspond to its share of ability to pay. The concentration curve lies on top of the Lorenz curve. Under a progressive system, the share of health payments contributed by the poor will be less than their share of ability to pay. The Lorenz curve dominates (lies above) the concentration curve. The opposite is true for a regressive system. ADePT Health Financing provides graphs P1 and P2 to analyze dominance. However, it is currently not possible to test formally for stochastic dominance using ADePT.2 Lorenz dominance analysis is the most general way of detecting departures from proportionality and identifying their location in the distribution of ability to pay. But it does not provide a measure of the magnitude of progressivity, which may be useful when making comparisons across time or countries. Summary indexes of progressivity meet this deficiency but require
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