Equity in the Finance and Delivery of Health Equity in the Finance and Delivery of Health Care in the United States Care in the United States

Thomas M. SeldenThomas M. SeldenAgency for Healthcare Research and QualityAgency for Healthcare Research and Quality

OverviewOverview

US health care in 2008US health care in 2008– over 16 percent of GDP ($2.4T)over 16 percent of GDP ($2.4T)– complex public/private systemcomplex public/private system

Tax-financed (Medicaid, VA, safety net)Tax-financed (Medicaid, VA, safety net) Social insurance (Medicare & WC)Social insurance (Medicare & WC) ESI (partially subsidized) & nongroupESI (partially subsidized) & nongroup >40M without coverage>40M without coverage Uncompensated careUncompensated care

Overall equity studies for US Overall equity studies for US – Wagstaff et al. (1987 data)Wagstaff et al. (1987 data)– Gottschalk & Wolfe (1980/81 data)Gottschalk & Wolfe (1980/81 data)

ObjectivesObjectives

Assess equity in financingAssess equity in financing– Share of income paid by bottom decilesShare of income paid by bottom deciles– Progressivity indicesProgressivity indices

Assess equity in deliveryAssess equity in delivery– Nonparametric standardization for need Nonparametric standardization for need

DataData

Pooled 2002&2003 MEPSPooled 2002&2003 MEPS– Civilian noninstitutionalizedCivilian noninstitutionalized

Aligned with Aligned with – 2002 NHEA (Selden & Sing, 2008)2002 NHEA (Selden & Sing, 2008)– Brookings-Urban (highest incomes) Brookings-Urban (highest incomes) – MEPS-IC (employer premiums)MEPS-IC (employer premiums)

NBER TAXSIMNBER TAXSIM Fed, St, Local budgetary data Fed, St, Local budgetary data

Public/Private MixPublic/Private Mix

19%

10%

12%

44%

14%

1%

Income Tax

Indirect Tax

Social Ins

Premiums

OOP

Misc

26%

14%

16%

13% 1%

30%

w/o Subsidies w/ Subsidies

Distribution of Income and Distribution of Income and Payments by Type, 2002Payments by Type, 2002

0

20

40

60

80

100

1 2 3 4 5 6 7 8 9 10

Deciles of Population (lowest first)

Cu

mu

lati

ve S

hare

s (

%)

Income

Distribution of Income and Distribution of Income and Payments by Type, 2002Payments by Type, 2002

0

20

40

60

80

100

1 2 3 4 5 6 7 8 9 10

Deciles of Population (lowest first)

Cu

mu

lati

ve S

hare

s (

%)

Income

Inc Tax

Distribution of Income and Distribution of Income and Payments by Type, 2002Payments by Type, 2002

0

20

40

60

80

100

1 2 3 4 5 6 7 8 9 10

Deciles of Population (lowest first)

Cu

mu

lati

ve S

hare

s (

%)

Income

Inc Tax

Social Ins

Prem

OOP

Distribution of Income and Distribution of Income and Payments by Type, 2002Payments by Type, 2002

0

20

40

60

80

100

1 2 3 4 5 6 7 8 9 10

Deciles of Population (lowest first)

Cu

mu

lati

ve S

hare

s (

%)

Income

Inc Tax

Social Ins

Prem

OOP

Total

Summary MeasuresSummary Measures

Conc = 2*(area btw 45Conc = 2*(area btw 45˚ and Lorenz)˚ and Lorenz)

Kakwani = ConcKakwani = ConcPAYMENTPAYMENT - Conc - ConcINCOMEINCOME

– ““Regressive” if K<0Regressive” if K<0

Finance Equity: Summary MeasuresFinance Equity: Summary Measures

Regressive in 2002Regressive in 2002 K = -0.098K = -0.098 Less regressive than in the pastLess regressive than in the past KK8181 = -0.145 = -0.145

KK8787 = -0.130 = -0.130 ReasonsReasons

– Income more concentrated, but…Income more concentrated, but…– Taxes even more concentratedTaxes even more concentrated– Increasing public shareIncreasing public share

Less Regressive, but Large Burdens Less Regressive, but Large Burdens for Low-Income Familiesfor Low-Income Families

40

2723 22 21 20 19 18 17 15

18

05

1015202530354045

All 1 2 3 4 5 6 7 8 9 10

Deciles

Perc

en

tag

e o

f P

re-T

ax

Inco

me

OOP

Premiums

Soc Ins

Oth Tax

Inc Tax

Financing Equity: ConclusionsFinancing Equity: Conclusions

Less regressive over timeLess regressive over time– Comparisons a bit trickyComparisons a bit tricky

Health care rising share of personal Health care rising share of personal incomeincome

Large shares of income paid by poorLarge shares of income paid by poor

Equity in DeliveryEquity in Delivery

Widely-accepted approach:Widely-accepted approach:– Standardize “needs” with linear regressionStandardize “needs” with linear regression

Alternative approach: Alternative approach: – ControlledControlled reweighting reweighting– Equalize distribution of needEqualize distribution of need

Age, sex, SAH, conditions, disabilityAge, sex, SAH, conditions, disability

– Preserve dist of other variables Preserve dist of other variables Race/ethnicityRace/ethnicity Insurance coverage Insurance coverage

Distribution of Medical Care Distribution of Medical Care (Total Expenditures)(Total Expenditures)

3500

4000

4500

5000

5500

6000

6500

1 2 3 4 5 6 7 8 9 1

Deciles

To

tal

Exp

en

dit

ure

s (

2002 $

)

Unadjusted

Distribution of Medical Care Distribution of Medical Care (Total Expenditures)(Total Expenditures)

3500

4000

4500

5000

5500

6000

6500

1 2 3 4 5 6 7 8 9 1

Deciles

To

tal

Exp

en

dit

ure

s (

2002 $

)

Unadjusted

Linear

Uncont RW

Cont RW

Delivery Equity: ConclusionsDelivery Equity: Conclusions

Adjusted for needs, use rises with Adjusted for needs, use rises with incomeincome

Linear and non/semi-parametric Linear and non/semi-parametric approaches yield very similar resultsapproaches yield very similar results

Similar results for office visit countsSimilar results for office visit counts Future: Other measures of useFuture: Other measures of use

– Charges vs expendituresCharges vs expenditures– Other use measures Other use measures

ConclusionsConclusions

Becoming less regressiveBecoming less regressive Large (probably growing) share of Large (probably growing) share of

income for bottom decilesincome for bottom deciles Delivery tilted toward persons in higher Delivery tilted toward persons in higher

decilesdeciles– Similar results using new and conventional Similar results using new and conventional

methodsmethods