Equity in the Finance of Health Care: Effects of the Dutch Health Insurance Reform

Abstract

Under the auspices of the European Community (EC), researchers of ten countries have recently begun collaborating on a comparative study of equity in the finance and delivery of health care. The project’s initial aim is to facilitate comparisons of the distributional consequences of alternative health care financing and delivery systems. The methodological framework and some tentative results have already been published by Wagstaff et al. (1989). In a second phase it is planned to examine the distributional consequences of specific health care finance reforms and/or cost-containment measures. This paper presents the first attempt with respect to the latter aim. The focus of attention is limited to only one country, the Netherlands, and to only one type of equity, namely vertical equity on the finance side of the health care system, as measured by the degree of progressivity of health care payments with respect to income. By means of a simulation exercise we have tried to establish how the progressivity of the Dutch health care financing system would have been affected if the proposed Health Insurance Reform had already been introduced in 1985. The progressivity of the simulated distributions under various assumptions is then compared with the progressivity of the actual distribution of health care payments across income deciles in 1985.