The Redistributive Effect of Health Care Finance in Palestine: A Decomposition Analysis Approach

Posted: 15 Jun 2007

See all articles by Mohammad Abu-Zaineh

Mohammad Abu-Zaineh

Faculty of Economics and Commerce, Birzeit University

Awad Mataria

Birzeit University - Institute of Community and Public Health & Department of Economics - Faculty of Commerce and Economics

Stéphane Luchini

University of Toulouse 3, Paul Sabatier University - Centre National de la Recherche Scientifique (CNRS); Université Paul Cézanne Aix Marseille, EHESS

Jean-Paul Moatti

French Institute of Health and Medical Research (INSERM)-U379 - ORS-PACA

Date Written: June 2007

Abstract

This paper applies a new methodology to decompose the overall redistributive effect (RE) of health care finance on income distribution. Contrary to most previous studies, the RE of various financing schemes are disentangled and estimated as sample statistics to reveal the vertical and horizontal inequalities, and reranking effects, using the measurement model previously proposed by Urban and Lambert (2005) to assess inequality in the context of close-income equals. In addition, an attempt is made to determine the statistical significance of each particular measure of inequality using the bootstrap method. The decomposition model is applied to three major financing sources particular to the specific context of the Occupied Palestinian Territory (OPT): out-of-pocket payments, private health insurance and governmental health insurance (GHI), using a recent household health expenditure survey. The general finding is that out-of-pocket payments are associated with major negative impact on income inequality. Much of this impact stems not only from their regressivity but even more importantly from the associated horizontal inequality (HE) and reranking effect (RR). Results on the GHI show that the potential pro-poor impact of this public insurance scheme is also significantly limited by a quite high degree of HE and RR. The paper offers some policy recommendations to enhance the capacity of the GHI and to limit the existing inequalities in the current health care financing system.

Keywords: Health care finance, Developing countries, Redistributive effect, Vertical equity, Horizontal equity, Reranking effect, Bootstrap Method

JEL Classification: C14, D63, I19

Suggested Citation

Abu-Zaineh, Mohammad and Mataria, Awad and Luchini, Stéphane and Luchini, Stéphane and Moatti, Jean-Paul, The Redistributive Effect of Health Care Finance in Palestine: A Decomposition Analysis Approach (June 2007). iHEA 2007 6th World Congress: Explorations in Health Economics Paper, Available at SSRN: https://ssrn.com/abstract=993392

Mohammad Abu-Zaineh (Contact Author)

Faculty of Economics and Commerce, Birzeit University ( email )

Birzeit, Palestine
Birzeit, 0000
Palestine

Awad Mataria

Birzeit University - Institute of Community and Public Health & Department of Economics - Faculty of Commerce and Economics ( email )

P.O.Box 154
Ramallah
West Bank
Palestine
+97222988654/5 (Phone)
+97222951181 (Fax)

Stéphane Luchini

University of Toulouse 3, Paul Sabatier University - Centre National de la Recherche Scientifique (CNRS) ( email )

Toulouse
France

Université Paul Cézanne Aix Marseille, EHESS ( email )

3, Avenue Robert Schuman
Aix-en-Provence Cedex 1, Aix en Provence 13628
France

Jean-Paul Moatti

French Institute of Health and Medical Research (INSERM)-U379 - ORS-PACA ( email )

101 rue de Tolbiac
75654 Paris Cedex 13
France
+33 491 22 35 02 (Phone)

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