HEALTH FINANCING

Health Financing

Health Financing

Introduction

Equity in Irish health care financing has been analysed using internationally accepted methods ([Nolan, 1993], [Smith, 2008] and [Wagstaff et al., 1999]). The Kakwani index is used to examine progressivity in the main sources of financing, measuring the extent to which each source departs from proportionality. Positive values indicate a progressive pattern (i.e. payments rise as a proportion of income as income rises). The use of a summary index facilitates comparison of progressivity across sources of finance, and across countries. Results indicate that public sources of financing (except indirect taxes) are progressive, out-of-pocket payments are regressive, and private health insurance premiums are regressive (although the underlying concentration curves cross each other). An index of total financing (1980s data) indicated a marginally progressive system overall (Nolan, 1993).

A detailed description of Irish health care financing is missing from the literature and in Irish policy discussions. The flow of funds addresses this gap, identifies the financing mix for different health care services and individuals, allows assessment of net benefit incidence to determine the patterns of cross-subsidisation in the system, and permits analysis of interactions between public and private resources in the system. The focus of analysis differs from previous work, looking at the distribution of resources across entitlement groups rather than income groups. The analysis offers a range of insights that enhance understanding of the patterns of equity in the Irish system, and identifies policy lessons for other countries.

Based on descriptive survey data, these entitlement groups can be broadly ranked in terms of socio-economic and health status from the medical card (lowest) to the privately insured (highest) (ESRI, 2001). Overlaps in deprivation and socio-economic indicators suggest that these are not mutually exclusive socio-economic categories. Mean gross incomes are statistically significantly different (p < 0.01) across the groups (see Table 1) and the privately insured and non-covered groups are both more likely to be engaged in employment than the medical card and dual cover groups. Non-covered individuals have the lowest mean age (<35), followed by the privately insured group (40.5). Individuals in the medical card group are older (52.7) and the mean age for those with dual cover is 61. Measures of health status indicate a higher proportion of ill-health amongst the medical card and dual cover groups relative to their respective population shares.

Table 1.

Percentage share of mean contributions and incomes across entitlement groups, 2004 (Row %).

Mean payments and income, 2004 (Row %)

Medical card

Dual cover

Non-covered

Privatelyinsured

Total health care payments

8.54

20.82

26.51

44.13

Public contributions

9.80

18.19

27.71

44.29

Out-of-pocket payments

9.97

10.56

41.34

38.13

Private health insurance

51.26

48.74

Pre-tax incomea

14.95

21.97

26.32

36.76

a Source: (ESRI, 2001).

Data and methodology

Fig. 1 outlines the flow of funds in the Irish health care system. Resource flows are traced from individuals to public and private financial intermediaries (plus direct out-of-pocket payments), from there to health care providers, and from there distributed to individuals. In the Irish context, health care entitlement structures provide valuable information on the characteristics of health care financing (i.e. indicating co-payment structures etc.) and of health care delivery (e.g. eligibility for publicly funded services). In contrast to the literature where equity patterns are assessed in terms of the ...