Working Paper: NBER ID: w13881
Authors: Sherry A. Glied
Abstract: This paper examines the efficiency and equity implications of alternative health care system financing strategies. Using data across the OECD, I find that almost all financing choices are compatible with efficiency in the delivery of health care, and that there has been no consistent and systematic relationship between financing and cost containment. Using data on expenditures and life expectancy by income quintile from the Canadian health care system, I find that universal, publicly-funded health insurance is modestly redistributive. Putting $1 of tax funds into the public health insurance system effectively channels between $0.23 and $0.26 toward the lowest income quintile people, and about $0.50 to the bottom two income quintiles. Finally, a review of the literature across the OECD suggests that the progressivity of financing of the health insurance system has limited implications for overall income inequality, particularly over time.
Keywords: Health care financing; Efficiency; Equity; OECD; Universal health insurance
JEL Codes: H42; H51; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financing choices (G32) | efficiency of health care service delivery (I11) |
| Financing choices (G32) | redistributive implications (H23) |
| Choice of how to collect funds (H87) | efficiency and equity (D61) |
| Financing of health care systems (H51) | overall income inequality (D31) |
| Universal publicly-funded health insurance (I13) | tax funds toward lowest income quintile (H23) |
| Universal publicly-funded health insurance (I13) | tax funds toward bottom two income quintiles (H29) |
| Progressivity of health insurance financing (H51) | overall income inequality (D31) |
| General revenue financing (H29) | cost growth (O49) |
| Private insurance financing (G52) | cost growth (O49) |