Equity of Fealth Care Financing in Iran

Presenter: Mohammad Hajizadeh, The University Of Queensland, Australian Centre for Economic Research on Health (ACERH)

Abstract

This paper presents the first detailed empirical estimates of the equity of health care financing in Iran. Although reliable data on public financing are not available, detailed household expenditure survey data are available. We use these data to measure the equity of private health expenditures, which comprise approximately 50% of total health spending in Iran. Kakwani Progressivity Indexes (KPIs) are computed for private sources of health care financing from ten National Household Income and Expenditure Surveys (NHIES) conducted from 1995-96 to 2004-05. In examining the progressivity of health care financing over this period we disaggregate the analysis into rural and urban areas in order to isolate the effect of the the Urban Inpatient Insurance Scheme (UIIS), introduced by the Iranian government in 2000, to extend hospital coverage to the previously-uninsured in urban areas. Measures of progressivity are computed for consumer insurance premium payments, consumer copayments and total private expenditure on health.

The results suggest that health insurance premium payments in Iran have, in recent times, been either mildly progressive or regressive depending upon whether an income- or expenditure-proxy of household income is used . Over time, though, the progressivity of insurance premium payments has improved in both rural and urban areas. In recent years, this source of health care financing is has been unambiguously progressive in rural areas, while ambiguously so in urban areas. Consumer copayments are also mildly regressive or progressive depending upon the method of KPI construction, but evince little trend progressivity/regressivity. Ironically, there is evidence that the UIIS had a regressive effect on consumer health expenditures. We interpret this result as a by-product of crowding out: prior to the existence of the UIIS, charitable organisations provided support to people who had no formal health insurance.