Who Pays for Health Care? Progressivity of Health Finance

Who pays for health care? To what extent are payments toward health care related to ability to pay? Is the relationship proportional? Or is it progressive—do health care payments account for an increasing proportion of ability to pay (ATP) as the latter rises? Or, is there a regressive relationship, in the sense that payments comprise a decreasing share of ATP? The preferred relationship between health care payments and ATP will vary across individuals with their conceptions of fairness. But identifi cation of the nature of the empirical relationship and quantifi cation of the degree of any progressivity or regressivity is of interest, not only from a wide range of equity perspectives, but also for macroeconomic and political analyses of the health care system. This chapter provides practical advice on methods for assessing and measuring progressivity in health care fi nance. Throughout, we measure progressivity through departures from proportionality in the relationship between payments toward the provision of health care and ATP. There are other approaches to the measurement of progressivity (Lambert 1993). The relationship between progressivity and the redistributive impact of health care payments is considered in the next chapter.