Estimating the Income Elasticities of Health Expenditures for Income Quintiles and Inequality of Health Expenditures Distribution

Background: Determining the income elasticities of the household health expenditures, especially for income deciles, leads to adoption of appropriate policies to control and manage health expenditures among income deciles. Therefore, the main purpose of this study was to estimate the income elasticities of urban household health expenditures by income quintiles, and also calculate inequality in distribution of urban household health expenditures in Iran. Methods: This was a descriptive-analytical and applied study performed cross-sectionally with the Hackman two-stage method in Stata 16 software in 2021. The sample included 16,943 urban households in Statistics Center of Iran, and the data was extracted from the raw data of different sections of the cost and income questionnaire regarding urban households. Health expenditure inequality was measured by Gini coefficient, Robin Hood and Herfindal-Hershman indices. Results: The results showed that the income elasticity of health expenditures was 0.31 for the entire sample and 0.28, 0.66 and 0.36 for the first, second and fifth quintiles, respectively. The Gini, Robin Hood and Herfindal Hirschman indices were 0.240, 0.272 and 0.231, respectively. The increase in parents' educational level and household income, and having a child under seven and a private home had a positive effect and maternal employment had a negative effect on the increase of household health expenditures. Conclusion: Health is an important asset for urban households and the income quintiles; therefore, the adoption of redistributive policies is recommended to support households, especially the ones in the 2 lowest quintiles. The results of inequality indicators demonstrate the existence of inequality in the distribution of health expenditures; so, it is recommended to upgrade health insurance programs for low-income deciles, expand the coverage of essential medical services and receive premiums based on their ability to pay.