Farid Abolhassani Equity 12

Learning Objectives After working through this chapter, you will be able to: Describe the relationship between equality and equity Explain why there might be a conflict between efficiency and equity objectives Evaluate different equity objectives for providers of health care Summarize the advantages of government intervention Describe the drawbacks of government intervention

Key Terms End-state Equity End-state Equity A situation where there is an equal distribution of income (or utility, or health, etc.). Horizontal equity Horizontal equity The equal treatment of individuals or groups in the same circumstances. Process equity Process equity A situation where people have the same opportunities even if the outcomes are unequal. Vertical equity Vertical equity The principle that individuals who are unequal should be treated differently according to their level of need.

Ideas about Fairness Inequalities are an artefact Inequalities are an artefact : there are no real differences between the health of social classes; any apparent difference is due to statistical errors such as missing data; Health status affects social status Health status affects social status : people with poorer health have low paid jobs or are unemployed and as a result are in lower social classes; Behavioral differences between social classes lead to health differences Behavioral differences between social classes lead to health differences : people in lower social classes take more risks with their health such as smoking, a poor diet and drug abuse; Material inequalities lead to health inequalities Material inequalities lead to health inequalities : people in lower socioeconomic groups are exposed to health risks such as poor housing, dangerous jobs and worse environmental pollution.

What are the principles of fairness? Philosophers have tried for centuries to answer this question. Economists have offered their answers too. But before we look at the proposed answers, you should know that: There is no universally agreed upon answer

The Economic Pie It makes sense to make the economic pie as large as possible and to bake it at the lowest possible cost But it is not clear that: What are fair shares of the economic pie for all the people who make it

Ideas about Fairness It’s not fair if the result isn’t fair It’s not fair if the rules aren’t fair

Utilitarianism premises Everyone has the same basic wants and are similar in their capacity to enjoy life. The greater a person’s income, the smaller is the marginal benefit of a pound

Utilitarian Fairness

The Big Trade-off Tax Government Taxing decrease efficiency and hence the size of economic pie A significant amount of tax revenue is used up to cover overhead costs Make the Poorest as Well Off as Possible

Symmetry Principle Behave towards others in the way you expect them to behave towards you Equality of Opportunity

Rules of Fairness 1. The state must enforce laws that establish and protect private property. 2. Private property may be transferred from one person to another only by voluntary exchange.

Why might equity of outcome (health) be impossible to achieve? Many factors influence health in addition to health care Genetic differences between people mean that complete equality of health simply is not possible There is no precise definition of ‘good health’ Equalizing health might be seen as elitist or paternalistic because it does not allow for individual preferences Equalizing health will be inefficient and may mean that average health levels are lower

Process Equity Horizontal equity Equal access to health care for equal need Equal use of health care for equal need Equal health care expenditure for equal need Vertical equity

Requirements of Equal Access Travel distance to facilities is equal Transport and communication services are equal Waiting times are equal Patients are equally informed about the availability and effectiveness of treatments Charges are equal (with equal ability to pay)

Imperfectness of Government Intervention Levying taxes reduces efficiency Administration costs Politicians and civil servants may act in their own interests It may be difficult to replace the coordinating powers of market forces with a large number of independent decisions made by a group of civil servants

Government Action in Health Care The scale of market failure in the area of health care would seem to imply that some form of government action is inevitable. This includes: Public financing Public provision Health market regulation Economic evaluation of health interventions