1. Equity in the Finance and Delivery of Health Care in the United States Thomas M. Selden Agency for Healthcare Research and Quality

2. Overview US health care in 2008 US health care in 2008 – over 16 percent of GDP ($2.4T) – complex public/private system Tax-financed (Medicaid, VA, safety net) Tax-financed (Medicaid, VA, safety net) Social insurance (Medicare & WC) Social insurance (Medicare & WC) ESI (partially subsidized) & nongroup ESI (partially subsidized) & nongroup >40M without coverage >40M without coverage Uncompensated care Uncompensated care Overall equity studies for US Overall equity studies for US – Wagstaff et al. (1987 data) – Gottschalk & Wolfe (1980/81 data)

3. Objectives Assess equity in financing Assess equity in financing – Share of income paid by bottom deciles – Progressivity indices Assess equity in delivery Assess equity in delivery – Nonparametric standardization for need

4. Data Pooled 2002&2003 MEPS Pooled 2002&2003 MEPS – Civilian noninstitutionalized Aligned with Aligned with – 2002 NHEA (Selden & Sing, 2008) – Brookings-Urban (highest incomes) – MEPS-IC (employer premiums) NBER TAXSIM NBER TAXSIM Fed, St, Local budgetary data Fed, St, Local budgetary data

5. Public/Private Mix w/o Subsidies w/ Subsidies

6. Distribution of Income and Payments by Type, 2002

10. Summary Measures Conc = 2*(area btw 45˚ and Lorenz) Conc = 2*(area btw 45˚ and Lorenz) Kakwani = Conc PAYMENT - Conc INCOME Kakwani = Conc PAYMENT - Conc INCOME – “Regressive” if K<0

11. Finance Equity: Summary Measures Regressive in 2002 Regressive in 2002 K = -0.098 K = -0.098 Less regressive than in the past Less regressive than in the past K 81 = -0.145 K 81 = -0.145 K 87 = -0.130 K 87 = -0.130 Reasons Reasons – Income more concentrated, but… – Taxes even more concentrated – Increasing public share

12. Less Regressive, but Large Burdens for Low-Income Families

13. Financing Equity: Conclusions Less regressive over time Less regressive over time – Comparisons a bit tricky Health care rising share of personal income Health care rising share of personal income Large shares of income paid by poor Large shares of income paid by poor

14. Equity in Delivery Widely-accepted approach: Widely-accepted approach: – Standardize “needs” with linear regression Alternative approach: Alternative approach: – Controlled reweighting – Equalize distribution of need Age, sex, SAH, conditions, disability Age, sex, SAH, conditions, disability – Preserve dist of other variables Race/ethnicity Race/ethnicity Insurance coverage Insurance coverage

15. Distribution of Medical Care (Total Expenditures)

17. Delivery Equity: Conclusions Adjusted for needs, use rises with income Adjusted for needs, use rises with income Linear and non/semi-parametric approaches yield very similar results Linear and non/semi-parametric approaches yield very similar results Similar results for office visit counts Similar results for office visit counts Future: Other measures of use Future: Other measures of use – Charges vs expenditures – Other use measures

18. Conclusions Becoming less regressive Becoming less regressive Large (probably growing) share of income for bottom deciles Large (probably growing) share of income for bottom deciles Delivery tilted toward persons in higher deciles Delivery tilted toward persons in higher deciles – Similar results using new and conventional methods