19 Though (social) insurance developed considerably in Vietnam between 1993 and 1998, it remains relatively small-scale and is more common amongst the better-off. Further expansion can be expected to result in the less well-off being covered, and this in turn can be expected to reduce further the values of H and R for out-of-pocket payments, as well as making out-ofpocket payments less regressive.

# **VII. Conclusions**

This paper has argued that the index of financial fairness proposed in the WHR is unattractive. It cannot allow the policymaker to know whether the index deviates from one (complete fairness) because households on similar incomes pay different amounts towards health care (horizontal inequity) or because households on different incomes pay different proportions of their income on health care (vertical inequity, given WHO's interpretation of the ability-topay principle). And yet the two have quite different policy implications. Furthermore, and more controversially, the index treats progressivity as just as unfair as regressiveness. This is highly unattractive, since though policymakers may be strongly averse to regressive payments (since they worsen the income distribution), they may-from a fairness in financing perspective-be quite willing to see progressive payments. Such payments may come about as the result of a choice by the better-off to spend proportionally more on health care than the worse-off, or as the result of a deliberate policy to _require_ that that the better-off pay more in proportional terms. In other words, whilst it is probably accurate say that most policymakers feel comfortable with the ability-to-pay principle as the underlying principle of health care finance, it seems most unlikely that most-if any-interpret this in terms of a hard-and-fast rule on proportionality.

A more useful approach would be one that allows the policymaker to distinguish between horizontal and vertical equity, and to see the degree of progressivity in the existing system _without having had the analyst specify in advance how large this should be._ Such an approach is provided by the decomposition framework proposed by Aronson et al. [8] in the early 1990s, and used in the health finance literature in the late 1990s [6, 7]. In this framework fairness is assessed explicitly in terms of the impact of health care financing on the distribution of income, since this is, after all, the ultimate concern amongst policymakers when they think about financial protection. In the approach, the change in the Gini coefficient for income caused by health care payments is decomposed into terms corresponding to changes attributable to overall share of income absorbed by health care payments, changes brought about by the progressivity (or regressiveness) of the payment structure, changes brought about by horizontal inequities in the system, and changes brought about by households changing their position in the income distribution as a result of health care payments.

In the last part of the paper, this method was illustrated using data on out-of-pocket payments in Vietnam for the years 1993 and 1998. The WHO index simply indicated a move towards greater fairness over the period in question, but this could have been because payments became more progressive, or became less regressive, or became progressive having been regressive, or became regressive having been progressive, or because of greater differences in payments at each income level. With the Aronson et al. approach, a much clearer picture emerged. Over the period in question, health care payments impacted adversely on the income distribution in both years, but the degree of impact was smaller in 1998. This was due in part to