Paying for health care : quantifying
            fairness, catastrophe, and impoverishment, with applications
            to Vietnam, 1993-98
The authors compare egalitarian concepts
            of fairness in health care payments (requiring that payments
            be linked to ability to pay) and minimum standards
            approaches (requiring that payments not exceed a
            prespecified share of prepayment income or not drive
            households into poverty). They develop indices for both sets
            of approaches. The authors compare the "agnostic"
            approach, which does not prespecify exactly how payments
            should be linked to ability to pay, with a recently proposed
            approach that requires payments to be proportional to
            ability to pay. They link the two approaches using results
            from the income redistribution literature on taxes and
            deductions, arguing that ability to pay can be thought of as
            prepayment income less deductions deemed necessary to ensure
            that a household reaches a minimum standard of living or
            food consumption. The authors show how both approaches can
            be enriched by distinguishing between vertical equity (or
            redistribution) and horizontal equity, and show how these
            can be quantified. They develop indices for
            "catastrophe" that capture the intensity of
            catastrophe as well as its incidence and also allow the
            analyst to capture the degree to which catastrophic payments
            occur disproportionately among poor households. Their
            measures of the poverty impact of health care payments also
            capture both intensity and incidence. To illustrate the
            arguments and methods, the authors use data on out-of-pocket
            health spending in Vietnam in 1993 and 1998-an interesting
            application, since 80 percent of health spending in that
            country was out-of-pocket in 1998. They find that
            out-of-pocket payments had a smaller disequalizing effect on
            income distribution in 1998 than 1993, whether income is
            measured as prepayment income or as ability to pay (that is,
            prepayment income less deductions, regardless of how
            deductions are defined). The underlying cause of the smaller
            disequalizing effect of out-of-pocket payments differs
            depending on whether the benchmark distribution is
            prepayment income or ability to pay. The authors find that
            the incidence and intensity of catastrophic payments-in
            terms of both prepayment income and ability to pay-declined
            between 1993 and 1998, and that both the incidence and the
            intensity of catastrophe became less concentrated among the
            poor. They also find that the incidence and intensity of the
            poverty impact of out-of-pocket payments diminished over the
            period. Finally, they find that the poverty impact of
            out-of-pocket payments is due primarily to poor people
            becoming even poorer rather than the nonpoor becoming poor
            and that in Vietnam in 1998 it was not expenses associated
            with inpatient care that increased poverty but nonhospital expenditures.