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The Distributional Impact of Healthcare Financing in Nigeria: A Case Study of Enugu State

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  • Hyacinth Ementa Ichoku
  • William Munpuibeyi Fonta
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    Abstract

    The deregulation of healthcare financing and supply in Nigeria has shifted the healthcare system towards competitive market ideals. Households' decision to utilize healthcare is identical with healthcare financing. This financing arrangement has potentials for income redistribution in a society with already high levels of inequality in resource redistribution. This study attempts to examine the extent to which this system of healthcare financing leads to catastrophic expenditures, defined as a threshold percentage of a household's income, and the extend of impoverishment arising from healthcare spending. It also uses the Aronson, Johnson, and Lambert (1994) decomposition framework to analyze redistributive effects in terms of vertical and horizontal inequities, as well as re-ranking effect. The study finds that healthcare spending engenders high incidence of catastrophic spending and impoverishment in the population. It also finds that healthcare spending is pro-rich in its redistributive effect, with significant vertical and horizontal inequities as well as reranking inherent in the system. The paper suggests policy reforms that separate healthcare utilization from healthcare financing if the poor are to have access to healthcare services.

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    Bibliographic Info

    Paper provided by PEP-PMMA in its series Working Papers PMMA with number 2006-17.

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    Date of creation: 2006
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    Handle: RePEc:lvl:pmmacr:2006-17

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    Keywords: Redistributive effects; Healthcare financing; Catastrophic financing; Impoverishing effects; Equity; Nigeria;

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    References

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    1. Musgrave, Richard A., 1990. "Horizontal Equity, Once More," National Tax Journal, National Tax Association, vol. 43(2), pages 113-22, June.
    2. Aronson, J Richard & Johnson, Paul & Lambert, Peter J, 1994. "Redistributive Effects and Unequal Income Tax Treatment," Economic Journal, Royal Economic Society, vol. 104(423), pages 262-70, March.
    3. Donaldson, David & Weymark, John A., 1983. "Ethically flexible gini indices for income distributions in the continuum," Journal of Economic Theory, Elsevier, vol. 29(2), pages 353-358, April.
    4. Alubo, S.Ogoh, 1994. "Death for sale: A study of drug poisoning and deaths in Nigeria," Social Science & Medicine, Elsevier, vol. 38(1), pages 97-103, January.
    5. Gerdtham, U. -G. & Johannesson, M. & Lundberg, L. & Isacson, D., 1999. "A note on validating Wagstaff and van Doorslaer's health measure in the analysis of inequalities in health," Journal of Health Economics, Elsevier, vol. 18(1), pages 117-124, January.
    6. Gerdtham, Ulf-G. & Sundberg, Gun, 1996. "Redistributive Effects of the Swedish Health Care Financing System," Working Paper Series in Economics and Finance 115, Stockholm School of Economics.
    7. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
    8. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
    9. Lambert, P & Ramos, X, 1995. "Vertical redistribution and horizontal inequity," IFS Working Papers W95/01, Institute for Fiscal Studies.
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    Cited by:
    1. Riman, Hodo B. & Akpan, Emmanuel S., 2012. "Healthcare Financing and Health outcomes in Nigeria: A State Level Study using Multivariate Analysis," MPRA Paper 55215, University Library of Munich, Germany.

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