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Including Private Health Care Costs in Measuring Nations’ Redistributive Effort

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  • Katherine Baird

    (Division of Politics, Philosophy and Public Affairs, School of Interdisciplinary Arts and Sciences, University of Washington Tacoma.)

Abstract

Because they do not account for the private component of household’s health care expenses, measures of nations’ redistributive effort inconsistently account for the financial burden their health-care system places on different households. We recalculate the effect of government policy on income distribution by adjusting household income not just for taxes and social transfers, but also for private health expenditures. Examining eight LIS datasets, we show the degree of bias in typical measures of post-government income distribution. In Switzerland and the U.S., for instance, post-government poverty rates climb by 3-4 percentage points once households’ private medical expenses are subtracted from income. Future assessments of governments’ redistributive effect should uniformly account for the distributional impact of their health-care financing policies.

Suggested Citation

  • Katherine Baird, 2018. "Including Private Health Care Costs in Measuring Nations’ Redistributive Effort," Journal of Income Distribution, Ad libros publications inc., vol. 26(2), pages 1-21, July.
    • Handle: RePEc:jid:journl:y:2018:v:26:i:2:p:1-21
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    More about this item

    Keywords

    Gini; poverty reduction; Reynolds-Smolensky; inequality; international comparison; health care financing;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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