An empirical study of equity in the finance and delivery of health care in Britain

This paper presents evidence on the extent to which the finance and the delivery of health care in Britain are equitable. The analysis of health care delivery focuses on whether there is ‘equal treatment for equal need’ irrespective of income. Examination of data from the 1985 General Household Survey reveals substantial inequalities in the distribution of (self-reported) morbidity. The bottom income group accounts for 30% of all individuals with a long-term illness but only 20% of the sample. There is less inequality in the distribution of health care. Consequently, the proportion of total health care resources consumed by the higher income groups is greater than the proportion of total morbidity they report. However, this simple comparison of the distribution of resources with the distribution of morbidity is not appropriate for assessing whether there is ‘equal treatment for equal need’. After appropriate standardisation for differences across income groups in age, gender and the incidence of morbidity, there is little evidence of inequality in the distribution of health care in Britain. The distribution of standardised NHS expenditure shows a slight pro-poor bias; adding private health care consumption produces (for adults only) a slight pro-rich bias. Neither of these inequalities are significant. These results differ from previous research which claimed to show substantial inequities in the delivery of NHS care in favour of the middle classes. On the finance side, we examine whether the finance of health care in Britain is progressive. Since health care in the UK is primarily financed from taxation, the analysis essentially amounts to an assessment of the progressivity of general taxation. The analysis, based on figures published by the Central Statistical Office, shows that in 1985 taxes were raised broadly in proportion to incomes. Whilst income taxes were progressive and National Insurance contributions neutral, indirect taxes were regressive. The omission from the analysis of user charges for NHS services is unlikely to be important since these account for only 3% of NHS finance. Private health care payments, which are also omitted, are likely to be progressive because it is predominantly the higher income groups who purchase private care. Our conclusions are that the British health care system appears close to allocating health care resources on the basis of ‘equal treatment for equal need’ and extracting payments in proportion to comes.