Evaluating the redistributive impact of public health expenditure using an insurance value approach

Abstract

This article analyses the redistributive impact of public health expenditure in Spain using an insurance value approach to compute individual and household's value of health services non-cash benefit. We model the intensity of use of different health care services using a count data framework on a nationally representative health care survey and then predict probabilities on the 2006 Spanish EU-SILC sample. This allows us to extend disposable income with the expected monetary value of public health services and to compare it with strictly cash income. Since non-cash income due to public health services is associated with health needs, we use needs-adjusted equivalence scales to perform distributional analysis and poverty/inequality comparisons. The results show that public health expenditure in Spain acts progressively on income distribution, and that health in-kind benefits, once considered as part of disposable income, can be extremely effective in reducing poverty and inequality.