Health care and income distribution in Finland

Abstract

This paper examines the effects of health care on income redistribution in Finland. In contrast to earlier studies in this area, the redistributive effect is analysed with noncash transfers from health care utilisation included in household income. Distributional consequences of changing health care financing towards one system or another are analysed in terms of municipality provided public services and sickness insurance based public services. Our results show that, overall, the public health care system distributed income from the rich to the poor. The poorest one-third of the population financed only about one-third of the public health care services they utilised. The distributional implications were, however, markedly different depending on the definition of income used. Whereas health care financing had only a marginal redistributive effect, the effect was substantially increased as noncash transfers from health care utilisation were taken into account.