Incorporating Inequality Aversion in Health-Care Priority Setting

Joan Costa-Font,Frank Cowell

doi:10.1007/s11211-019-00328-6

Joan Costa-Font, Frank Cowell

Open Access

https://doi.org/10.1007/s11211-019-00328-6

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Abstract

Although measures of sensitivity to inequality are important in judging the welfare effects of health-care programmes, it is far from straightforward how to elicit them and apply them in health-care decision-making. This paper provides an overview of the literature on the measurement of inequality aversion, examines some of the features specific of the health domain that depart from the income domain, and discusses its implementation in health-system priority-setting decisions. We find evidence that individuals exhibit a preference for more equitable health distribution, but inequality aversion estimates from the literature are unclear. Unlike the income-inequality literature, standard approaches in the health economics do not follow a ‘veil-of-ignorance’ approach and elicit mostly bivariate (income-related health) inequality aversion estimates. We suggest some ideas to reduce the disconnect between the income inequality and health economics literature.

Highlights

There is a widespread consensus that the attainment of health improvements is a desirable outcome of a health system
An important question for the design and management of health systems is: how should one measure the extent to which a society is willing to trade off maximising health for reductions in health inequality? This is essentially what the economics literature defines as inequality aversion
The consideration of inequality preferences is an important piece of information in guiding health-care decision-making

Summary

Introduction

There is a widespread consensus that the attainment of health improvements is a desirable outcome of a health system. In a health-system budget experiment revealing the valuation of health programmes relative to others, Costa-Font, Sato, and Rovira-Forns (2017) find evidence that individuals value health equity as one of the main goals of the health system in the context of a hypothetical health-care reform This evidence is consistent with the idea that priority-setting decisions in the health sector result from some notion of ‘fair share’ in allocating resources (Margolis, 1984).. These studies estimate the welfare reduction in health improvements among lowerincome (more deprived) groups Such measures are an extension of individual income-based inequality aversion measures to a different outcome variable (health rather than income) as opposed to health-inequality aversion. This is itself a significant departure from the elicitation methods of the income-inequality literature where inequality aversion refers to a single-variable equalisand, as we describe

A Simple Theoretical Framework

Findings

Conclusion