Vertical Equity in Healthcare Financing: A Progressivity Analysis for the Italian Regions.

Guido Citoni,Margherita Giannoni,Domenico De Matteis

doi:10.3390/healthcare10030449

Abstract

Background: The aim of this paper is to measure for the first time in Italy the progressivity of healthcare financing systems at the regional level by using the Kakwani index (KI), the most widely used summary measure of progressivity in the healthcare financing literature. Methods: KIs were reported by region and by health financing sources for the year 2015. Results: There were significant vertical inequities in healthcare financing at both national and regional level. OOP (out-of-pocket) payments and value added tax were slightly regressive; income taxation on firms and households was progressive. Conclusions: After the introduction of fiscal federalism during the 90s, the healthcare financing system became regressive. A regional divide emerged: Overall regressivity is higher in the south and lower in the north, partly compensated by the interregional equalization mechanism, based on the redistribution of VAT from northern to southern regions. In times of policy interventions aiming at recovering the economy during the COVID-19 pandemic, it is important to monitor equity in healthcare financing.

Highlights

Progressivity is the usual way of measuring vertical equity in healthcare financing [1]
Two types of data are required for the progressivity analysis: survey data, in order to establish the distribution of payments across households, and aggregate data, in order to determine the macro-weights to be assigned to each financing source
Value added tax (VAT) and Out of pocket (OOP) appear to lie inside the Lorenz curve; they are regressive sources of finance

Summary

Introduction

Progressivity is the usual way of measuring vertical equity in healthcare financing [1]. With the introduction of fiscal federalism in healthcare financing in the late nineties [5–7] the system became heavily decentralized at the regional level, with varying financing rules across regions, in terms of co-payments for public healthcare services, such as drugs, specialists, and diagnostic care [8,9] This has affected the vertical equity of the system. Rafaniello and Spandonaro showed that in Italy during the nineties, OOP (out-of-pocket) spending was significantly regressive; among the sources of public health financing, VAT (value added tax) was highly regressive, whereas both direct taxation and social security contributions appeared progressive [10] The latter were replaced in 1996 by regional corporate tax (IRAP—Imposta Regionale sulle Attività produttive), a tax on the value of net production deriving from the usual exercise of activities aimed at the production or exchange of goods and services, roughly corresponding to the sum of wages and profits), which was shown to be progressive as well. In times of policy interventions aiming at recovering the economy during the COVID-19 pandemic, it is important to monitor equity in healthcare financing

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Conclusion