Progressivity in Household Health Care Payments in Iran And its Effect on Income Redistribution

The way in which national health care is financed influence the distribution of household income. Progressive (regressive) system reduces (increases) income inequality. In order to assessequity in health payments، studying the progressivity alonewill be misleading. Health financing system should be decomposed to its components including progressivity، horizontal inequity and rerankingto assess equity in health payments. First، we assessed the progressivity in health payments. We applied the Aronson et al method and the ADePT software to decompose the redistributive effect of Iran’s health care financing system to health insurance prepayment and out of pocket payments using Iranian household income expenditure micro data during 2005-2010. The health insurance prepayment and out of pocket payment were regressive and progressive during the study period. They were improved up to 53% and 35%، respectively. Progressivity of the total health care payments was increased by 19% and resulted in reducing income inequality. There was a strong horizontal inequity in out of pocket payments. In Iran، h ealth payments have been progressive and have reduced income inequality during the study period. Results of income redistribution effect indicated that only studying the progressivity for equity assessment was not enough. Despite existence of progressivity and vertical equity، there was horizontal inequity within each income groups. Since most of health care payments in Iran are through out of pocket payments، better-off not only pay more، they also get more health services.