Equity in healthcare financing: A review of evidence.

Abstract

This review summarises empirical studies on the progressivity and redistributive effects of healthcare financing mechanisms. The evidence varies significantly across countries and financing sources. Tax-based systems exhibit high progressivity, as direct taxes contribute to a favourable redistribution toward low-income households, often offsetting the regressive nature of indirect taxes. Social insurance systems are found to be progressive but may be regressive in practice due to contribution ceilings and exemptions for high-income earners. This creates disparities where high-income taxpayers benefit from social protection while contributing less proportionally to their total income, limiting the overall positive redistributive effect on income inequalities. Most health systems with co-payments use flat rates rather than income-based rates, disproportionately affecting lower-income individuals and potentially leading to catastrophic expenses. This review highlights a lack of recent research on healthcare financing in high-income countries, while recent studies in low- and middle-income countries align with commitment to deliver universal health coverage. Continuous analysis of the redistributive effects of the health system is essential to ensure that health financing systems not only fund healthcare effectively but also contribute to broader social equity goals.