Medicare Financing and Redistribution in British Columbia, 1992 and 2002

Abstract

Equity in healthcare in British Columbia is defined as the provision of services based on need rather than ability to pay and a separation of contributions to financing from the use of services. Physician and hospital services in Canada are financed mainly through general tax revenues, and there is a perception that this financing is progressive. This paper uses Gini coefficients, concentration indexes and Kakwani indexes of progressivity to assess the progressivity of medicare financing in British Columbia in 1992 and 2002. It also measures the overall redistributive effect of medicare services, considering both contributions to financing and use of hospital and physician services. The conclusion is that medicare does redistribute across income groups, but this redistribution is the result solely of the positive correlation between health status and income; financing is nearly proportionate across income groups, but use is higher among lower-income groups. Informed public debate requires a better understanding of these concepts of equity.