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Keywords:

  • redistributive effect;
  • decomposition;
  • health-care financing

Abstract

The total redistributive effect (RE) of health-care finance has been decomposed into vertical, horizontal and reranking effects. The vertical effect has been further decomposed into tax rate and tax structure effects. We extend this latter decomposition to the horizontal and reranking components of the RE. We also show how to measure the vertical, horizontal and reranking effects of each component of the redistributive system, allowing analysis of the RE of health-care finance in the context of that system. The methods are illustrated with application to the RE of health-care financing in Canada. Copyright © 2008 John Wiley & Sons, Ltd.