A Re-Examination of Redistributive Effects of Direct Healthcare Financing Under Alternative Decompositional Frameworks

Abstract

Healthcare financing, like fiscal policies, have explicit distributional implications. It is often important for policy purposes to make explicit such distributional consequences. A number of decomposition frameworks have been developed in literature for analyzing redistributional impact of fiscal and transfer policies. This study examines the conceptual basis of two of such decomposition frameworks - the Aronson, Johnson and Lambert (AJL) (Aronson et al., 1993) model, which has dominated much of literature, and the Duclos, Jalbert and Araar (DJA ) (Duclos et al., 2003) model. The models are applied to estimate the components of inequity in healthcare financing in Nigeria. The results show clear differences in the estimated components of inequity. The study also finds that underlying the decomposition frameworks are conceptual differences on account of which interpretation of inequity components estimated from the two models must be done with care.