CHAPTER 7

Equity in health care

7.1 Introduction
The way in which health care systems are organised and funded is, as we have shown in
Chapters 5 and 6, important for efficiency. It also has important implications for the way that
health care is distributed among people. The aim of this chapter is to consider equity – that is,
fairness – in relation to the distribution of health care and the financing of health care.
Equity is an important policy objective in almost every health care system (Box 7.1
illustrates its importance to the NHS in the UK). However, what is actually meant by equity
might well differ between countries. The precise meaning and importance of equity at the
health system level will depend upon factors such as cultural beliefs and attitudes.
While there is no uniquely correct way of defining equity, it is informative nonetheless
to consider it in a systematic way. A useful distinction, which will be made frequently
throughout this chapter, is between horizontal and vertical equity. Horizontal equity
refers to the equal treatment of equals, for example, the extent to which those who are
equal with respect to needs for health care have equal access to health care. Vertical equity
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refers to the unequal treatment of unequals, for example, the extent to which those who are
unequal with respect to income differ with respect to how much they have to contribute
towards the costs of health care. We will also develop a taxonomy of other equity concepts,
and we will describe how equity might be measured, with respect to both finance and
distribution.
As noted in Chapter 1, the analysis of equity has both positive and normative aspects.
Positive analysis is commonly undertaken to describe or measure the distribution of health
and of health care use, and of the way in which payments for health care are shared between
different people in society. We will show in this chapter how economists undertake analyses
of this kind. As we shall also see, economists usually analyse equity with respect to some
measure of equality, such as whether people with the same ability to pay for health care make
equal payments, or whether people with equal needs for health care have equal utilisation.

Morris, Stephen, et al. Economic Analysis in Healthcare, Wiley, 2012. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/imperial/detail.action?docID=1938272.
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 164 ECONOMIC ANALYSIS IN HEALTH CARE

BOX 7.1 The equity foundations of the UK NHS

In discussing the establishment of the NHS, Whitehead (1994) argued that its introduc-
tion in 1948 grew out of a realisation by the government that the pre-NHS system was
‘inequitable, inefficient, and near to financial collapse’. In the 1930s, only 43% of the
population were covered by the national insurance scheme, mainly men in manual and
low-paid occupations, and covered only for GP services. Around 21 million people were
not covered by any health insurance, and faced potentially catastrophic expenditure
should they become ill. Additionally, there was an uneven distribution of services, with
deprived areas in particular being poorly served in terms of the quantity and quality of
available health services. According to Whitehead:
Against this background a wide consensus formed in the 1940s about the need to
build a more equitable service and what the principles and values of such a service
should be. The concept of equity in the NHS articulated by Aneurin Bevan, the
minister of health responsible for introducing the NHS, was multifaceted, incorpo-
rating the following principles:
A service for everyone: Everyone was to be included in the scheme as of right,
without having to undergo a means test or any other test of eligibility.
Sharing financial costs and free at the point of use: In the words of Bevan: ‘It has
been the firm conclusion of all parties that money ought not to be permitted to stand
in the way of obtaining an efficient health service.’ The method of funding chosen,
through general taxation, was linked to the ability to pay.
Comprehensive in range: There was a clear commitment to extend coverage – to
preventive, treatment, and rehabilitation services, covering mental as well as
physical health, chronic as well as acute care.
Geographical equality: With the intention of creating ‘a national service, responsive
to local needs’, came a commitment to improve the geographical spread of services.
The same high standard of care for everyone: The Royal Commission [Merrison,
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1979] emphasised that this principle must be based on levelling up, not levelling
down: ‘The aim must be to raise standards in areas where there are deficiencies but
not at the expense of places where services are already good.’
Selection on the basis of need for health care, not financial position in situations
of scarcity: People had the right to expect that no one would be able to gain access to a
service ahead of others, by money or social influence.
The encouragement of a non-exploitative ethos: To be achieved by maintaining
high ethical standards and by minimising incentives for making profits from patients.
(Whitehead, 1994)
Clearly, equity considerations played a key role in the establishment of the NHS and
equity continues to be an important objective for the NHS today.

Morris, Stephen, et al. Economic Analysis in Healthcare, Wiley, 2012. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/imperial/detail.action?docID=1938272.
Created from imperial on 2020-02-16 03:25:30.