Abstract:
This study applies a new method of decomposing total redistributive effect of taxation proposed by Duclos et al. (2003) to assess the redistributive effects of direct healthcare financing in Nigeria. This new framework makes it possible not only to introduce into the conventional Gini Index estimation framework a flexible ethical measure of aversion to inequality but also a novel concepts of horizontal inequity and re-ranking. The empirical results indicate that when the decision to utilize healthcare is always linked to the decision to pay for healthcare, as is the case in Nigeria, out-of-pocket payment, contrary to existing literature, may indeed be progressive with high levels of horizontal inequity and re-ranking effect. But the progressivity may underlie the lack of ability to pay by poorer households. All the components of the redistributive effect are also likely to vary with the level of the social aversion to inequity
