Equity of Health Care Financing in Iran: The Effect of Extending Health Insurance to the Uninsured

This paper examines the progressivity of health insurance premiums and consumer co-payments in Iran by calculating Kakwani Progressivity Indices using data from annual national household surveys between 1995/96 and 2006/07. During this period, the Urban Inpatient Insurance Scheme in 2000 and the Rural Health Insurance Scheme in 2005 extended health insurance coverage in urban and rural areas. Unexpectedly, the results suggest that both of these initiatives had regressive impacts on the distribution of health care financing in Iran, which could be explained by public sector activity having crowded out private sector charitable activity. Although this study does not address changes in the distribution of health care utilization, these results for health care financing suggest the need for caution in the implementation of such programmes in low-income and middle-income countries. If charitable activity already results in the provision of health care to the poor at zero or low prices, public intervention may not improve the progressivity of health care financing.

JEL Classification:

• D31,
• D63,
• I18