Evaluating Equity in Health Financing Using Benefit Incidence Analysis: A Framework for Accounting for Quality of Care

Equity in health care financing has gained increased attention in low- and middle-income countries (LMICs) following the renewed global interest in universal health coverage (UHC), a key component of the sustainable development goals (SDGs). UHC requires that people have access to the health services they need without risking financial hardship. Health financing is central to UHC and many LMICs have initiated reforms to align their health financing systems with the goals of UHC. Evaluation of the equity impact of these reforms has become a growing area of research, especially in countries with large health inequalities where the pressure to move towards UHC is most intense and the need for evidence to inform policy most critical. However, current analytical tools for evaluating equity in health financing conspicuously exclude indicators of quality, an important dimension of UHC. The aim of this paper was to address this critical methodological gap by introducing quality scores into benefit incidence analysis (BIA), one of the key techniques for assessing equity in health financing. BIA measures the extent to which different socioeconomic groups benefit from public spending on health care through their use of health services. The benefit (public subsidy) is captured in monetary terms by multiplying the quantity of a particular health service consumed by the unit cost of that service and subtracting any out-of-pocket costs incurred while using the service. It does not account for variations in the quality of health services in the computation of the public subsidy.