Progressivity, horizontal inequality and reranking caused by health system financing: A decomposition analysis for Switzerland

This paper presents an application of the Duclos et al. [Duclos, J.-Y., Jalbert, V., Araar A., 2003. Classical horizontal inequity and reranking: an integrated approach. Research on Economic Inequality 10, 65-100] decomposition to an analysis of the 1998 Swiss health system financing. We see that in addition to measuring horizontal inequality in the classical sense, this decomposition is more efficient and flexible than earlier ones. It is also pointed out that methods involving a nonparametric estimation lead to asymptotically biased vertical and horizontal effects. A procedure to estimate this bias is given. Finally, it is shown that despite a major reform, health system financing is still very regressive and social health insurance is more regressive than direct financing.