On decomposing the inequality and inequity change in health care utilization: change in means, or change in the distributions?

Health care financing arrangements not only have strong implications for income distribution, but also affect health care utilization. Therefore, a comparison of the equity in health care utilization for those health systems with different financing arrangements has important policy implications for health care policymakers. The concentration index (CI) and the horizontal inequity index (HI) are commonly used to measure inequality and inequity in health care utilization. In this paper, we propose simple methods to decompose the difference between two CIs and two HIs into two factors: one factor reflects the difference between the means, and the other factor reflects the difference between the distributions. The proposed decomposition method might be useful since the means are likely to be caused by factors that do not constitute unfair inequalities (inequities). We also present two empirical applications of the decomposition methods for the purpose of illustration.