Health Policy and Equity of Health Care Financing in Australia: 1973–2010

Using data from A ustralian T axation S tatistics and H ousehold E xpenditure S urveys we analyze the distribution of health care financing in A ustralia over almost four decades. We compute K akwani P rogressivity indices for four sources of health care financing: general taxation, M edicare L evy payments, M edicare L evy S urcharge payments, and direct consumer payments, and estimate the effects of major policy changes on them. The results demonstrate that the first three of these sources of health care financing are progressive in A ustralia, while the distribution of direct payments is regressive. Surprisingly, we find that neither the introduction of M edicare in A ustralia in 1984 nor the E xtended M edicare S afety N et in 2004 had significant effects on the progressivity of health care financing in Australia. By contrast, the L ifetime C over scheme—introduced in 2000 to encourage people to buy and hold private health insurance—had a progressive effect on health care financing.