Reaching the Poor Conference, February 24, 2004

1

Benefit Incidence Analysis

Abdo Yazbeck

Lead Health Economist

World Bank Institute

2

$ $

$

Who benefits?

services

3

• A very crude but politically powerful way of measuring who is gaining from government spending

• It simply combines two empirical facts:– Who is using the services– The cost to the government of making the

services available• Data intensive

Benefit Incidence

4

India BIA

10.1%

13.4%

25.6%

33.1%

17.8%

0.0%

10.0%

20.0%

30.0%

40.0%

Poorest20%

2nd Middle 20% 4th Richest20%

Income Quitiles

Sh

are

of

the

Pu

blic

Su

bsi

dy

Source: NCAER, New Delhi, India

5

Strong Rural Inequality

0

5

10

15

20

25

30

35

40

45

Poorest20%

2nd Middle20%

4th Richest20%

Rural

Urban

6

By Level of Care

0

5

10

15

20

25

30

35

40

Poorest20%

2nd Middle20%

4th Richest20%

Hospital

PHC & Below

7

State-Level Findings:Benefit Incidence

Rank State Ratio of Curative Care Subsidy to Richest Versus

Poorest Quintile

Concentration Index

1 KERALA 1.10 -0.041 2 GUJARAT 1.14 0.001 3 TAMIL NADU 1.46 0.059 4 MAHARASHTRA 1.21 0.060 5 PUNJAB 2.93 0.102 6 ANDHRA PRADESH 1.85 0.116 7 WEST BENGAL 2.73 0.157 8 HARYANA 2.98 0.201 9 KARNATAKA 3.58 0.208 ALL INDIA 3.28 0.214

10 NORTH EAST 3.16 0.220 11 ORISSA 4.87 0.282 12 MADHYA PRADESH 4.16 0.292 13 UTTAR PRADESH 4.09 0.304 14 RAJASTHAN 4.95 0.334 15 HIMACHAL PRADESH 5.88 0.340 16 BIHAR 10.3 0.419

8

BIA Data Requirements

• Household Survey Data:– Service Use– Ability to group– Out-of pocket

payment (fees)

• Facility Cost Data:– Unit cost of service

delivery– Ability to

desegregate by level of care, type of service, and/or geographic location

9

Steps

• Group users by socioeconomic category

– Income, sex, residence, tribe or caste, etc.• Determine service use by group• Calculate the unit cost for the service• Subtract the out-of-pocket fees from cost• Multiply the net unit cost by the group service

use to determine group benefit

10

Vietnam Safe Motherhood

• Examining the benefits from delivery and antenatal services by income group

• Income groups are divided into five (quintiles)• Five service delivery levels in Vietnam:

– Central Hospital– Provincial Hospital– District Hospital– Polyclinic– Commune Health Center

11

Benefit Incidence Math

Total Benefit for each group =

Utilization * Net Unit Cost.

12

Data by Income GroupUtilization Data

Poorest 20% Richest 20%

Central Hospital 225 741

Provincial Hospital 446 2187

District Hospital 837 1676

Polyclinic 450 215Commune Health Center 6933 4866

Number of antenatal

visits/woman delivering 1.27 2.51

Average Out-of-Pocket Expenditures

in Delivery Fees (VND)

Poorest 20% Richest 20%

Central Hospital 71,773 60,734

Provincial Hospital 23,737 20,086District Hospital 9,551 8,082Polyclinic 9,551 8,082

Commune Health Center 7,581 4,685

Average Out-of-Pocket Expenditures

for antenatal care in Fees (VND)

Poorest 20% Richest 20%

Central Hospital 802 5,239Provincial Hospital 618 4,036District Hospital 395 2,576Polyclinic 184 1,202Commune Health Center 184 1,202

Unit Cost (facility specific)Outpatient Inpatient(visit) (admission)

Central Hospital 61,000 511,000Provincial Hospital 47,000 169,000District Hospital 30,000 68,000Polyclinic 11,000 170,000Commune Health Center 14,000 42,000

13

Do the Math

Total Benefits (in milllion VND)Poorest 20% Richest 20%

Cental HospitalProvincial HospitalDistrict HospitalPolyclinicCommune Health Center

Hint: First calculate the delivery benefits, then calculate the benefits from antenatal visits, then add the two.

14

Utilization * Net Unit Cost• For Deliveries, the poor:

225 * (511,000 – 71,773) = 98.8 Million• For Deliveries, the rich:

741 * (511,000 – 60,734) = 333.6 Million• For antenatal care, the poor:

(225*1.27)*(61,000-802) = 17.2 Million• For antenatal care, the rich:

(741 *2.51)*(61,000-5,239) = 103.7 Million• Total, poor 98.8 + 17.2 = 116 Million

Total, rich 333.6 + 103.7 = 437.3 Million

15

Results

Total Benefits (in milllion VND)Poorest 20% Richest 20%

Cental Hospital 116 437Provincial Hospital 91 562District Hospital 80 216Polyclinic 78 40Commune Health Center 360 338Total Benefit 726 1593

Question: What are possible policy implications of these findings?