data briefing

The World Health Organisation's ranking of countries' performance on fairness in healthcare financing suggests the UK is in trouble. But a closer look at what it is measuring - and how - reveals a different

Fairness is a key goal of any health system, but particularly so for the NHS, which was founded on the principle that health services should be provided to those who need them, rather than those who are willing and able to pay.

An important aspect of fairness (though not the only one) is equity in the way healthcare is financed.

The World Health Organisation's ranking of the UK's health system performance on equity in healthcare financing appears to give cause for concern. Despite being predominantly tax-funded, and services being comprehensive and generally available free of charge, the UK ranks 11th out of 191 countries. What is going wrong? Should the NHS look to Denmark, Germany and Finland - which rank ahead of the UK - for fairer ways of funding healthcare?

The answer to this is, quite simply, no. The explanation behind the UK's apparently poor performance on this criterion in WHO's ranking lies not so much in what the UK could be doing better, as what WHO got wrong.

WHO started out by defining fairness in financing as meaning that the costs of the health system are distributed according to ability to pay, rather than to risk of illness. It notes that 'financial fairness is best served by more, as well as by more progressive, prepayment in place of out-of-pocket expenditures'. In other words - and simplifying - the more of a health system's funds that are obtained through taxing those on high incomes proportionately more, the fairer it is.

Oddly, WHO then proceeds to measure financial fairness in a way that contradicts its own definition.

The maximum score is given to systems where the ratio of total contributions to health funding (be it through insurance premiums, user charges or taxation payments) are identical for all households - regardless of their income, health status and health service use.

Anything other than equal contributions is given a lower score. If poor households contribute a higher share of their income on healthcare than rich households, the health system gets a low score on fairness - as one would expect.

The twist is that healthcare in the UK is paid for mainly through (mildly progressive) taxes, so rich households contribute a higher proportion of their income to funding than their low-income counterparts. Because that departs from 'equal shares', this too is considered unfair and the UK scores relatively badly. Both progressive and regressive funding are equal sins, according to the details of WHO's approach.

Measuring fairness in a different way reveals a quite different conclusion. A scoring system that rewards - rather than penalises - progressivity, shifts the UK to the top of the league-table for fairness in financing.

There are two lessons to be learned from this. First, defining and measuring fairness can be a difficult and value-laden affair. Second, measures of performance need to be scrutinised closely to ensure they measure what they purport to measure.

Nancy Devlin is fellow and John Appleby is director of the health systems programme at the King's Fund.

REFERENCES

1Wagstaff A. Measuring Equity in Healthcare Financing: reflections on and alternatives to the World Health Organisation's fairness of financing index. Health and Population Working Papers N.17. World Bank, 2001.

2 Wagstaff A et al. . Equity in the finance of health care: some further international comparisons. J of Health Economics 1999; 18: 263-90.