Equity in the Utilization of Hospital In-Patient Services in Ireland: An Improved Approach to the Measurement of Health Need and Differential Cost

Hospital services in Ireland have developed into a complex mixture of public and private provision with private patients being treated in public as well as private hospitals. This interweaving of public and private medicine is driven to a large extent by the large proportion of the population covered by health insurance which has grown from 4% in 1960 to over 50% by 2004. This situation has led to concerns that hospital care is not available to all on the basis of need alone but is substantially influenced by personal circumstances. Previous research on Irish hospitals found that utilisation was neutral across the income distribution controlling for health status - i.e., there was essentially equal treatment for equal need irrespective of income. It could be argued however that these analyses did not properly control for health status as those in lower income groups can be shown to have a lower health status within the same response categories within social surveys. Similarly, previous research has also assumed that treatment costs were identical across groups. In this paper we derive a new measure of health - the "Ill Health Index" using three different health indicators and obtain information on differential costs of treatment across groups. We find that both those with medical insurance and those with medical cards are more likely to use hospital services. The costs of these services are also significantly higher for these groups. Comparison of measures of equity for inpatient utilisation and inpatient costs shows that costs are more pro-poor, but a decomposition of the distribution of hospital costs standardising for health needs shows that higher income groups actually use hospital services more and cost more for the same level of health than lower income groups.