Horizontal Equity Vs Vertical Equity

It is much easier to implement the concept of vertical equity on income-based taxes than it is on asset-based taxes. Individual income tax returns, including those for elected officials, are private. The Internal Revenue Service cannot release the information to the public.

• In such a case, tobacco taxes are intended to compel smokers to shoulder the external costs of smoking; hence, the apparent flouting of the horizontal equity principle is not considered problematic.
• This was to correct for any sampling biases that would have been introduced as a result of using the Census Enumerated Areas of the 2000 Population and Housing Census with updated household listings in 2007 as the sampling frame.
• It might be the case that older Ghanaian women are more proactive towards early care-seeking such that they have comparatively fewer complications that would later warrant hospitalisation.
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Information on the details of sampling procedure, data collection, methods and measures are equally available via the same link. Tables2 and 3 show the results of bivariate analyses indicating the crude estimates of the strength of association between variables and both outpatient and inpatient utilisation. In assessing the level of morbidity, a composite measure of five chronic diseases was derived by summing the number of these diseases that respondents reported. Diseases considered were hypertension, diabetes, arthritis, asthma and depression based on their context relevance. Respondents were categorised into those with none for no disease, single for only one ailment and comorbidity for two or more diseases.

Horizontal equity is an economic theory that is used to assess the fairness of tax burden across a population. The theoretical underpinning of horizontal equity is that the amount of taxes paid should be equal for people in similar circumstances, regardless of the tax system in place.

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Inequity can occur here when a select group is able to take advantage of special deductions or tax exemptions that another group cannot. Such a tax claim not only a larger absolute amount, but also a larger fraction or percentage of income as income increases.

All areas that had been legally proclaimed as urban were designated “urban” and all others without any such legal status were considered “rural” in assessing the variable “residence”. All of Ghana’s ten administrative areas and whether an area was urban or rural were used as the units of stratification in the multi-stage cluster design. Individual-level and household data were collected where each household completed a questionnaire and individuals aged 50 years plus in a household were interviewed. Persons found unable to respond to the individual questionnaires had them administered through a proxy respondent . Negative income tax is a cash deposit paid by the government to eligible tax residents who are earning below a certain threshold.

Understanding Horizontal Equity

Measures that aim to reduce unfair disparities in healthcare access could go a long way in ensuring that older Ghanaians receive a fair opportunity to have their health needs addressed. This paper provides a strong starting point for further research into issues of equity in accessing healthcare among the older Ghanaian population. Further studies would be required to ascertain the impact that social protection initiatives have had on bridging the inequity gap among older persons and how health transitions affect the use of healthcare services. Regarding the latter, it is hoped that the WHO SAGE panel data availability will make this possible. In our study, no association between self-rated health or morbidity level and the use of outpatient services was found, which is contrary to the observation of other researchers . This finding suggests that outpatient care access is predominantly influenced by other factors such as socioeconomic and not need.

• In order to improve access to healthcare and achieve universal coverage for all Ghanaians, the National Health Insurance Scheme was instituted in and funded through taxes, premiums and donor support.
• All of Ghana’s ten administrative areas and whether an area was urban or rural were used as the units of stratification in the multi-stage cluster design.
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• A self-perceived need may also not reflect a true medical need at the time of the study because self-rated health changes over time.
• Respondents’ education level was categorised as none, primary, secondary and tertiary.

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Horizontal Vs Vertical Equity: Comparison Table

In other words, it considers how a tax might have different impacts on families with different incomes. For example, low- and middle-income families tend to spend a greater share of their incomes on necessities such as food, gas, and clothing.

A key limitation of this study is that causal inferences cannot be drawn from the findings due to its cross-sectional nature. Caution is thus advised regarding any broad policy conclusions or generalisations beyond the present study context.

Horizontal And Vertical Equity

Under the horizontal equity doctrine, some economists use income as the standard approach to group taxpayers as equals and impose proportional taxation as the fair means of distributing the tax burden. However, a taxpayer’s lifetime income is alternatively considered by some economists as a better measure. The horizontal equity principle can be attained despite the type of income definition used. The terms “horizontal equity” and “vertical equity” are used in the context of social policy rather than finance. Horizontal equity refers to the idea that people in the same circumstances should be treated in the same way. Vertical equity refers to the idea that people on higher incomes should take on a greater share of the responsibility for paying for public services.

The current study is among the very few to have looked at how the concept of equity is operationalised in the use of healthcare among older persons in Ghana. We also observed that the area of residence was only important in the access to inpatient services where urban dwellers were at an advantage over those living in rural areas. In the Ghanaian context, chronic or lifestyle diseases have been noted to be more prevalent among those with relatively higher SES who mostly reside in urban areas. It is possible that these individuals may have more health risks warranting admissions than those in rural areas. The observed disparity in access to inpatient care may thus also be because of disparities in resource allocation. A statistical significance of the initially observed gradient of higher odds for care utilisation for a higher number of morbidities in the crude model was lost after adjusting for education and wealth .

A New Measure Of Horizontal Equity

Other Sub-Saharan Africa nations such as South Africa and Tanzania have taken similar steps but with much less coverage goals . In West Africa, Ghana’s edge over other countries in the sub-region such as its neighbour Nigeria, in healthcare access and major health indices (infant mortality, under-5 mortality and life expectancy) has been documented .

For example, two individuals earning $25,000 each should contribute the same amount of tax. Therefore, horizontal equity maintains fairness and eliminates discrimination on grounds such as types of work or race. Horizontal equity can be compared with vertical equity, which calls for increases in tax rates for higher levels of earned income. Tax equity is a measure of the fairness of the tax system based on an individual’s ability to pay. Such a tax takes a smaller and smaller proportion of income as income increases. A regressive tax may or may not take a larger absolute amount of income as income expands.

Pearson’s chi-square was used to analyse sex differences for the various categorical variables. There are situations in which the equal treatment of equals in the taxation principle does not hold. Taxpayer A gets an interest of $9,000 from tax-exempt bonds, while B receives $9,000 as fully taxable interest. Horizontal equity can be consistent with attaining vertical equity since the equal distribution of tax implies achieving vertically equitable distribution of tax burdens. A decomposition of income-related inequalities in young adults’ utilization of health care in Northern Sweden. A tax deduction is an expense that can be deducted before a person or a business determines taxable income. Home mortgages, charitable contributions, business expenses, the number of dependents, and costs for education and child care are some variables that can affect a taxpayer’s total tax liability.

The concepts of horizontal equity and vertical equity date back to the works of Aristotle and Plato. This principle claims that wealthier people, or those with access to more resources, should pay higher taxes. Quintile five and quintile one represented the wealthiest and poorest fifths of respondents respectively. There are also cases where horizontal equity is not applicable – for example, in situations where taxes are levied to account for the external costs.

After adjusting for SES and other factors, respondents were observed to be slightly more likely for admission if they had one or more chronic diseases, and this was statistically significant for having a comorbid state . Overall, vertical equity was observed in the use of healthcare for inpatient services among the study population. The predisposing factors considered were age, sex and residence ; the enabling factors wealth quintile, education and health insurance; and the health need factors of self-rated health status and morbidity level. Additionally, factors that affect the use of healthcare services are diverse and complex. Additionally, this study focuses only on + 50 years age group without any comparison with the younger adults or children population when probably the major equity vault-lines in healthcare access lie between these major age groups. In this paper, we assessed whether both the horizontal and vertical equity requirements regarding healthcare utilisation were being met in the elderly population of Ghana.

This is not surprising for a system that is not truly universal in healthcare coverage. In this study, we sought to ascertain whether healthcare was equal for all older Ghanaians by examining how well horizontal and vertical equity concepts were operationalised in terms of access to healthcare.

Ghana is therefore a good example in examining whether the strides made towards universal coverage translate into equity in healthcare use among older persons in terms of outpatient and inpatient visits. An example of horizontal equity is illustrated in a scenario whereby a group of people who each earn $ 30,000 and are mandated to pay the same amount of tax. On the other hand, an example of vertical equity is illustrated in a scenario whereby a person who earns $60,000 is subjected to a 15% tax rate while a person who earns $110,000 is subjected to a 25% tax rate.

Increasing age was also found to be a predictor of outpatient use but not for inpatient care. Albanese et al., however, did not find any association between age and the use of community services in a large survey of nine LMICs . As it is inevitable that LMICs like Ghana will continue to expand in the population of older adults, it might be worthwhile encouraging health promotion and preventive health activities among the older population. This may not only serve to reduce the cost of curative healthcare but could potentially help reduce healthcare disparities . Consistent with many studies in LMIC on inpatient and outpatient use , we observed that females used significantly more outpatient services than males but were less likely to be admitted for an inpatient care. Factors such as gendered differences in illness construction, care-seeking behaviour and social norms have been alluded to as possible reasons .