How far are income-related inequalities in the health sector due to gaps between poor and less poor areas, rather than due to differences between poor and less poor people within areas? This note sets out a method for answering this question, and illustrates it with two empirical examples. The disproportionate accrual of health subsidies to Vietnam's better-off is found to be largely due to the fact that richer provinces have larger per capita subsidies, while pro-rich inequalities in health insurance coverage in rural China are found to be largely due to the fact that better-off villages have been more successful at preventing the collapse of their insurance schemes. Copyright © 2005 John Wiley & Sons, Ltd.