Are user charges efficiency‐ and equity‐enhancing? A critical review of economic literature with particular reference to experience from developing countries

Abstract

User charges have come to play a significant role in the financing and delivery of publicly provided health services in many developing countries. As a response to health care financing crises, user charges are often promoted as a way of rationalizing the use of care, raising revenue, and improving the coverage and quality of services. The primary purpose of this paper is to provide a critical review of the main arguments for the efficiency- and equity-enhancing potential of user charges. The extent and scope of welfare gains from user charges are found to be very limited in practice. Using a less restrictive theoretical choice model and estimation technique, the most recent demand studies' findings indicate that household's utilization of health services are more responsive to changes in price and income than was initially reported by the early demand studies. Response to price changes are also found to be greater among the poor than the rich. These findings, combined with modest retained fee revenues and the failure of exemption mechanisms to protect the poor tend to cast doubt on the net benefits of user charges policy, particularly in the area of equity. Copyright © 2001 John Wiley & Sons, Ltd.

No cash, no care: how user fees endanger health—lessons learnt regarding financial barriers to healthcare services in Burundi, Sierra Leone, Democratic Republic of Congo, Chad, Haiti and Mali

“…Our experience reflects other studies which show that even when well implemented, exemption systems based on individual or household targeting, in contexts where a large proportion of the population is too poor to pay, do not include all those in need of financial assistance to access care. 35,36 Fifth, MSF experience has shown that in contexts with widespread poverty, alternatives to cost recovery systems that incur even a modest fee from service users (e.g. a low flat fee, free drugs but continued payment of other treatment costs, and targeted household or individual exemptions) continue to act as a financial barrier to healthcare access for some, especially the poorest and most vulnerable.…”

Payment for antiretroviral drugs is associated with a higher rate of patients lost to follow-up than those offered free-of-charge therapy in Nairobi, Kenya

“…Thus, beyond a certain threshold, households are understandably unable to cope with the continuing financial burden of treatment. Although a social waiver system was in place to identify and exempt individuals who were unable to pay, the experience with waiver systems in settings where the median income is well under absolute poverty is that they are insensitive in detecting 'ability to pay' and thus repeatedly fail (Sepehri and Chernomas, 2001). The fact that five patients in our study diluted ART doses in order reduce the monthly cost of medication by half suggests that the waiver system failed to provide sufficient support to those unable to pay and could not be calibrated to adjust for fine changes in the ability to pay.…”

Who Pays What for Primary Health Care? Patterns and Determinants of the Fees Paid by Patients in a Mixed Public-Private Financing Model

“…The impact of patient co-payments on access to care, utilisation of services and health outcomes, and the implications for public policy of patient co-payments, have been the focus of much attention in the international health policy literature over many years (Scitovsky and Sneider, 1972;Rice and Morrison, 1994;Sepehri and Chernomas, 2001). The issue is of particular salience in New Zealand, where primary health care traditionally has been only partially subsidised by government, resulting in individual New Zealanders cofunding their access to primary health care through significant out-of-pocket payments, with the level of co-payments traditionally set by general practitioners (GPs), in an unregulated market setting.…”