Years ago before deciding what I wanted to work on for my dissertation, I remember speaking to a colleague who suggested that there still had not been great empirical work done on user fees and that the question of what impact cost sharing had on utilization of health services was still very much up for debate. At the time, I wondered why on earth he thought this was still an interesting question. Of course user fees reduce utilization of health services: that is econ 101, right? User fees were just a bad policy dreamt up by the World Bank and the IMF, something I learned from my masters studies. In my mind, the Bamako Initiative was up there with the marketing of baby formula and Pfizer’s testing of drugs in Nigeria on the world’s list of really-bad-global-health-stories. The truth is that I just did not know enough.
As it turns out, years later I became interested in the question of user fees through some research I was doing in Ghana. Ghana like many countries in Africa was struggling to increase health service coverage and also like in many other countries user fees had become highly politicized. Some countries had experimented with eliminating user fees or to exempt certain people or certain services from user fees. What was surprising, was that the empirical literature that existed did not always show what we would expect it to show: increase coverage. Some user fee introductions were associated with higher coverage. Some elimination of user fees did not show higher coverage. Some of these experiments actually failed and countries were forced to reintroduce user fees. In many cases the exemptions that were introduced became non-functional over time.
Part of the problem, as it always is in these cases, was methodological. Most policies were implemented at the national level making it hard to find a good control group and the general availability of data was so poor that it was hard to properly measure the effect of the policies.
But part of it also has to do what many economists or others who ignore the political economy of user fees fail to recognize: user fees don’t just reduce patient demand they also provide important incentives to health care providers. Since these two effects work in opposite directions, whether eliminating or implementing user fees will increase or decrease utilization is an empirical question. Randomized experiments on the effects of user fees on the demand for health services where the supply side is purposely well controlled by the investigators neglect this offsetting effect and therefore don’t translate well to the real world.
For a brief period starting in 2003, Ghana exempted women from paying delivery fees. The policy was rolled out to 4 of the regions before being implemented nationwide 20 months later. I have recently finished a working paper that looks at the effect of this policy on the utilization of services. I find what both the advocates and opponents of user fees would argue: eliminating user fees did increase the utilization of services, the policy may have adversely affected quality, and because the government ignored the incentives to providers, the policy stopped being implemented over time. Everyone was right.
The real question then is not whether or not user fees limit demand, it does as we would expect, the question is how to implement a policy that can target services to the groups we are interested in while preserving the provider incentives. Pre-paid heath insurance plans, such as the plan currently being implemented in Ghana is likely one answer. Voucher systems might be others. The full effect of such policies needs to be considered.
Comments and criticisms of the paper, as it is still an early stage working paper, are very much appreciated.Share on Facebook