Costs of targeting the poorest

Reaching the very poor and meeting their specific needs will usually be more costly than delivering equivalent services to the average population. This raises difficult questions about the degree to which governments and donors should allocate scarce resources for this purpose.

In practice, very little empirical evidence exists on the costs associated with reaching the poorest. The marginal costs of health services for the poorest argues that the limited evidence that exists points to the fact that providing services for the poorest is more expensive than the average cost in any population. However, it is argued that a trade-off between efficiency and equity considerations can be justified in circumstances where higher investment is likely to bring about a higher health impact.

Targeting in health: a summary of the evidence suggests that targeting efforts are worth the time and trouble for equity considerations. It obviously has a cost. Targeting individuals through methods such as means testing can work well, but has failed when it was tried “on the cheap” – with minimal administrative effort and without additional resources to cover the costs of the services provided. Other targeting options must be explored in parallel. Targeting by age and by disease (which are much less expensive) should also be considered, and using several targeting mechanisms at once appears more effective than reliance on a single mechanism.