Goal 3: equity
If user fees can be applied to the non-poor, and the proceeds channelled to services used by the poor, then they could potentially play a redistributive role. Fees could be applied to secondary and tertiary facilities, which are used more by richer segments of the population, and used to subsidise local (especially rural), lower level services. Exemptions for the poor could also help to make fees foster equity.
Central government public health subsidies do not necessarily favour the poor. Benefit incidence analysis shows that middle and higher income groups benefit more than poorer populations. Replacing some public subsidies with revenue from user fees, with effective exemptions for the poor, could therefore have a redistributive effect.
In practice, however, user fees seem to have worsened rather than improved equity. Some research has shown that patients, even poor patients, are willing to pay for improvements in quality. But "before and after" studies have shown that user fees deter service use, especially by poor and vulnerable groups, and the higher the charges, the greater the decline.
Before and after studies
In practice, user fees seem to have worsened rather than improved equity
The equity impacts of community financing activities in three African countries concludes that the impact of fees are highly dependent on the setting and fee policies in place. For instance, the impact was positive in Benin, partially positive in Kenya, and most negative in Zambia. Similarly a World Bank Africa Region bulletin claims that attendance increased in four countries (Benin, Niger, Liberia, Zaire), decreased in one (Ghana), with mixed results in three (Guinea, Nigeria, Senegal).
Strategies for pricing publicly provided health services reviews several studies showing that an increase in user fees led to a drop in demand, with a higher impact for children and the elderly as well as for poorer rural households. Equity implications of health sector user fees in Tanzania argues that user fees were regressive in Tanzania and contributed to the exclusion of poor and vulnerable groups.
However, before and after studies, especially over short time periods, do not allow for quality improvements. The starting level of quality and improvements over time, particularly with regard to the availability of drugs, may have important implications for utilisation rates. When quality improves at the same time, user charges should increase the likelihood of poor people using local health centres rather than having to travel to more distant hospitals.
But the introduction of fees has rarely led to additional resources being allocated to basic services or targeted assistance for the poor. Nor are user fee revenues generally shifted from higher to lower level facilities. Revenue usually either stays at the point of collection, or reverts to the central Ministry of Health.
Exemptions and waivers
Exemption mechanisms do not seem to have worked well
The main mechanism adopted for protecting the poor from the financial burden of health service tariffs has been the user fee waiver or exemptions (see 22 policy questions about health care financing in Africa). But exemption mechanisms and sliding fee scales do not seem to have worked well. This is due to corrupt health staff, the poor working of administrative mechanisms, and difficulties in identifying the poor.
Assessment of the free health care provision system in Northern Ethiopia found no relationship between income and receiving free health care in rural areas. A case study on health in Uganda reports that record keeping was inadequate to support credible or efficient quality control and auditing; staff corruption was also a problem. In Ghana in 1995, less than one in 1000 patients were granted an exemption.
Targeting those who merit exemption or reduced fees is a major problem. Targeting by employment status (e.g. the unemployed) or special groups (civil servants, military personnel) has been more common than by geographical area or occupational group. Some of these groups that have been targeted are not the poorest, and so the targeting has actually been damaging to equity. Means testing was the most common method of targeting, and is argued to be the best way to identify a person who is poor (see 22 policy questions about health care financing in Africa). But criteria used are usually vague and income thresholds are rarely used because of the administrative costs.
