Paying their way: health financing mechanisms in Zambia

Health services in many low-income countries charge user fees. These payments may deter the poorest people from seeking treatment. Zambia has tried two alternatives to user fees: prepayment and discount cards. How do these schemes affect equity in the use of health services?

User feescan help to maintain supplies of drugs and provide bonuses to motivate healthworkers. Health centres in Zambia have used varying combinations of three costrecovery mechanisms:

• user charges
• prepayment through a monthlyinsurance scheme, aiming to pool risk across income groups and between thesick and healthy
• discount cards allowing users to buycoupons for cheaper health services, spreading risk over time and allowingtransfer of coupons between individuals.

What arethe equity implications of each option? Research by the University of Tsukuba,Japan, and Queen Margaret University College, Edinburgh, UK, focused on the choicespeople make before they fall ill. They used economic models to predict thatpayment mechanisms are chosen based on the price or premium charged and thetiming of payment. Other influences are the user’s income, their chosen levelof health care use and their perceptions of their own health status and the qualityof health care available.

Theresearchers looked at six urban health centres: three in Lusaka and three in Kitwe, using a nationwide household survey, routine healthcentre records and an outpatient exit survey. These data suggest that:

• Of those who prepay, 62.3percent in Lusaka and 91.5 percent in Kitwesubscribe only when they need care and are unlikely to keep up enrolmentonce they are well.
• Households that do not facea cost at the point of use (through prepayment or employer coverage) are2.1 times more likely than others to use health services in Lusaka and 1.7times more likely in Kitwe.
• Results largely support theidea that prepayment is linked to a higher service use than discountcards, with the lowest utilisation level found for user charges.
• Income is not a significantfactor in choice of payment mechanism, but smaller households tend tochoose prepayment.
• Perceived quality is lessimportant than expected in the choice of payment method.
• Discounts cards are chosenmostly by people who live near the health facility.

Theresearchers conclude that relative to user charges, prepayment improves accessto care without causing income-related inequity. Discount cards also aidaccess, but to a lesser extent, and are more likely to produce income-relatedequity losses, favouring people who already have greater access to services. Interruptedsubscription is common in prepayment schemes. Discount cards may offer a middleground: giving better equity and access than user charges while protectingagainst the abuses of prepayment schemes.

The rangeof options for policy-makers includes:

• using monthly rather thanannual prepayment to reduce income inequities, paying attention toproblems such as interrupted enrolment and higher administrative costs
• learning from health centreswith the most successful prepayment schemes to reduce abuses of the systemelsewhere
• conducting a better resourced andmonitored trial before introducing discount cards.