equity implications of health sector user fees in tanzania

II LITERATURE REVIEW
2.1 Introduction to the overall user fee debate
Background
The user fee debate is full of controversies. The alleged positive and negative impacts of user fees on
efficiency, equity, quality and sustainability have led to heated debates among health sector
stakeholders. Almost without exception, the donor community strongly supported the cost-sharing
approach to education and health progressively introduced in the 1980s and 1990s. The IMF and WB
have traditionally promoted user fees, although their official policy is more careful nowadays. They
considered charges at the point of use needed to deter frivolous use and to help bring money into
cash-strapped health systems (Rowson, 2004). Toward the late 1990s, however, other donors started
to change their position regarding the desirability of user fees. This trend is confirmed by Bennet and
Gilson (2001) and the WHO World Health Report 2000. They conclude that “the focus of the
international debate is on the need to move away from excessive reliance on out-of-pocket payment
as a source of health financing towards a system which incorporates a greater element of risk pooling
(for example, through health insurance) and thus affords greater protection for the poor.
Commonly used systems
Health care systems, particularly those in developing countries, typically depend on a mix of financing
mechanisms rather than only one. The principal mechanisms are: (1) tax-based financing, (2) social
insurance financing, (3) private insurance, (4) user fees and (5) community-based health insurance. It
is common for different population segments to be covered by different types of financing mechanism.
The degree to which the financing system as a whole is pro-poor depends on how the different
mechanisms interact (Bennet & Gilson, 2001). Two broad models of user fee systems have been
adopted in African countries: (1) the ‘standard model’ and (2) the ‘Bamako Initiative model’ (Nolan and
Turbat, 1995; in Gilson, 1997) (See Technical Paper Part 1). There is a wide range of different types
of user fee payment systems: flat fee or differentiated fee; fee per episode or fee per item of service;
prepayment or payment at time of use (Price, 2002). In addition to formal user fees, informal charges
are common practice (Nyonator and Kutzin, 1999).
The reviewed literature mentions several main and derivative objectives for introducing user fees in
the health sector. They are classified (see table 2.1) in three main categories. 7
Table 2.1: Objectives for introducing user fees in the health sector
Enhancing
efficiency
Enhancing
sustainability
Enhancing
equity
� The introduction of price signals through user fees can strengthen the appropriate use
of the referral system by patients, facilitate the reallocation of resources to costeffective
primary care, and rationalize utilization and ‘frivolous’ consumption of health
services.
� Raising revenue to replace or supplement government funds is mentioned as the
dominant objective. There is a desire for ‘system sustainability’ (a broader concept
than ‘financial sustainability’) as the underlying rationale.
� User fees can avoid the provision of subsidies to those who can afford to pay, and in
doing so free up funds to pay all or part of the costs for those less or unable to pay. If
resources generated through user fees are allocated to improve coverage and quality
of care 8 , user fees are said to disproportionally benefit the poor by increasing their
demand and utilization of health services.
Source: Newbrander & Sacca, 1996; Gilson, 1997; Wilkinson et al, 2001; Bonu et al, 2002; Kivumbi &
Kintu, 2002; IPAR, 2003; Price, 2002; Bijlmakers, 2003; Ridde, 2003.
2.2 Documented implications of user fees
The study team identified the most relevant documented evidence on the implications of user fees. For
more background information the Addis Ababa Consensus on Principles on Cost Sharing in Education
7 Some authors mention enhancing quality as an additional objective. In our view, however, it is more appropriate
to consider improved quality as being instrumental to enhancing sustainability, efficiency and most notably equity.
We therefore do not mention it separately (see also Bijlmakers, 2003).
8 The reviewed literature mentions different strategies for such quality improvement: either directly or indirectly
aimed at health services. Kipp et al (2001) report on the implementation of user fees as a staff incentive system
(i.e. top up low salaries), which led health workers to offer improved services. They note that they found no other
published information on using cost-sharing revenues in such a way.
Equity Implications of Health Sector User Fees in Tanzania 3