equity implications of health sector user fees in tanzania

and Health in Sub-Sahara Africa (Addis Ababa 20 June 1997) has been included in the Technical
Paper Part 4. The following overview of key findings follows Gilson (1997; citing various authors) 9 and
has been supplemented with observations from the literature review.
Efficiency implications of user fees
Fee systems appear to represent weak mechanisms for improving the efficiency of utilization, and may
rather promote inefficiencies in provider behaviour (see Table 2.2).
Table 2.2: Efficiency implications of user fees
Provider � Fees have been shown to encourage inefficient provider behaviour when the resulting revenue
behavior is retained at the point of collection (supplier-induced demand)
Utilisation � As the travel and time costs of seeking care are usually high, there is unlikely to be any
unnecessary utilization (‘frivolous’ consumption). Fees may encourage more efficient utilization
patterns if: (1) they are graduated by level of the system, (2) a by-pass fee is introduced in
areas where the primary care network is adequate and referred patients are exempted at higher
levels of the system, (3) they are associated with quality improvements which promote
utilization at the primary level. A lack of co-ordination within a fee system may encourage
greater use of less cost-effective care when lower levels of the health system charge higher
fees than higher levels.
Source: Various authors; in Gilson, 1997 10 ; Nyonator & Kutzin, 1999 11 ; Bonu et al, 2003
Sustainability implications of user fees
Revenue generation from any fee system is unlikely to be adequate in addressing the large and
growing gap causing nationwide quality shortfalls that exist in many African countries. Fees need to be
complemented by a broader range of actions if they are to enhance the sustainability of health
systems (Gilson, 1997; Bennet & Gilson, 1997). Table 2.3 presents the main findings for sustainability.
Table 2.3 Sustainability implications of user fees
Revenue
generation at
national level
� National user fee systems have generated an average of around 5% of total recurrent
health system expenditures, gross of administrative costs (this proportion is also
mentioned by WHO). In countries with low average household incomes, it is probably
not possible to raise more than 10-20% of service delivery costs. Evidence also
demonstrates that revenue levels vary over time; they increase due to improved
implementation practices, but fall in periods of inflation, war and economic recession.
Revenue at � Fees may generate considerable proportions of the total non-salary recurrent
facility level
expenditure within lower level, lower cost health facilities.
Substitution � User fees are said to have been used to cover administrative costs instead of being
translated into direct improvements in services at the local level; and to substitute
funding from the central ministry instead of raising additional revenue.
System
� The impact of user fees on overall system sustainability is not well-known due to a lack
sustainability
of studies, but the available evidence suggests that their contribution is limited.
Source: Various authors; in Gilson, 1997; 50 Years Is Enough Network; see also Nyonator & Kutzin, 1999;
Bennet & Gilson, 2001.
Equity implications of user fees
Equity implications of user fees are related to both (in)adequate management systems and to the
direct effect user fees have on people in need of health care service. The problems of implementation
are likely to prevent the potential equity benefits of fee-plus-quality-improvements being realized in
practice. Instead, fees have the potential to worsen existing inequities (Gilson, 1997). More recent
studies confirm this conclusion. In Guinea and Indonesia, the main reason given by the poor for not
seeking care at government facilities was the cost of treatment. The poorer the patients, the more
respondents in that category cited costs as a reason for seeking care from alternative sources. In
Ecuador, 54% of the poorest group said they were unable to seek care because of lack of money. In
Kenya, it was found that sometimes the poor pay even more for health services than the non-poor
(Newbrander, Collins and Gilson, 2002). An overview of documented equity implications of user fees
9 These findings in Gilson (1997) cover Africa as a continent.
10 This poses a dilemma, however, because the impact of user fees is reported to improve if the revenues
generated are used at the facility/level where they have been collected.
11 Since fee levels are determined by individual facilities, there may be no differential between health centre and
hospital charges for the same service, giving the patient no incentive to use the health centres. Indeed, given the
dependence of all facilities on user fee income, hospitals have a strong incentive to compete for primary care
patients, and they are in a strong position to do so, given the difference in human resources (i.e. the presence of
doctors at hospitals) between the facilities (Nyonator & Kutzin, 1999; for Ghana).
Equity Implications of Health Sector User Fees in Tanzania 4