equity implications of health sector user fees in tanzania

PART 4 BACKGROUND INFORMATION TO CHAPTER 4
Rationale for the introduction of user fees in Tanzania
Table TP 5: Rationale for the introduction of user fees in Tanzania
Growing deficit
in the overall
GOT budget
Growing funding
gap in the Health
sector
Expansion of
health facilities,
and an increase
in demand and
costs
Poor health
services
Strengthening
referral system
Ability and
willingness to
Pay
� The 1970s and 1980s showed a poor economical performance and a growing
deficit in the Government budget. Dependence on foreign finance increased.
National and international political- socio-economic developments contributed to a
shift in views
� The funding gap for total financial requirements of the health sector was 42.86%
in 1989/90, 67.4% in 1990/91 and 63.65% in 1991/92. The recurrent budget and
fiscal deficit showed an annual growth of 5%. In 1992, the donor support for the
health sector was 12 times more then the health sector development budget. It
was assumed that the revenues of cost sharing schemes would increase over
time.
� Between 1980 and 1989 the population increased with 29%, the number of health
facilities increased with 10%, the number of medical assistants increased with
285%, the number of outpatients increased with 53.5% while the number of
inpatients increased with 43%. Between 1980 and 1989 the recurrent costs grew
with 64%
� The quality of health services was generally perceived as very poor. It was
assumed that this was partly caused by the absence of user fees, and that the
revenue from user fees would be used for services which otherwise could not be
provided because of inadequate funding. User fees would hence contribute to
improved availability and quality of health services. To ensure that revenue from
user fees would contribute to quality improvements, the MOH formulated
purchasing guidelines for essential items and established advisory committees in
each hospital to monitor progress. It was assumed that, in the context of the
decentralisation process, the funds generated through cost-sharing schemes
would allow for funds to be retained and used at the local level
� It was assumed that user fees would (1) reduce the tendency of patients to bypass
the lower level facilities, (2) rationalize the utilisation of health services and
(3) strengthen the referral system. Therefore, differentiated charges were
introduced; lower charges for primary level and higher charges for other levels.
� Many arguments were based on the assumption that even the poor could (had
ability) and should contribute something for the services they received.
� Willingness to pay assessments indicated that a majority of the people were
willing to contribute to health services if services would be improved.
Ensuring equity � By establishing fees according to ability to pay instead of actual costs and by
introducing exemption and waiver mechanisms, it was assumed that this would
guarantee access to health services for the poor.
Source: Mushi 1996, MOH 1996, MOH 1997, MOH/SDC, 2001, Mushi 2003, Msambichaka 2003
Technical Paper 11