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Key issues

User fees for health: a background

A quick guide through the key issues

In many African countries, user fees were first implemented through the 1987 Bamako Initiative. The history and effects of this initiative are outlined in the first section below. World Bank policy has also been an important influence on the implementation of fees, and the second section considers how this has evolved since the 1980s. The final section outlines concerns that user fees will make it harder for countries to meet the Millennium Development Goals.

The Bamako Initiative

One principal vehicle for implementation of user fees is the Bamako Initiative (BI), adopted by African health ministers in 1987, and aimed primarily at increasing availability of resources for essential drugs. It proposed decentralising health decision making to the district level; establishing a realistic national drug policy; and providing basic essential drugs. The Initiative was promoted by the United Nations Children's Fund (UNICEF) and World Health Organization (WHO), and stressed the need for community and individual self-reliance and participation in planning, organisation, operation and control of primary healthcare, making fullest use of local, national and other available resources.

Accordingly, the BI advocated a combination of financing by users, communities, districts and the central government, depending on the specific circumstances in each country. It stipulated that fees collected from patients should not replace existing health budgets. The community would control locally generated funds with consideration for protecting the poorest.

The BI recognised that fees could be a barrier to treatment for low-income districts or households, and included ways of dealing with this. Charges were supposed to be set at a level which is modest in relation to household income, but which still generates enough income to allow for a proportion of patients not to pay anything. For example in Benin about 30 per cent of patients received services for free. Alternatively, community health committees or the government could subsidise those on low incomes. Preventive care, such as vaccinations, could be given free or heavily subsidised. Charges for less essential but very popular treatments, such as injections, were allowed to be higher than for vital treatments. It was also expected that low-income areas would receive larger government subsidies.

The emphasis of the resolution adopted by African health ministers was on community participation in the financing of health services, through "drug revolving funds" (in which an initial supply of drugs is provided to a community, and proceeds from the sale of these drugs are used to buy further supplies). This emphasis was criticised on various grounds including the negative implications for equity, difficulties in implementation, and increased dependence on UNICEF for financing. In addition, while the BI envisaged various financing mechanisms – including payment for drugs, payment per episode, and pre-payment schemes – the focus of country governments has been on the fee-for-service mechanism, as this is easiest to implement.

It appears that Bamako Initiative programmes enjoyed some success in improving access to drugs and quality care. The Bamako Initiative in West Africa, a World Bank background paper, emphasises the role of community ownership of locally generated resources in securing these improvements. However, some reports suggest the effect on equity may have been less positive. The equity impacts of community financing initiatives in Africa notes that equity was only a minor goal in BI schemes, and a paper on household behaviour and equity in Benin and Guinea stresses the need to design better exemption mechanisms for the most vulnerable. See also papers on the implications of the BI for affordability, cost-effectiveness and efficiency of primary health care in Benin and Guinea; equity in Burkina Faso; and health seeking behaviour in Nigeria.

More readings on the Bamako Initiative...

The World Bank's "no blanket policy" on user fees

The World Bank has been a major player in influencing user fee policies throughout the developing world. In the 1980s it was a major proponent of user fees for health services, but by 2004 it was advocating "no blanket policy on user fees" – see the 2004 World Development Report (WDR), Making services work for poor people (especially chapter 4). The Bank acknowledges that user fees in a lot of cases have led to exclusion of poor people and recommends that the situation has to be analysed in each policy context and decision-makers have to choose from a variety of options regarding user fees.

How should policy-makers determine when user fees are appropriate, and what kind of complementary measures are needed to protect the poor? The report suggests that the decision should balance three goals: protection of the poor, efficiency in allocation, and the ability to guarantee that services can be implemented and sustained. In particular, it recommends that services should be free to all when any of the following conditions apply:

  • when services are not "excludable" – this covers services such as pest control or sanitation which benefit everyone in a community or area;
  • when services can be given at a minimal "lifeline" rate to all, with higher levels charged for;
  • when services are disproportionately used by the poor, and are likely to be delivered adequately without user fees, and will not be overused – this includes low cost primary healthcare; antenatal care; immunisation; and low cost treatment for priority diseases.

If it is possible to distinguish the poor from the non-poor, then the Report recommends waivers, exemptions, cash transfers or vouchers wherever they are feasible. But if it is not possible to distinguish the poor from the non-poor, then under certain conditions the report argues that user fees should be charged to everyone.

Despite this framework for making decisions, having "no blanket policy" means that some difficult questions are left to be answered at the individual country level. How inadequate do funds have to be for user fees to be justified? What proportion of poor users is sufficient to justify a blanket exemption? The framework can be interpreted in a variety of ways, depending on definitions, approaches to measurement, and available data.

Underlying the Bank's approach is a belief that as well as creating additional funding, user fees help to establish a market relationship between provider and client which can empower the client. One way of sustaining such a relationship is the distribution of vouchers to pay for public services, giving poor people an earmarked but tangible purchasing power with which to exercise their rights as consumers. If a choice of providers is available then the poor become active "players" who are able to demand minimum standards of quality of care. The report also argues that vouchers may be better in targeting the poor than other public health subsidies, of which a disproportionate share is often captured by the better-off. (Also see Increasing client's power to scale up health services for the poor: the Bamako Initiative in West Africa.)

Critics of the World Bank's approach have argued that, while the decision-making framework suggests removing fees for primary healthcare, very few countries have yet gone ahead with this. User fees: the right to health and education denied observes that progress in implementing the Bank’s policy changes on user fees remains slow and uneven, and calls for it to move towards a clear position against user fees and provide the support that is needed for country governments to abolish them.

Recommended reading:

User fees, global health initiatives, and the Millennium Development Goals

User fees have several important implications for the Millennium Development Goals (MDGs):

  • their effects on both health and economic status could mean that they act as a barrier to poor individuals remaining healthy, becoming more educated, or eating – especially where ill health leads to catastrophic costs – preventing the human development MDGs from being achieved
  • ill people have lower productivity and so generate less income and are more likely to stay poor
  • treatment for children, women, and people suffering priority diseases may be delayed or not happen at all
  • payment for drugs will mean that fewer are consumed than is necessary, especially for more expensive drugs (such as drugs for malaria, HIV and AIDS)

The case is being made increasingly that health-related development targets such as the MDGs, will not be met without a drastic increase in the resources flowing to health, as well as adapted health financing policies in order to reduce financial barriers to health services. (See the MDG page on the UN website).

A growing number of global health initiatives, such as the Global Fund for AIDS, TB and Malaria (GFATM) aim to raise the resources flowing for the control of a range of diseases. (See Global Health Initiatives and national level health programs). World Bank grants and loans have also targeted priority diseases such as malaria and AIDS. However, to ensure that these increased resources on the supply side of the health sector are actually used for preventing and treating disease, especially in vulnerable or poor populations, they need to be balanced by initiatives to overcome barriers on the demand side.

The next section of this guide presents evidence that user fees have acted as a barrier to people using health services. Combined with poorly functioning waiver and exemption mechanisms, they have reduced access for the target groups of the health MDGs: children, pregnant women and persons with communicable diseases. On these grounds, meeting the MDGs has been presented as a reason for abolishing fees by advocacy organisations: see Impact on child mortality of removing user fees and User fees: the right to education and health denied.

More recommended reading: