| dc.description.abstract | This study was conducted against the background of concern regarding the welfare impact of
introduction of user fees in government health facilities in Kenya. The introduction in 1989
of new and revised user fees in public health facilities represented a major policy change
from a policy of "free" health services for all at the time of Independence. This change,
together with concerns about the welfare loss it would likely engender, led in a large part to a
lack of its acceptance by the public as well as a lack of political will to implement it.
The Thesis uses panel data to estimate a demand model for health care in Kenya and to assess
the impact on welfare of the health care financing reform just noted. The data used covers a
lG-year period - 3 years before (1986-88) and 7 years after the cost sharing reform (1989-95).
Thus the data used for the analysis captures changes of the demand factors both over
time as well as over the cross-section of health facilities included in the sample, which makes
it possible to estimate" parameters of the Kenyan medical care demand function more
precisely than has been done in previous studies. Further, the data permit a comparison of
the rate of health service utilization in public and private health facilities before and after cost
sharing, which in turn permits a direct inspection of the effect of the cost sharing reform on
medical care use The sample statistics show that service utilization was lower in both government and in
private health facilities after the implementation of cost sharing. Demand for health services
in government health facilities fell by around 33% compared to a drop of 17% in non government
facilities. The drop in medical care use was steepest in government hospitals
(44%) where the fee increase was the largest. In government health centres, where fees were
moderate, demand fell by 12%, while unexpectedly, in government dispensaries, where
service provision continued to be free of charge, demand fell by 69%. These results suggest
that interventions in one sub-sector of a medical care system can have quite unexpected
effects on other parts of the system.
The regression results show that in overall terms, the net effect of cost sharing on health
service utilization was negative, a finding that is consistent with what the sample statistics
reveal. Implementation of cost sharing led to an increase in medical care demand (due
perhaps to improvement in service quality), but this increase was insufficient to offset a
relatively large, negative demand effect of fees (the usual price substitution effect). Distance
between competing health facilities, emerges in this study, as a major determinant of demand
for health services: demand for medical care is greater in facilities that are clustered together
than in those that are far apart. This is perhaps because proximity among facilities enhances
quality via competition and/or via the sharing of medical expertise. Proximity also increases
households' knowledge about the available health services.
These findings are important in a variety of ways. For policy, they imply that caution should
be taken when introducing user fees since they can lead to significant reductions in utilization
of health services, particularly among the poor. They also suggest that in settings in which
densities of alternative health care providers are high, such as in urban areas, the negative
demand effects of user fees can be greatly compensated for by the positive effects of quality
improvement that appears to be associated with the proximity among providers.
The results further show that proper management of user fee revenues and attention to quality
improvements have the effect of increasing the demand for health services. Moreover,
changes in fees and in other determinants of demand in one region or district can have large
effects on service quality and service use in a contiguous area. An increase in the number of
doctors in Kiambu for instance (an area contiguous to Nairobi) reduces the number of visits
to health facilities in Nairobi. Thus demand effects of regional spillovers of user fee changes
and of other policy changes need to be considered for effective implementation of health care
reforms. | en |
