In Tanzania, health statistics have shown slow improvement, although spending on health
services in Tanzania is quite high. Defining the determinants of both health status and
health use is interesting to point out possibilities for policy. Using household data of the
rural Tanzanian mainland, one indicator of health status, the incidence of illness, is
examined here and three health demand variables, the incidence of treatment, the level
and the provider of treatment. For health outcome as well as health demand, the
importance of household income in Tanzania is striking. A positive cross-effect of
education on health could not be identified, except for rich Tanzanians. Distance to the
nearest health facility does not matter for the poorest patients. Although the measurement
of quality is problematic, the quality of the lower level medical care is found to have a
positive impact on health status and on health demand, more specifically the nonwage
component of quality. These results indicate that the introduction of cost recovery
schemes in the Tanzanian health system may have perverse effects, if not combined with a
price differentiation according to income and an improvement of quality of health
facilities.