User fee in Asia: rationales, impacts and policy options

Type Report
Title User fee in Asia: rationales, impacts and policy options
Author(s)
Publication (Day/Month/Year) 2011
Abstract
User fee was introduced to generate additional revenue for the health sector, increase efficiency of government health services delivery by reducing unnecessary utilization, improve quality of care, and formalize informal pay. Insufficient funding to public-sector providers has been a major factor to the introduction of and increase in user fee in many Asian countries.

Empirical evidence shows that user fee has negative impacts on access to care due to financial barrier especially for the poor. Exemption of user fee for the poor often does not work in many low-income countries, which do not have administrative capacity for exemption mechanism for vulnerable population. High out-of-pocket payment for health care often results in catastrophic payment for health care and impoverishment due to illness. Catastrophic payments for health lead to the sacrifice of current consumption, accumulation of debt, and spending of savings and assets.

To minimize the negative effects of user fee and out-of-pocket payment, abolition of user fee may not be a solution. Without alternative sources of funding such as government/donor financial replacement of the removal of user fees, the abolition of user fee can result in informal under-table payment, drug shortage, no or very poor services, over-workloads of health workers, and overcrowded wards.

Health care financing reform and introduction of prepayment mechanism is a fundamental solution to minimize the negative impacts of out-of-pocket payment and maximize financial protection for population. In most low- and middle-income countries, the population engaged in the formal employment sector is small, which limits the size of people who contribute to prepayment schemes. Without political will and government subsidy, universal coverage through pure contribution mechanism will be very difficult in most Asian countries.

Existence of prepayment scheme does not necessarily guarantee financial protection. Financial protection through health care financing reform requires expanded benefit package and pro-poor orientation. Changing provider incentives and replacing fee-for-service system by other close-end provider payment methods such as capitation and case-based payment will contribute to cost containment and improving efficiency in health care delivery, providing additional fiscal space for universal coverage.

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