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The IMF and the no user fees policy in health
BY SANDRA GRAHAM
Saturday, August 15, 2009
The imminent return of Jamaica to a borrowing relationship with the International Monetary Fund (IMF) has been dominating media and public discourse. Among the matters being discussed are the conditionalities that may be imposed on the country and specifically what will be the fate of the Government's no user fees policy for health.
The arguments have mainly been confined to discussing changes, real or imagined, that have occurred in the IMF with little or no reference to significant developments that have taken place in the international community and which have been impacted by evidence.
This article will examine the history, goals and theories of user fees, the performance of the user fees policy and the response of the international community to the user fees policy in health.
The history of user fees in health
User fees became a popular policy in the developing world in the 1980s largely because it was one of the loan conditionalities set by the World Bank and IMF for those countries that had to seek funding support amidst the oil crisis and high debt situation. So extensive was the application of the policy that by 1993, a total of 32 African countries had implemented user fees. The Bamako Initiative, which was sponsored by UNICEF and adopted by African ministers of health in 1987, was an important mechanism that was used to introduce user fees to several African countries.
In addition, the influence of the IMF and World Bank on the global development agenda introduced or intensified the globalisation of policy and a new wave of policy transfer from developed to developing countries.
Goals and theories of user fees
Governments sought to defend the user fees policy arguing that it:
1. improves access;
2. rations the use of health services;
3. increases equity;
4. improves quality;
5. promotes efficiency;
6. mobilises revenues; and,
7. fosters private sector development
There are three theories of user fees. The philosophical theory is located within the argumentation of community participation and ownership. The political theoretical construct is hinged on the principles of accountability and responsiveness to the electorate, while the economic theory has as its fundamental tenet the inelasticity of demand suggesting that user fees would have no significant impact on utilisation.
The performance of user fees policy
By the turn of this century three significant findings on the impact of user fees resulted in a groundswell of opposition to the policy in the international community.
i. Evidence shows user fees impact negatively on utilisation.
The experiences of several developing countries such as Lesotho, Kenya, Papua New Guinea, Lao PDR, South Africa, Uganda, Zambia, Ghana, Rwanda and Colombia show that patient utilisation declined during user fees intervention.
In Ghana, 70 per cent of a sample population listed cost as a reason for not seeking health care while 80 per cent of a sample population in Rwanda cited it as a source of dissatisfaction. A World Health Organisation (WHO) review on user fees showed cost to be a factor in 15 of 21 Poverty Reduction Strategy Papers.
Thirty-seven per cent of a sample population in Lusaka, Zambia resorted to self-medication because of prohibitive cost. The trend was the same in Ghana where research found a "continued" 40 per cent decline in outpatient visits after a new fee system was introduced.
Even where studies were undertaken in industrialised countries, the results show a decline in utilisation. A study of 13 industrialised countries such as the USA and Thailand confirm that user fees "behave regressively".
ii. User fees increase poverty rate.
There is compelling evidence of a link between user fees and poverty. In a study that shows the "poverty impact" of out-of-pocket payments (OOP), 78 million people in 11 low/middle income countries in Asia were pushed below the international poverty line of a $1 a day because of OOP. Bangladesh, India and China experienced percentage point increases of 3.8, 3.7 and 2.6 per cent respectively, attributed to OOP.
The link between user fees and poverty was also established in a study carried out in Burundi where 82 per cent of the sample population reported incurring debt or a reduced asset base to meet health costs. In Ethiopia, people also incurred debt and reduced their asset base to qualify for exemptions. Kenya's 10/20 policy that imposes a fee of 10 or 20 shillings per hospital visit had a similar poverty impact on people's asset base. The poor are sensitive to even small price movements and may lead to what is being termed the "medical poverty trap phenomenon".
iii. Free health care increases utilisation
A third and equally important evidence from countries that reduced or removed user fees shows that patient utilisation increased immediately post-the intervention. South Africa removed user fees for children under six years of age and pregnant and lactating mothers in 1994, then full abolition in 1997. Uganda abolished fees in hospitals except for private wings in 2001, Zambia removed fees for all services in rural areas in April 2006 and Burundi followed a month later with free maternal and child services. Madagascar, after a six-month blockade in 2001, suspended user fees in health centres.
In all of these countries - whether the abolition of user fees was across the board, in rural or urban towns, based on gender, age or health condition - the common effect was an increase in patient utilisation. For example, South Africa's immunisation rate increased from 41 per cent in 1999/2000 to stabilise at 83 per cent in 2003/04. Uganda experienced an immediate 50-100 per cent increase in utilisation with outpatient attendance increasing by 87 per cent and immunisation by 105 per cent. Econometric analyses show a 16 per cent increase in patient visits in Madagascar. Utilisation rates in Zambia, Burundi and the Democratic Republic of Congo increased post-abolition of fees.
The response of the international community
The overwhelming evidence of the regressive nature of user fees influenced the beginning of a new thinking on user fees, especially in the social sectors of health and education. Opposition to the user fees policy gained important international support from the NGO community, human rights interests, the US Congress and later UNICEF and DFID.
The passage of the US Foreign Appropriations Bill that opposes user fees as a loan conditionality played a particularly influential role in shifting international support away from user fees policy. President Bill Clinton signed into law the 2001 Bill which includes a provision that requires that the US representatives to the IMF, World Bank and other multilateral institutions oppose any programmes containing user fees. What is unique about this Bill is that it requires that the Treasury Department report to Congress on any user fees conditionalities that are approved by the IMF or World Bank.
In addition, global targets such as the Millennium Development Goals and A World Fit for Children favoured the removal of user fees in developing countries. Isolated, the World Bank responded in 2004 with its "no blanket policy" on user fees, which generally professes support for the removal of user fees "unless there are compelling reasons to impose fees".
Conclusion
It is clear that there is international resistance to the user fees policy and this will likely play a part in defining the terms and conditions of any IMF loan agreement. The power and influence of international lobby groups and the mountain of research that provide irrefutable evidence of the negative impact of user fees have combined to create an environment that is hostile to a return to the 1980s IMF policy of sponsoring cost-sharing mechanisms in the health and education sectors.
BY SANDRA GRAHAM
Saturday, August 15, 2009
The imminent return of Jamaica to a borrowing relationship with the International Monetary Fund (IMF) has been dominating media and public discourse. Among the matters being discussed are the conditionalities that may be imposed on the country and specifically what will be the fate of the Government's no user fees policy for health.
The arguments have mainly been confined to discussing changes, real or imagined, that have occurred in the IMF with little or no reference to significant developments that have taken place in the international community and which have been impacted by evidence.
This article will examine the history, goals and theories of user fees, the performance of the user fees policy and the response of the international community to the user fees policy in health.
The history of user fees in health
User fees became a popular policy in the developing world in the 1980s largely because it was one of the loan conditionalities set by the World Bank and IMF for those countries that had to seek funding support amidst the oil crisis and high debt situation. So extensive was the application of the policy that by 1993, a total of 32 African countries had implemented user fees. The Bamako Initiative, which was sponsored by UNICEF and adopted by African ministers of health in 1987, was an important mechanism that was used to introduce user fees to several African countries.
In addition, the influence of the IMF and World Bank on the global development agenda introduced or intensified the globalisation of policy and a new wave of policy transfer from developed to developing countries.
Goals and theories of user fees
Governments sought to defend the user fees policy arguing that it:
1. improves access;
2. rations the use of health services;
3. increases equity;
4. improves quality;
5. promotes efficiency;
6. mobilises revenues; and,
7. fosters private sector development
There are three theories of user fees. The philosophical theory is located within the argumentation of community participation and ownership. The political theoretical construct is hinged on the principles of accountability and responsiveness to the electorate, while the economic theory has as its fundamental tenet the inelasticity of demand suggesting that user fees would have no significant impact on utilisation.
The performance of user fees policy
By the turn of this century three significant findings on the impact of user fees resulted in a groundswell of opposition to the policy in the international community.
i. Evidence shows user fees impact negatively on utilisation.
The experiences of several developing countries such as Lesotho, Kenya, Papua New Guinea, Lao PDR, South Africa, Uganda, Zambia, Ghana, Rwanda and Colombia show that patient utilisation declined during user fees intervention.
In Ghana, 70 per cent of a sample population listed cost as a reason for not seeking health care while 80 per cent of a sample population in Rwanda cited it as a source of dissatisfaction. A World Health Organisation (WHO) review on user fees showed cost to be a factor in 15 of 21 Poverty Reduction Strategy Papers.
Thirty-seven per cent of a sample population in Lusaka, Zambia resorted to self-medication because of prohibitive cost. The trend was the same in Ghana where research found a "continued" 40 per cent decline in outpatient visits after a new fee system was introduced.
Even where studies were undertaken in industrialised countries, the results show a decline in utilisation. A study of 13 industrialised countries such as the USA and Thailand confirm that user fees "behave regressively".
ii. User fees increase poverty rate.
There is compelling evidence of a link between user fees and poverty. In a study that shows the "poverty impact" of out-of-pocket payments (OOP), 78 million people in 11 low/middle income countries in Asia were pushed below the international poverty line of a $1 a day because of OOP. Bangladesh, India and China experienced percentage point increases of 3.8, 3.7 and 2.6 per cent respectively, attributed to OOP.
The link between user fees and poverty was also established in a study carried out in Burundi where 82 per cent of the sample population reported incurring debt or a reduced asset base to meet health costs. In Ethiopia, people also incurred debt and reduced their asset base to qualify for exemptions. Kenya's 10/20 policy that imposes a fee of 10 or 20 shillings per hospital visit had a similar poverty impact on people's asset base. The poor are sensitive to even small price movements and may lead to what is being termed the "medical poverty trap phenomenon".
iii. Free health care increases utilisation
A third and equally important evidence from countries that reduced or removed user fees shows that patient utilisation increased immediately post-the intervention. South Africa removed user fees for children under six years of age and pregnant and lactating mothers in 1994, then full abolition in 1997. Uganda abolished fees in hospitals except for private wings in 2001, Zambia removed fees for all services in rural areas in April 2006 and Burundi followed a month later with free maternal and child services. Madagascar, after a six-month blockade in 2001, suspended user fees in health centres.
In all of these countries - whether the abolition of user fees was across the board, in rural or urban towns, based on gender, age or health condition - the common effect was an increase in patient utilisation. For example, South Africa's immunisation rate increased from 41 per cent in 1999/2000 to stabilise at 83 per cent in 2003/04. Uganda experienced an immediate 50-100 per cent increase in utilisation with outpatient attendance increasing by 87 per cent and immunisation by 105 per cent. Econometric analyses show a 16 per cent increase in patient visits in Madagascar. Utilisation rates in Zambia, Burundi and the Democratic Republic of Congo increased post-abolition of fees.
The response of the international community
The overwhelming evidence of the regressive nature of user fees influenced the beginning of a new thinking on user fees, especially in the social sectors of health and education. Opposition to the user fees policy gained important international support from the NGO community, human rights interests, the US Congress and later UNICEF and DFID.
The passage of the US Foreign Appropriations Bill that opposes user fees as a loan conditionality played a particularly influential role in shifting international support away from user fees policy. President Bill Clinton signed into law the 2001 Bill which includes a provision that requires that the US representatives to the IMF, World Bank and other multilateral institutions oppose any programmes containing user fees. What is unique about this Bill is that it requires that the Treasury Department report to Congress on any user fees conditionalities that are approved by the IMF or World Bank.
In addition, global targets such as the Millennium Development Goals and A World Fit for Children favoured the removal of user fees in developing countries. Isolated, the World Bank responded in 2004 with its "no blanket policy" on user fees, which generally professes support for the removal of user fees "unless there are compelling reasons to impose fees".
Conclusion
It is clear that there is international resistance to the user fees policy and this will likely play a part in defining the terms and conditions of any IMF loan agreement. The power and influence of international lobby groups and the mountain of research that provide irrefutable evidence of the negative impact of user fees have combined to create an environment that is hostile to a return to the 1980s IMF policy of sponsoring cost-sharing mechanisms in the health and education sectors.