Recent empirical and theoretical literature sheds light on the disappointing experience with implementation of primary health care programs in developing countries. This article focuses on the evidence showing two weak links in the chain between government spending for services to improve health and actual improvements in health status. First, institutional capacity is a vital ingredient in providing effective services. When this capacity is inadequate, health spending, even on the right services, may lead to little actual provision of services. Second, the net effect of government health services depends on the severity of market failures-the more severe the market failures, the greater the potential for government services to have an impact. Evidence suggests that market failures are the least severe for relatively inexpensive curative services, which often absorb the bulk of primary health care budgets. A companion paper, available from the authors, offers a perspective on how government funds can best be used to improve health and wellbeing in developing countries. It gives an alternative view of appropriate public health policy, one that focuses on mitigating the characteristic market failures of the sector and tailoring public health activities to the government's ability to deliver various services.

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Weak links in the chain: A diagnosis of health policy in poor countries

While the importance of the private sector in providing health services in developing countries is now widely acknowledged, the paucity of data on numbers and types of providers has prevented systematic cross-country comparisons. Using available published and unpublished sources, we have assembled data on the number of public and private health care providers for approximately 40 countries. This paper presents some results of the analysis of this database, looking particularly at the determinants of the size and structure of the private health sector. We consider two different types of dependent variable: the absolute number of private providers (measured here as physicians and hospital beds), and the public-private composition of provision. We examine the relationship between these variables and income and other socioeconomic characteristics, at the national level. We find that while income level is related to the absolute size of the private sector, the public-private mix does not seem to be related to income. After controlling for income, certain socioeconomic characteristics, such as education, population density, and health status are associated with the size of the private sector, though no causal relationship is posited. Further analysis will require more complete data about the size of the private sector, including the extent of dual practice by government-employed physicians. A richer story of the determinants of private sector growth would incorporate more information about the institutional structure of health systems, including provider payment mechanisms, the level and quality of public services, the regulatory structure, and labour and capital market characteristics. Finally, a normative analysis of the size and growth of the private sector will require a better understanding of its impact on key social welfare outcomes.

Private health care provision in developing countries: a preliminary analysis of levels and composition.

Proponents of user fees stress that equity and efficiency gains can be achieved through the implementation of a cost-recovery policy package. Within this package user fees are complemented by decentralization and combined with two targeting mechanisms favouring low income groups: exemptions, and the use of fee revenue to improve the services offered to them. This paper seeks to contribute to health financing policy debates by reviewing targeting options and assessing the available evidence concerning these issues. Success in protecting the poor appears to be limited and there are considerable informational, administrative, resource and socio-political constraints undermining the development of effective targeting mechanisms. The paper, therefore, urges caution in developing health care financing policy and identifies a relevant research agenda. -from Authors

The political economy of user fees with targeting: developing equitable health financing policy

Out-of-pocket spending (OOPS) is the major payment strategy for healthcare in Nigeria. Hence, the paper assessed the determinants socio-economic status (SES) of OOPS and strategies for coping with payments for healthcare in urban, semi-urban and rural areas of southeast Nigeria. This paper provides information that would be required to improve financial accessibility and equity in financing within the public health care system. The study areas were three rural and three urban areas from Ebonyi and Enugu states in South-east Nigeria. Cross-sectional survey using interviewer-administered questionnaires to randomly selected householders was the study tool. A socio-economic status (SES) index that was developed using principal components analysis was used to examine levels of inequity in OOPS and regression analysis was used to examine the determinants of use of OOPS. All the SES groups equally sought healthcare when they needed to. However, the poorest households were most likely to use low level and informal providers such as traditional healers, whilst the least poor households were more likely to use the services of higher level and formal providers such as health centres and hospitals. The better-off SES more than worse-off SES groups used OOPS to pay for healthcare. The use of own money was the commonest payment-coping mechanism in the three communities. The sales of movable household assets or land were not commonly used as payment-coping mechanisms. Decreasing SES was associated with increased sale of household assets to cope with payment for healthcare in one of the communities. Fee exemptions and subsidies were almost non-existent as coping mechanisms in this study There is the need to reduce OOPS and channel and improve equity in healthcare financing by designing and implementing payment strategies that will assure financial risk protection of the poor such pre-payment mechanisms with government paying for the poor.

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Investigating determinants of out-of-pocket spending and strategies for coping with payments for healthcare in southeast Nigeria.

His Majesty's Government of Nepal has embarked on an ambitious social welfare programme of increasing the accessibility of primary education and health care services in rural communities. The implications on the financing of health care services are substantial, as the number of health posts has increased twelve-fold from 1992 to 1996, from 200 to 2597. To strengthen health care financing, government policy-makers are considering a number of financing strategies that are likely to have a substantial impact on household health care expenditures. However, more needs to be known about the role of households in the current structure of the health economy before the government designs and implements policies that affect household welfare. This paper uses the Nepal Living Standards Survey, a rich, nationally-representative sample of households from 1996, to investigate level and distribution of household out-of-pocket health expenditures. Utilization and expenditures for different types of providers are presented by urban/rural status and by socioeconomic status. In addition, the sources of health sector funds are analyzed by contrasting household out-of-pocket expenditures with expenditures by the government and donors. The results indicate that households spend about 5.5% of total household expenditures on health care and that households account for 74% of the total level of funds used to finance the health economy. In addition, rural households are found to spend more on health care than urban households, after controlling for income status. Distributing health care expenditures by type of care utilized indicates that the wealthy, as well as the poor, rely heavily on services provided by the public sector. The results of this analysis are used to discuss the feasibility of implementing alternative health care financing policies.

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Household health expenditures in Nepal: implications for health care financing reform.

This report assembles data on health, demographic trends, health infrastructure, health personnel, and health financing across Asian countries. In a broad manner, it attempts to relate differences in spending priorities and patterns to health outcomes. This effort should be viewed as a complement to country-specific and household-level analysis. The objective of the study is to assemble data essential for making sensible public policy decisions in the health sector. It is an inductive, exploratory study. The study reviews mortality data, medical inputs, and health expenditures. It attempts to construct a health profile for the developing countries of Asia using cause-of-death information, the age structure of the populations, and related evidence. Data assembled for the years 1986 - 1987 on sources of health expenditure, health infrastructure, and related financial data are reviewed. A chapter is devoted to the discussion of user fees and insurance, the two main alternatives to tax financing of public sector curative services. The study concludes by piecing together information from many sources in an attempt to assess the degree to which public subsidies in the health sector are targeted, and to whom.

Charles C. Griffin

Papers

Health Care in Asia: A Comparative Study of Cost and Financing