Challenges of Healthcare Financing: Economic and Welfare Effects of User Fees in Urban Ethiopia.
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Date
2007-07
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A.A.U
Abstract
This study examines the de/erminants of health care provider choice of urban households
of Ethiopia. Particularly, it investigates the effects of user fees on the demand for health
care by different segments of socio-economic group using multinomial logit model. The
data source of the study is the Ethiopian Urban Socio-economic Survey conducted in
2004 by the Department of Economics of Addis Ababa University in collaboration with
the Department of Economics, University of Goteborg in Sweden Cost recovery
mechanisms were introduced based on the principle that health care demand in
developing countries is price inelastic; so that more resources can be generated for the
health sector without reducing the demand by the poor. But the results of this study
reveal that for a given rise in health care cos/, the poor will reduce /he demandfor health
care significantly in greater proportion relative to the better off In other words an
increase in user fee is likely to drive out the largest portion of the poorest households
from receiving medical care. The study also shows the poor are required to pay
significantly greater proportion of their income to health care than the better off in order
to get treatment. This will aggravate the existing inequality in access to basic health care
services. Hence, even though the principle of cost recovery had been advocated as
alternative means of health care financing in most developing countries, increasing user
fee may drive the poorest population out of health care market or deepen their economic
situation unless some reliable protective measures are taken.
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Keywords
cost recovery, equity, financing, health care provider, user fees