User Fee in Public Health Institutions An Experience Across Asian and...
User Fee in Public Health Institutions
An Experience Across Asian and African Countries
SAMAN AFROZ
The introduction of user fee as an alternative source of health financing is widely be-
ing questioned across nations mainly because of its inability to generate the required
revenue needed for any significant improvements in the quality of care and its implica-
tions on equity. This article looks at the experiences of some Asian and African coun-
tries for implementation of the fee, which was basically meant to increase the quality,
efficiency, sustainability and effectiveness of the government health services and
seeks to draw lessons for a country like India. This has been done by the review of
relevant national and international studies in the area.
Ms. Saman Afroz is Lecturer, National Service Scheme Unit, Tata Institute of Social
Sciences, Mumbai, India.

INTRODUCTION
User fee or user charges is a new method of health financing proposed
to most of the low income countries by the World Bank and
International Monetary Fund (IMF). It formed an essential component
of the health sector reform package and was meant to generate
additional resources for the resource-starved government health
institutions. Most government health systems across the world have
largely been financed by general taxes. Therefore, the principle was
t h a t the government will both finance as well as provide health services
free of cost. However, the experience of most countries shows t h a t the
government could not stick to its commitment of providing free health
care and introduced some kind of token payments for registration or for
drugs. User charges means much more t h a n token, it means charging
for specific services (Green, 1992) and is seen to substitute this tax-
based financing of government health services.
USER FEE: MEANING AND OBJECTIVES
The term user fee was first introduced in the World Development Report
of the World Bank in 1993 and can be defined as
Any payments made by beneficiary directly to the health care
providers at the time of delivery. This includes fee for services or
price paid for supplies like drugs and immunization.(Andrews and
Mohan, 2002).

396 Saman Afroz
In certain situations, the insurance companies may cover only a
particular proportion of the total expenses, with the consumer paying
the rest. This is called co-payment and can also be considered as a type
of user charge.
The fee was introduced with the objective of improving the quality of
health care by generating additional resources for the resource-starved
government health institutions. The proponents of the fee, the World
Bank and the IMF, recommended it as a financing mechanism for
achieving the goals of increased efficiency, equity, quality,
sustainability and effectiveness of the health sector. However,
experience across countries show t h a t the fee was not able to achieve
the above-mentioned targets due to which its existence is being
questioned in most of these countries. According to Mcpake (1993),
An experience across countries show that the policy has met far from
universal acceptance and has been particularly questioned on the
basis of its implication for equity and utilisation of health services
and possibly exaggerated potential for revenue generation.
The introduction of the fee has become an area of great public health
concern in the countries where it has been introduced, as it defies the
public health principles of equity, universality and comprehensiveness
and makes health care out of the reach of the poor, which in turn
deteriorates the health status. However, supporters of the policy believe
that user fee — if implemented properly — can greatly improve the
accessibility of health services by improving its other wise poor quality.
This article tries to explore the problems t h a t come in the way of
successful implementation of the fee by taking examples from various
countries where it was introduced. This is mainly done with a view of
drawing lessons for the successful implementation of the fee from these
country experiences. This has been done through a review of various
empirical studies on the subject, which were published in various
national and international journals of public health. For the sake of
convenience, I have restricted myself to six African and Asian
countries, namely: Zimbabwe, Ghana, and Kenya from Sub-Saharan
Africa and China, Cambodia and India from Asia. The article
specifically looks into the context in which the fee was introduced in
these countries, the revenue generated from it, the effectiveness of the
fee in improving the quality of health care, and its implications on
equity and health status of the population.
Before going into the cross-country experiences, it would be useful to
understand the contextual background in which the fee was introduced
in these countries and some issues related to its implementation.
Contextual Background
The policy for levying user fee h a s arisen in the context of a crisis in
health service financing (Mcpake, 1993). Globally, the demands for

User Fee in Public Health Institutions 397
health services were multiplying as a result of population growth,
changing preferences and attitudes in many areas, and the appearance
of new problems like HIV/AIDS and many other associated conditions.
However, the capacity of the developing countries to meet these
demands was shrinking due to the ongoing economic crisis. The genesis
of this economic crisis can be attributed to the rise in the price of oil
declared by the Organisation of Petroleum Exporting Countries, in
1973 and in 1979, forcing countries to take loans at high rates of
interest to import. The situation was worsened by the world economic
recession (Andrews and Mohan, 2002). It was at this point t h a t the
international financial institutions like the World Bank and the IMF
stepped in to help these nations come out of the debt trap by offering
loans (Rao and Lewenson, 1997) on the condition t h a t they accept the
Structural Adjustment Programme (SAP) — a set of policies for
restructuring their economy. Under SAP, these countries were
suggested to cut their spending on welfare sectors like health and
education. This led to a dramatic decline in public health spending,
which in t u r n severely affected the health sector. Health care
institutions lacked drugs and necessary equipment and the health
workers were underpaid, due to which they were poorly motivated to
provide services (Mcpake, 1993). To resolve the ongoing crisis of the
health sector and to generate alternative sources of financing, a series
of reforms were suggested by the World Bank and the IMF. An
immediate solution, which formed a p a r t of the reform package, was the
introduction of user fee in public health institutions, which was
supposed to be paid by all sectors of the society.
USER FEE: SOME ISSUES IN ITS IMPLEMENTATION
Exemption
When the fee was introduced, all segments of the society were required
to pay it. However, soon after its implementation it was realised t h a t
the introduction of the fee greatly reduced the accessibility of health
services, especially for the poor. Studies done by Creese (1991), Mcpake
(1993), and Gilson (1997) strongly support this view. The poor who
earlier received services free of cost were not willing to pay for the
same. They delayed seeking care and used self-medication and
informal sources of care (Booth and others, 1995; Casor and Sans,
1996), as a result of which their health status deteriorated. Several
studies done in sub-Saharan Africa support this view.
Hence, the official policy in many countries suggested exempting the
poor. However, the planning and implementation of exemption has
been very difficult. In practice, exemption mechanisms are often
ineffective and fail to protect the poor (Creese, 1991; Gilson, 1997). The
major failure t h a t occurs in exemption is targeting which consists of
limiting the inclusion and exclusion error (Willis and Leighton, 1995).

398 Saman Afroz
However, the exemption mechanism in most developing countries
suffers from these errors. The rich are excluded and the poor are
included to pay the fee. This happens because, very often, the
influential sections use political and social clout to get free t r e a t m e n t
even when they can afford to pay (Baru, 2001). As observed by Burgess
and Stern (1991):
targeting of public services to the poor is beset with many problems
namely mechanisms of identification and delivery of services to the
non needy who have the political power to force the effective and
sustained implementation of any given scheme.
Another factor t h a t leads to the inefficient exemption mechanism is
the dilemma faced by health workers as to whether they should exclude
a patient when including him/her means an addition to their income
and strengthening of the otherwise poor health infrastructure
(Hardeman, Van Damme, Van Pelt, Por, Kimvan and Meessen, 2004).
Besides health workers often do not have the expertise or time to
objectively assess the patient's ability to pay (Huber, 1993). A
purchasing body or a third party payer which is able to identify the poor
and to pay on their behalf may be a good solution to this problem
(Nyonatar and Kutzin, 1999). Hence, most of the countries contract a
local non-government organisation (NGO) or a private body to identify
the poor and collect fee from the non-poor. However, the management
cost of these private bodies can consume a substantial chunk of the
revenue generated with very little amount left for any improvement in
the quality of services (Gilson and Mills, 1995; Wanter, 1995).
Revenue Generation
A major factor t h a t prevents user fee in achieving its objective of equity
and quality is the poor revenue generated from the fee. Revenue
generation varies over time, sometimes increasing due to improved
implementation practices but also failing as a result of inflation or
problems such as economic recession (Leightonm, 1995). It also varies
across nations; in most of the countries revenue generation is poor and
hardly near the expected targets (for example, Zimbabwe and India),
while in some other countries sufficient amount of money h a s been
raised from the fee (for example, Ghana and Kenya). The differential in
revenue generation across some African countries is depicted in Table
1.
Vogel explained these differentials in revenue generations across
countries by attributing it to excessive exemption and poor
administrative machinery (Mcpake, 1993). In his study of four West
African countries, Vogel observed striking differences between
amounts of revenue generated by a weak administrator and those by a
strong one (Mcpake, 1993). He, thus, concluded t h a t revenue
generation depends on the administrative mechanism. Other factors

User Fee in Public Health Institutions 399
leading to poor revenue generation are lack of motivation of health
workers in collecting the revenue and unwillingness of the people to pay
the fee. Revenue generation also depends upon the exemption
mechanism. If large numbers of people are exempted from paying the
fee then it would naturally affect the revenue generated. According to a
World Health Organisation report on sub-Saharan Africa, 'low fee and
low exemptions can raise more revenue t h a n high fee and high
exemption' (Bennett and Ngalande-Banda, 1994).
TABLE 1: Revenue from User Charges as a Percentage of Recurrent
Government Expenditures on Health in Selected African Countries
Country
Percentage Country
Percentage
Botswana
Malawi
1979
1.3
1983
3.3
1983
2.8
Burkina Faso
Mali
1981
0.5
1986
2.7
Burundi
Mauritania
1982
4.0
1986
2.7
Cote d'lvorie
Mozambique
1986
3.1
1985
8.0
1993
7.2
Ethiopia
Rwanda
1982
12.0
1984
7.0
mid-1980s
15.0-20.0
Ghana
Senegal
1984
5.2
1986
4.7
1987
12.1
Kenya
Swaziland
1984
2.0
1984
2.1
Lesotho
Zimbabwe
1984
5.7
1986
2.2
1991/92
9.0
1991/92
2.2-3.5
Source: Nolan and Turbat (1993), Vogel (1988), World Bank (1994), Shaw and
Griffin (1995): all cited from Quadeer, Sen and Nayar (2001).
Quality
In countries where revenue generation is poor, the fee can hardly
contribute any thing towards improvement of the quality of health care
(Here quality refers to the infrastructure, drug supply, equipment,
motivated and well-paid health staff, and so on). But experience in sub-
S a h a r a n countries show t h a t even a small amount of income generated
from the revenue can contribute significantly in quality improvements
if utilised properly. It's mainly on the basis of the experience of these
countries t h a t Creese (1991) made the observation that, 'fee income if
appropriately used represents small but significant additional resource

400 Saman Afroz
for health care'. In many other countries like India, the revenue
generated from the fee has not been utilised properly and thus has
hardly made any significant contributions to the quality.
Accessibility
The quality of health care is directly linked to its utilisation. Studies in
some South African countries have shown an increase in the utilisation
of health care, particularly by those belonging to the low income groups,
after the improvement in quality by revenue generated from the fee
(Audibert and Mathonat, 2000; Litvack and Bodart, 1993). However, in
many cases utilisation decreased significantly after the fee was
introduced, which affected the poor in particular (Creese, 1991). Thus,
the impact of user fee on equity has been a subject of major debate.
While some believe t h a t it is a means of charging the poor for poor
services (Prasad, 1998), which makes them avoid seeking health care;
some others believe t h a t if implemented properly with proper
exemption mechanism, user fee can be a means of improving the
quality and accessibility of health care targeted at the poor by collecting
revenues from those who can afford to pay (Creese, 1991).
Thus, low revenue generation and poor exemption mechanism which
in turn leads to poor quality and reduced accessibility of health services
act as major hindrances in the fulfilment of the objectives for which the
fee was originally introduced across nations. The rest of the article
focuses on exploring the above-mentioned issues in the successful
implementation of the fee by specifically looking into the experiences of
six countries namely Zimbabwe, Ghana, and Kenya from Africa and
China, Cambodia and India from Asia.
USER FEE IN AFRICAN COUNTRIES
Many countries in Africa have a long history of user fees for public
health services. Almost all the sub-Saharan countries implemented
user fee in the health sector, especially after the launch of Bamako
initiative in 1987, to meet the acute shortage of commodities in health
care institutions due to decrease in the government spending on health.
The strong internal and external pressures to introduce the fee and
weak civic opposition led to the easy introduction of the fees in these
countries (Andrews and Mohan, 2002). Studies show t h a t the
introduction of user fee in these poverty-stricken countries had
damaging repercussions for the health of the population. The already
poor health of the population further deteriorated due to the reduced
accessibility to health services. According to these studies, with the
introduction of health sector reform, the incidence of communicable
diseases like malaria, diphtheria, tuberculosis, and cholera showed a
resurgence and health indicators such as Infant Mortality Rate and
Maternal Mortality Rate showed a reverse trend. User fee was an

User Fee in Public Health Institutions 401
integral p a r t of the SAP in Zimbabwe, Ghana, Kenya, Zaire and many
other sub-Saharan countries.
Zimbabwe
In Zimbabwe, user fee was introduced in 1992 as a result of the
suggestion of the World Bank and the IMF to cope with the declining
government expenditure on health. The government expenditure on
health fell by 14 per cent between 1990 and 1992, and by a further 29
per cent in the following year. The Government of Zimbabwe set the fee
well below the cost recovery level in view of the sentiments of the
people. Revenue generation has been less successful in Zimbabwe with
a cost recovery level of a mere 3.5 per cent. This may be due to low fee
charges and a weak billing and collection system. Fee revenue was not
used to improve the quality, but was only used to sustain the services.
As the user fee did not contribute to the quality of services, the
utilisation level of public health services decreased by 50 per cent. The
worst-affected were the r u r a l poor and other vulnerable sections of the
society like tribals, women, children, and so on. This can be best
depicted from the fact t h a t the utilisation patterns declined most
significantly for ante-natal care and length of stay in the maternity
wards. Patients, in many cases, refused certain investigations
recommended by physicians in an effort to reduce hospital bills. On
many occasions, drug consumption went down. In due course, when the
illness became more severe, patients had no choice but to go for more
expensive medical care, which led to further impoverishment of the
poor households (Andrews and Mohan, 2002). Thus, the introduction of
user fee in Zimbabwe at the time of deep financial crisis and h u m a n
resource constraints failed to achieve its targets of efficiency,
sustainability and equity.
Ghana
In Ghana, SAP was introduced in the early 1980s and the user fee
policy was included in the mid-1980s. The real government health
spending in the early 1980s was only 20 per cent of t h a t in the 1970s.
Thus, doctors and managers advocated user fee to maintain
professional expectations of service standards. There was also an
impetus from the Ministry of Health for a radical revision of fees to
overcome the shortage of commodities in the health sector due to the
financial crisis. The shortage of foreign exchange was such t h a t no
drugs or medical supplies were imported for an entire year. The
government succumbed to pressure from the Ministry of Finance and
health managers and medical professionals and finally increased the
fees in 1985. The policy to introduce user fee was not opposed as people
were already paying informal charges at government facilities.
In Ghana, the policy was quite successful in generating additional
funds. The country was able to achieve the cost recovery figure well

402 Soman Afroz
above the average 5 per cent attested in several African countries. It
attained a maximum of 12.4 per cent in 1987 and as high as 20 per cent
from two main hospitals. The introduction of cash and carry system
where health staff could use the fee revenue to purchase more drugs so
as to improve the quality of care, increased the national recovery
system, which ensured better drug availability and thus better quality
of care. In spite of the improvement in the quality of care, the
introduction of the user fee led to a 50 per cent drop in the out patient
attendance (Nyonatar and Kutzin, 1999). Thus, Ghana's experience
show t h a t the accessibility of care does not depend up on its quality;
rather, it is dependent on an individual's ability to pay. A study showed
t h a t only 27 per cent of people injured in road crashes used hospital
services, the inability to pay user fee was found to be the most apparent
reason for this.
Kenya
Kenya's first attempt with user fee was in 1989. Here also, the
introduction of fee was driven by h a r s h economic conditions. It was a
hasty process, which lacked a strategy and allowed no time for staff
training or testing of systems, as had been the case with Zimbabwe and
Ghana. As a result of this, implementation problems and policy failures
arose. Cost recovery level was similar to t h a t of Zimbabwe (about 3 per
cent) and there was no improvement in the quality of services. In
Kenya, too, the number of out patient visits declined by about 40 per
cent despite the fact t h a t the user fee was small. It was found t h a t there
was a large decline in the demand in treatment for sexually
transmitted diseases (Andrews and Mohan, 2002; Huber, 1993).
USER FEE IN ASIAN COUNTRIES
User fee h a s been introduced in lesser number of Asian countries t h a n
African mainly because of the resistances at various levels.
Cambodia
User fee was officially introduced in Cambodia in 1997 under the
National Charter of Health Financing to generate extra finances for the
health sector, which was under crisis. The revenue generated from the
fee was used to improve the quality of care and to raise the salary of the
health workers. Though the revenue generated from the fee was used to
improve the quality of care, it severely reduced the accessibility by the
poor. To help the poor meet the expenditure of health care, a health
equity fund was created by the Ministry of Health and UNICEF. The
management of the fund was done by local NGOs working in different
districts. These NGOs identified the poor and paid on their behalf. Out
of the total cost for running a hospital in Sotnikum district of
Cambodia, 62 per cent was funded by the state, 21 per cent through

User Fee in Public Health Institutions 403
user fee, and 17 per cent by external parties (Hardeman and others,
2004).
China
User fee existed in China prior to the formation of the People's Republic
of China in 1949. Afterwards, cooperative medical system prevailed
until the advent of economic transformation (market socialism) in the
1980s. The collective payment system gave way to individual user fee.
In China, the government pays only a small proportion (10-20 per cent)
of the actual expenses of the health care system. The rest comes from
private pockets. User fee is high in China and recovery is around 30 per
cent. It is levied for both curative and preventive care. Tuberculosis is
the leading cause of mortality in China and the introduction of user fee
has had an adverse impact for tuberculosis control programme. It has
prevented patients from being diagnosed early and getting treatment.
The introduction of user fee has undermined China's achievement of
controlling tuberculosis during the 1960s and 1970s (Andrews and
Mohan, 2002).
India
The history of user fee in India predates the SAPs. Due to the severe
opposition from various lobbies, the fee was introduced in some
selective states like Andhra Pradesh, Karnataka, Punjab, West Bengal,
Rajasthan and Haryana in the 1980s. With the introduction of SAP, the
budgetary allocation on health dropped to 0.9 per cent of the Gross
Domestic Product (GDP) in 1991 after an increase of 1.3 per cent in
1986. To cope with the shrinking budget on health, the state health
development project of the 1990s proposed to implement the existing
legal charges more rigorously (Baru, 2001). Hence, states like
Maharashtra, Assam, Kerala, Madhya Pradesh, Orissa and Uttar
Pradesh also introduced the fee in the 1990s.
In Andhra Pradesh user fee was introduced in 1998. With the
introduction of the fee, patients were required to pay for medical
services in public hospitals, and also purchase drugs from outside.
Recent attempt to hike the fee has met with opposition from various
quarters (Prasad, 1998).
M a h a r a s h t r a began the World Bank-funded health sector reform in
1999 and increased the user fee substantially in 2000. However,
revenue generated from the fee is not being used and is merely adding
to the state's resources. Despite paying user fee, patients did not get the
required drugs, equipment were malfunctioning and diagnostic tests
were prescribed to be done privately. Besides, the maintenance of
hospitals was also very poor (Duggal, 2003).
In Kerala, which has some of the best health outcomes, user fee was
introduced in the end of 1980s. Money was collected at the health
facility level for various services but it accumulated in a local account

404 Saman Afroz
without being used. So the Government of Kerala banned the fee in
1992, as it felt t h a t the fee was charging the poor for poor services
(Duggal, 2003). Recently, an attempt was made to roll back the fee but
it has met with serious resistances from various quarters (Andrews and
Mohan, 2002).
Rajasthan is the only state in India where the experience of user fee
has been a positive one. According to a report by the Ministry of Health
and Family Welfare (India: 2000), user fee which was introduced in the
state in the 1980s has been successful in generating an average of
10-15 per cent of the hospital budget. Rajasthan's success of user fee.
can mainly be attributed to a systematic administrative mechanism
(Mangal, 2002).
However, a strong administrative mechanism doesn't ensure
effective cost recovery in all the cases. In Maharashtra, in spite of the
strong administrative mechanism, a number of social groups were
exempted from being charged for the fee mainly due to the political and
social clout used by them. This included those with monthly income of
less t h a n Rupees 180, civil servants and their families, medical and
nursing staff, and medical students. Despite detailed administrative
guidelines, hospitals collected less t h a n 1 per cent of its running costs in
1984-1985 (Griffin, 1992). So Mcpakes' assumption t h a t effective
administration ensures better revenue collection does not hold true for
Maharashtra.
TABLE 2: Implementation of Cost Recovery in Various States.
State
Structure
Services Charged
Excess Funds
Andhra Pradesh
Quasi-Official
Funds deposited in
Advisory
Government
committees
treasury
attached to health
institutions and
hospital
development
societies in tertiary
hospitals
Orissa
District Societies
Diagnostic
Retained by the
services; Private
Health institutions
wards
Rajasthan
Hospital-based
Out-patient
Retained by the
Societies
department (OPD); health institutions
in-patient,
Registration;
Diagnostic
services; Private
wards
Madhya Pradesh
Roji Kalyan Samiti
-
Retained by the
Health institutions

User Fee in Public Health Institutions 405
States
Structure
Services Charged
Excess Funds
Assam
Out-patient
Deposited in
department;
government
in-patient,
Treasury
Curative, and
diagnostic services
Haryana
_ . . .
Deposited in
. —
government
Treasury
Kerala
Diagnostic;
Retained by the
surgery; In-patient Health Institutions
Maharashtra
Out-patient
Retained by the
department;
Health institutions
in-patient
Registration;
diagnostic;
surgery; meals
Uttar Pradesh
Out-patient
Retained by the
department;
Health institutions
in-patient
Registration;
diagnostic;
surgery; meals
Source: Mangal (2002).
State-wise implementation of the user fee is clearly depicted in Table
2. The average revenue generated from various states, which h a s
implemented the fee, is 3.8 per cent of the gross budget for running the
health services. However, marked difference occurs in the revenue
collection from different states. This, according to Baru (2001), is
mainly dependent on the degree of dominance of the private and public
sectors in the states.
In states where the public sector is dominant like Madhya Pradesh,
Karnataka, Orissa and West Bengal, the revenue generated from the
user fee is high. While in states where private sector is dominant like
Kerala, Andhra Pradesh and Gujarat, the rich and the middle class were
charged user fee by the public hospitals prefer to pay the same money or
little more and go to private hospitals and only the poor who are
exempted from paying the fee are left to utilise the public hospitals. As a
result the revenue generated from these states is very low (Baru, 2001).
Table 3 below shows the revenue generated from each of the 15 states in
which user fee was implemented during the period 1975 to 1989.
SUGGESTIONS FOR EFFECTIVE IMPLEMENTATION OF THE
USER FEE
Thus, experience across Asian and sub-Saharan African countries
shows t h a t the user fee was hardly able to achieve its targets of

406 Saman Afroz
improving the quality of health services and thus its accessibility.
Instead, it further made health care out of reach for the poor. While
many public health practitioners are fully convinced by this view and
oppose its existence, there is a lobby t h a t strongly supports the fee and
believes t h a t it can become an effective devise of health financing and
can help the poor get better quality health care, provided its
implementation is proper. Experience from the state of Rajasthan
where the fee has been highly successful in fulfilling its targets also
suggests the same.
These proponents of the fee have outlined suggestions for effective
implementation of the fee. According to them, in order to enable the
consumers pay the fee, the fee amount should be set by assessing the
consumer's willingness and ability to pay. The fee structure should be
simple and in accordance to the t r e a t m e n t received, for example,
prescription fee (Bennet and Ngalande-Banda, 1994; Gilson and Mills,
1995).
TABLE 3: Cost Recovery in Medical and Public Health Services (Non-ESIS)
in Percentage
States
1975-76
1980-81
1984-85
1988-89
Average
15 major states
6.4
4.1
3.04
1.6
3.8
Andhra Pradesh
2.9
3.4
3.8
0.8
2.7
Assam
3.9
3.5
_
1.6
2.2
Bihar
17.0
8.5
3.3
_
7.2
Gujarat
3.7
5.0
1.9
2.6
3.3
Haryana
6.4
3.9
7.7
1.5
4.9
Karnataka
11.0
3.2
2.7
6.6
5.9
Kerala
3.8
4.1
3.7
1.6
3.3
Madhya Pradesh
4.9
2.4
6.4
2.4
4.0
Maharashtra
12.9
3.5
1.7
1.7
5.0
Orissa
2.6
3.0
4.3
1.1
2.8
Punjab
15.6
5.6
4.3
5.4
7.7
Rajasthan
4.0
3.9
2.5
0.8
2.8
Tamil Nadu
4.0
3.9
2.5
0.8
2.8
Uttar Pradesh
5.3
1.9
1.3
0.5
2.3
West Bengal
2.2
2.1
2.1
0.8
1.4
Source: Tulsidhar (1992), cited in Quadeer and others (2001).
As mentioned in the earlier sections, one of the frequently faced
problems in the successful implementation of the fee is t h a t of
exemption. Exemption mechanisms are often faulty and are even
costlier t h a n the revenue generated from the fee which prevents
generation of any surplus. This can be overcome by setting simple and

User Fee in Public Health Institutions 407
efficient exemption mechanism, the administrative cost of which
should be low. The cost of administration of the exemption mechanism
should always be less t h a n the funds generated from the fee. Another
problem which prevents successful utilisation of the fee is the lack of set
guidelines for using the fee revenue. Hence, fixed guidelines and
procedures for effective utilisation of fee revenue for quality
improvements should be set. Also, institutions collecting the fee should
be authorised to use the funds without referring them to the state
government. This would motivate the local health staff to collect the
funds. Revenue generated from the fee can be enhanced by giving
incentives to the health workers. This again would motivate them for
fund collection. Hence, in order to enhance the effectiveness of user fee,
all systems for setting the fee, accounting and auditing procedures,
purchase procedures, exemption mechanism and the decision-making
process should be well stated. As Mangal (2002) says, 'Accountability
and transparency in collection and utilization of user fee for improving
the quality of care are hallmarks of any successful interventions'.
CONCLUSION
Thus, the review of literature shows t h a t the experience of user fee
across countries has not been a positive one. The theoretical benefits of
the fee were not realised because of the problems in implementation.
The above mentioned suggestions for effective implementation of the
fee were hardly put into practice in any of the countries mentioned in
the paper. An experience across the six countries clearly shows t h a t the
fee was hardly successful in achieving its objectives of equity,
efficiency, effectiveness and sustainability and thus defied the
principles of public health as well.
Revenue generated from the fee was very low in most of the countries
(Zimbabwe, Ghana, and India) which prevented any marked
improvement in the quality of care. This, in turn, deteriorated the
accessibility of care by people in general and poor in particular. Even in
countries where the revenue generation was good and there was
improvement in the quality of services, accessibility remained poor
(Kenya and Cambodia). This shows t h a t accessibility of services has
very little to do with quality and is totally guided by affordability.
Therefore, the assumption t h a t user fee will improve the quality of care
and thus improve the accessibility was proved wrong from the
experience of these two countries. It was found in almost all the
countries t h a t the introduction of fee further deteriorated the health
status of population as it affected the accessibility to health services.
Thus user fee, which was actually meant to benefit public health by
improving financial sustainability and shared the similar objectives as
t h a t of public health, resulted in becoming a t h r e a t to it in practice.
An experience of the fee across the above-mentioned nations raises
some question on the very existence of the fee. If the revenue generated

408 Saman Afroz
from t h e fee is so low and if it h a s such damaging repercussions for the
accessibility of h e a l t h care — especially for the poor — then why does
the fee still exist in these countries? Why does the state rely on such
faulty mechanisms of financing for health, which is further
deteriorating the health of the population? Is it actually lacking funds
or is it r u n n i n g away from its responsibility of providing free, basic
health care for which it h a d earlier committed to?
In the Indian context, when the government can spend one-fourth of
it's GDP on projects like linking of rivers t h e n why can't it increase the
budgetary allocation on health? Why does h e a l t h still comes last in the
list of priorities for the government? Has it forgotten the earlier
commitments made in the constitution and the Alma Atta Conference?
Is it merely because of the pressures of the international agencies like
the World Bank and the IMF or is it something else? Why are we still
talking about implementing the fee in a better fashion a n d not
removing it? Isn't the experience of the above-mentioned countries
enough for us to draw lessons from?
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