Vulnerable groups such as poor people and the disabled often benefit less from public health spending. Increasingly, governments are investing in consumer-led demand side financing systems (CL-DSF), whereby specific services can be obtained by vulnerable groups through the use of mechanisms such as government vouchers. There is limited evidence of the success of such schemes.

CL-DSF has the potential to encourage competition and better quality among accredited providers of services and improve the access of vulnerable groups to such services. Vouchers and other demand side financing methods have been used in the USA, Europe, and some low- and middle-income countries for a wide range of services including health, education, public housing and essential food.

A report from Oxford Policy Management in the UK examines the costs and benefits of developing CL-DSF in low-income countries. In Tanzania a discount voucher for insecticide treated bed-nets targets poor, pregnant women; in China’s Yunnan Province vouchers allow poor pregnant women free hospital services; in Mexico essential services have been extended to poor populations through cash subsidies to households conditional on using basic health and education; in India’s Andhra Pradesh, poor women are offered a financial incentive to give birth in a public or private health facility.

Though evidence is not strong, research findings include:

• CL-DSF in the health sector can increase the use of services, as in the examples above from India, Mexico, China and Tanzania.
• Such schemes can be cost-effective, as in Tanzania.
• In Nicaragua distribution of vouchers to sex workers and their clients reduced rates of syphilis and gonorrhoea.
• There is little evidence that CL-DSF has improved the quality of services.
•  In countries that have pioneered demand financing (the USA and some Latin American states) there is concern that such schemes mainly benefit higher income groups since service providers tend to work in areas with a denser, wealthier population.
• Comprehensive licensing of private providers has often been ineffective in low-income countries, where there is little incentive for providers to meet minimum standards.

The report advises low-income countries to:

• consider selective accreditation of providers able to use a voucher scheme to regulate the supply of services
• examine whether benefits can be obtained at a lower cost through some other financing option
• evaluate the costs of creating an organisation for assessing and allocating vouchers, accrediting facilities and paying providers
• realise that consumer-led financing is most likely to succeed when applied to increasing use of specific and easily identifiable services
• start pilot schemes for patients with predictable needs – pregnant women, newborn infants, those at risk from sexually transmitted diseases and sufferers of malaria, tuberculosis and other diseases that take time to treat
• be aware that providing services free of charge does not guarantee use where there are other barriers to access: for example, patients needing to attend clinics frequently will need help with transport.

Developing demand side mechanisms that go beyond the basic services will require a system of vouchers for insurance, but the rudimentary nature of insurance markets in developing countries makes it unlikely they would be able to offer competitive services.

Source(s):
‘Consumer-led demand side financing in health and education and its relevance for low and middle income countries’ by Tim Ensor, International Journal of Health Planning and Management, 19, pp267–285, September 2004

Funded by: World Health Organization

id21 Research Highlight: 15 June 2005

Further Information:
Tim Ensor
Oxford Policy Management
6 St Aldates Courtyard
38 St Aldates
Oxford OX1 1BN
UK

Tel: 44 (0) 1865 207300
Fax: 44 (0)1865 250580
Contact the contributor: tim.ensor@opml.co.uk

Oxford Policy Management, UK

Other related links:
'Understanding the 'demand side' in service delivery

'Making insecticide treated nets available to the poorest households in Nigeria'

'Improving the quality of primary health care: public and private provision'

'Competitive voucher schemes: can they improve healthcare for the poor?'

'Vouching for health: HIV prevention for sex workers in Nicaragua'