Consumer‐led demand side financing in health and education and its relevance for low and middle income countries

Abstract

There is increasing awareness that supply subsidies for health and education services often fail to benefit those that are most vulnerable in a community. This recognition has led to a growing interest in and experimentation with, consumer-led demand side financing systems (CL-DSF). These mechanisms place purchasing power in the hands of consumers to spend on specific services at accredited facilities. International evidence in education and health sectors suggest a limited success of CL-DSF in raising the consumption of key services amongst priority groups. There is also some evidence that vouchers can be used to improve targeting of vulnerable groups. There is very little positive evidence on the effect of CL-DSF on service quality as a consequence of greater competition. Location of services relative to population means that areas with more provider choice, particularly in the private sector, tend to be dominated by higher and middle-income households. Extending CL-DSF in low-income countries requires the development of capacity in administering these financing schemes and also accrediting providers. Schemes could focus primarily on fixed packages of key services aimed at easily identifiable groups. Piloting and robust evaluation is required to fill the evidence gap on the impact of these mechanisms. Extending demand financing to less predictable services, such as hospital coverage for the population, is likely to require the development of a voucher scheme to purchase insurance. This suggests an already developed insurance market and is unlikely to be appropriate in most low-income countries for some time.

Can social capital help explain enrolment (or lack thereof) in community-based health insurance? Results of an exploratory mixed methods study from Senegal

“…However, research from West Africa (Porter & Lyon, 2006) finds that channelling external development funds through groups and associations (such as CBHI) often fails to include the poorest and most vulnerable and incurs social costs such as peer pressure and loss of trust, suggesting that overturning established social hierarchies through CBHI subsidies could be difficult to achieve in practice. Therefore, echoing previous analyses of marketoriented health sector reforms (Bennett S, McPake B, & A., 1997) and consumer-led financing (Ensor, 2004), it is likely that alternative or complementary public sector and/or supply-side financing policies are needed. These may include direct and indirect tax-based funding (Mills et al, 2012) and broader social protection policies integrated into government systems of social welfare (Devereux & White, 2010).…”

Effective financing of maternal health services: A review of the literature

“…This has led to an increasing interest in demand side funding either through subsidised insurance (such as the Bolivia MCH scheme) or through the provision of vouchers or coupons that individuals can exchange for services with government and non-government providers. Experience of vouchers in the health sector is still relatively scarce although positive experience is reported in countries as diverse as Mexico, Nicaragua, Tanzania and China [61]. Vouchers for maternal health care have already been used to target the poor in the Yunnan province of China and parts of Indonesia [62].…”

Vouchers as demand side financing instruments for health care: A review of the Bangladesh maternal voucher scheme

“…Vouchers, 1 a key demand side instrument, can potentially address a number of public policy issues including the underutilisation of essential services (changing consumer behaviour), improving targeting of public subsidies to the needy (linking demand to supply), empowering consumers by providing a choice of providers (freedom of choice) and promoting provider competition and responsiveness (changing provider behaviour) and thus leading to improved quality of health care services. Vouchers have been or are being introduced in a variety of low income countries including Nicaragua, Kenya, Uganda, Tanzania, Cambodia and Bangladesh [4]. While this evidence shows some impact on the consumption of key services amongst priority groups there is far less positive evidence on the effect on service quality as a consequence of greater competition [4].…”

“…Vouchers have been or are being introduced in a variety of low income countries including Nicaragua, Kenya, Uganda, Tanzania, Cambodia and Bangladesh [4]. While this evidence shows some impact on the consumption of key services amongst priority groups there is far less positive evidence on the effect on service quality as a consequence of greater competition [4]. In high income countries vouchers have been used extensively in the education sector to extend school choice [5].…”