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Health

User fees and abuser fees

Shanta Devarajan's picture

If user fees for health have been so vilified (including in comments on this blog), why are we bringing the subject up again?  Because new evidence calls into question the prevailing view, namely that removing user fees leads to: (i) increased use of health services and hence to (ii) improved health outcomes.  Confirming (i), the recent literature shows that (ii) does not always follow.

Principles

Raising the price of a good or service has two effects: it reduces demand and increases supply.  In the case of user fees for health, it was thought that paying for a service also makes people use it more appropriately (you don’t go to the doctor for minor ailments) and value it more than if they obtained it for free.