Is Free Care Good for Health?

February 10, 2014

A recent article shows that removing fees for health care in rural Ghana has no impact on health.  These results are strikingly similar to another recent study that found expanding the US Medicaid insurance program in Oregon also had no impact on physical health (my colleague Victoria Fan and I even wrote a similarly-titled blog about it here – Déjà vu!)

Like insurance, removing user fees reduces the direct costs of health care. But reducing the direct costs of care generally hasn’t –on its own – improved health.  Free care or insurance thus seems a necessary but not a sufficient condition for improving health outcomes.  Here’s why.

The mechanism between reduced costs of care-seeking and health status operates through increasing the utilization of health care, holding other factors constant. Since free care does increase utilization but does not have an impact on health outcomes, then there are likely many other factors at play: poor clinical quality on the provider side; poor adherence to treatment on the patient side; or other unobserved genetic or behavioral variables on both sides.

Moreover, changes in health care utilization and associated health outcomes need to be directly related to the services offered by the clinics participating in the free care scheme. In other words, changes in physical health have more to do with the scope and content of the services provided and the incentives associated with provider payment and quality oversight mechanisms – and less to do with accessibility and availability of services through free care.

Bottom line:  both insurance and free care work well for access, utilization and financial protection, and maybe peace of mind – all health system goals in their own right. But the Ghana study should limit further debate over whether insurance or free care is “better” in terms of health impact. So far, neither has had a huge health impact at the population level. And this makes sense since more access can only achieve better health if the health system is actually delivering high-quality, cost-effective health interventions and these are used appropriately by patients. 

Thanks to Victoria Fan and Jenny Ottenhoff for comments and edits.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.