On Wednesday we at CGD had the pleasure of hosting Jessica Cohen for a presentation of her Brookings Working Paper authored jointly with Pascaline Dupas and entitled Free Distribution vs. Cost-Sharing: Evidence from a Malaria-Prevention Field Experiment in Kenya. This paper gives us the opportunity to continue the interesting dialogue on the role of user fees in the delivery of services to the poor that kicked off here last July with a blog on a paper by Nava Ashraf, James Berry, and Jesse Shapiro of the MIT Poverty Lab. That blog accumulated comments through the end of the year, some of which supported the selective use of user fees and some of which argued for their abolition.
Jessica's clear slide presentation, which she kindly allowed us to post, lays out the elements of their experiment (also see the useful blog on Wednesday's presentation by Abigail Keene-Babcock of the World Resources Institute).
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Supporters of the abolition of user fees will draw comfort from Cohen & Dupas' finding that demand curves slope down - poor expectant mothers are more likely to accept an offered mosquito net if the price is 10 Ksh rather than 40. Whether the mothers are more likely to accept the net at a price of zero than at a price of 10 KSh is less clear since one of the authors' estimates says "no" (Table 2, column 6 of their working paper) while another estimate says "yes" (Table 3, column 4). The authors dismiss the Table 2 estimate as due to faulty data, but I would like to see a more thorough attempt at reconciliation of the two estimates.
A more arcane but interesting finding is with regard to the "cognitive dissonance" or "sunk cost fallacy" result on which I previously blogged in the work of Ashraf et al. I have added an update on this finding to my previous blog.
The larger question still looms regarding the role of user fees not just for bed-nets, but more generally in the delivery of health care services. My discussant comments on Wednesday were entitled "User fees for health care can sometimes help the poor." My presentation makes the point that most existing public health services are of very poor quality in many if not most poor countries. The quality is so poor that it is hard to believe that consuming them is worth the effort. Perhaps that is why such a large proportion of the poor population, as well as of the less poor, use private sector alternatives.
User fees are one of a small number of instruments that the poor can wield in order to hold health care providers accountable. The suspension of these fees deprives the poor of this instrument. In the case of Madagascar, for example, a suspension of drug fees did produce a dramatic increase in visits - but it also led to a dramatic reduction in the quality of those visits - as measured by a drop in the percentage of prescriptions the clinics were able to fill. A suspension of user fees in Uganda similarly and unsurprisingly led to a dramatic increase in health care visits among the poor, but seems NOT to have reduced the frequency of catastrophic health expenses among the poor, perhaps also because the additional visits were in pursuit of out-of-stock pharmaceuticals. So user fees should not be discarded until one can demonstrate that providers and the health care systems in which they work can be held accountable in other ways.
In the specific case of mosquito nets, the findings of other researchers have clearly shown that the benefits of bed nets spill over from the user to non-users in the form of "positive externalities." These externalities provide justification for providing a greater subsidy for bed nets than for health services that only benefit the patient (see the first question in the World Bank’s 2004 algorithm for considering user fees). Thus, if one ignores the supply side of the story, one might conclude that mosquito nets should be free even if other services are not.
But then I quoted from Cohen & Dupas’ work to show how much they had to pay and supervise the government health clinics to try and keep them honest. I suggested that this was evidence that clinic-based distribution of free nets would be difficult to sustain.
Furthermore, I pointed out that the substantial health benefits Cohen & Dupas estimate from the free distribution of nets are, as they admit, dependent on the assumption that many others in the communities also use nets supplied by other programs. Some of these other programs are commercial and others resemble the subsidized but non-free delivery in their experiment. A member of the audience from Population Services International (PSI) told the seminar participants that his group had put a half million bed nets into the same population in preceding months, enough to provision the average household with 1.4 bed nets. So the Cohen & Dupas experiment may have succeeded in reaching an important vulnerable group of women and infants whom PSI had not been able to reach. But to conclude from that success that the government should cease to support the non-free modes of distribution which established the foundation for the successful experiment would seem to be folly.
We have benefited from rigorous studies of the elasticity of demand. Now what we need is equally rigorous studies of the elasticity of supply. What techniques are available for assuring that health workers go to work on time? That they are cordial to their patients? That they serve the poor and rich equally? That they manage government supplied drugs responsibly rather than selling them in their private after-hours practice? That they exert effort to provide the best possible health care? That they refrain from asking for informal payments? That they refrain from giving malaria medication when the diagnostic test is negative for malaria? What is the role of checklists and algorithms in managing government clinics? Under what conditions does competition from the private sector improve the performance of government health workers? And what is the role of user fees in health service delivery?
*If you'd like an additional chance to hear from Jessica Cohen, she will be presenting her research at Brookings on January 24, from 12:00 - 1:30 pm. For more information, please email Kristie Latulippe at klatulippe@brookings.edu, or call 202-797-6065.
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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.
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