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Health Policy and Planning, Vol 13, 50-58, Copyright © 1998 by Oxford University Press

ARTICLES

User fees, self-selection and the poor in Bangladesh

S Thomas, J Killingsworth and S Acharya
Health Economics Unit, Ministry of Health and Family Welfare, Bangladesh; Maxwell Stamp PLC, UK; South-East Asia Regional Office of the World Health Organisation, India

The widespread uncontrolled introduction of user fees in any developing country is likely to have a disastrous impact on poorer patients. Furthermore, traditional targeting schemes aimed at their exemption are often expensive, difficult to administer and ineffective at reaching those in greatest need. This research study examines how user fees can raise revenue and target poorer patients, under the right market conditions, without resorting to costly targeting schemes. The authors draw their findings from case studies of cost recovery in the health and population sectors in Bangladesh.The mechanism suggested in the paper is to use self-selection. It is argued that under certain market conditions poorer patients will choose the health-care option that is appropriate to their means. They will thus identify themselves as poor without having to be selected or tested by an independent authority. This self-selection allows the relevant authorities to cross-subsidize their market choice by over-charging the non-poor in other segments of the market.
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