The impact of financing and quality changes on health care demand in Niger

Abstract

This paper assesses the demand effects of a cost recovery and quality improvement pilot study conducted in Niger in 1993. Direct user charges and indirect insurance payments were implemented in government health care facilities in different parts of the country, and were preceded or accompanied by quality changes in these facilities. Decision-making by patients is modelled as a three-stage process of reporting an illness, seeking treatment and choice of provider; and multinomial nested logit techniques are used to estimate the parameters of the decision-tree. Overall, the results give a reasonably favourable impression of the policy changes. In neither case is there evidence of serious reductions in access or increases in cost. Particularly notable is that despite an increase in formal user charges, the observed decline in rates of visits is statistically insignificant, suggesting the success of measures to improve quality of health care in public facilities. The observed increase in the probability of formal visits in the district with indirect payments is also striking. Both contrast with the control region of Illela, where neither user charges were introduced nor were any efforts made to improve quality. The data suggest that higher utilization of formal care, probably due to improvements in quality, outweighed the decrease in utilization that may have come about due to introduction of cost recovery, so that the net effect of the policy changes was an increase in utilization. Quality considerations appear to be important in ensuring the long-term success of cost sharing.