Health care financing in Kenya: a simulation of welfare effects of user fees

Abstract

This paper examines the efficiency and equity effects of introducing user fees in public health facilities in Kenya. These effects are studied with the aid of a simulation technique. It is found that through their favourable effects on quality of medical services, the user fees in public clinics would yield welfare gains. However, these gains might involve unacceptable equity trade-offs. Thus, in general, the net welfare effects of user charges on medical services is ambiguous. More specifically, if the user fees were imposed across the board in government health facilities, the equity trade-offs would be large, and for that reason, the user fees would be socially and politically unacceptable. But, if the user charges are restricted to government hospitals, the attendant equity problem would not be too difficult to manage.