With economic freedom and equitable services, consumers can express their opinions and wants by purchasing certain services. While this works in many sectors, it has scarcely functioned in the health care sector because health services are generally not equitably available and are rarely inexpensive. However, depending on the method of financing, healthcare can be more or less affordable. In most high-income countries, healthcare is funded by a variety of financers, including the private sector and the government. However in low-income countries, patients generally finance healthcare by paying out of pocket. Different methods have been used to supplement the large out-of-pocket expenses faced by most poor populations in low-income countries, including the institution of user fees, the use of international aid funds, and the addition of private sector funding. However, none of these methods has substantially reduced the large financial impact of out-of-pocket expenses on individual households. Consequently, individual households have sought other means of financing healthcare costs including selling assets and borrowing money.
Many countries have attempted to use international aid in order to finance the health sector and health care (Forsberg, Montagu, & Sundewall, 2011) While this method of financing provides immediate supplementation for high costs, it is not sustainable. Consequently, the possible inclusion of private supplemental funding in low-income countries may improve both the access to and affordability of healthcare. With private funding, dependence on international foreign aid could be avoided because private funding would provide consistency while aid is unpredictable and constantly changing. Additionally, private funding eliminates the need for user fees or out-of-pocket payments because it should provide enough funds to not require additional revenue. However, private funding may not be feasible for low income countries because it requires regulations and evaluation. Because the private sector works for profit, research shows that patients are taken advantage of in order to increase revenue. For example, patients attending private clinics are more likely to receive more drug prescriptions than those who attend public clinics. Thus, low-income countries would require a government to manage and assess the private sector. Unfortunately, many governments in most low-income countries do not have the infrastructure to broadly regulate and control a specific market.
User fees are another method previously used to raise revenue for healthcare (Yates, 2009). While research shows that user fees do raise revenue for healthcare it also shows that additional use of health services is not equal across income groups. Ideally, user fees would raise enough revenue to improve quality and availability of care which would increase the use of care by all individuals, including poor and rich populations. The institution of user fees has shown to actually reduce the use of services for the poorest populations. Many countries have attempted to avoid this affect by providing exemptions from user fees for poor individuals. However, these exemptions have not been executed effectively and many poor individuals are still required to pay a fee for services. Additionally, very high transport and opportunity costs for poor populations prevent use of services regardless of exemption from user fees.
Because of the consistently high costs of health services, regardless of the use of international aid, private sector funds, or user fees, poor populations have to pay for services out-of-pocket. Clearly, the size of these payments targets poor populations and has led to different methods of financing, including selling assets and borrowing money from family members (Leive & Xu, 2008). These are the two most used options for many households because micro-credit and informal or formal credit networks are not available for supplement financing. Although these payments are already large, they additionally affect the livelihood of poor households because individuals lose money from the inability to work and for other expenses, such as food and education. Moreover, many of these healthcare expenses are unexpected which cyclically causes poverty.
Unique and innovative ways of financing healthcare must be established to allow for economic democracy, such that consumers can express their wants by having the ability to or not to purchase services (Easterly, October 6, 2011). Obviously, the international community has been ineffective in providing consumers with this power thus the ideas and innovation must come from the countries themselves.
Easterly, W (2011, October). Solutions to Poverty vs. Rights for the Poor. Grand rounds presentation at the Weill Cornell Global Health Grand Rounds, New York, NY.
Forsberg, B.C., Montagu, D., & Sundewall. (2011). Moving towards in-depth knowledge on the private health sector in low- and middle-income countries. Health Policy and Planning, 26, 11-13.
Leive, A., & Xu, K. (2008). Coping with out-of-pocket health payments: Empirical evidence from 15 African countries. Bulletin of the World Health Organization, 86 (11), 849-856.
Yates, R. (2009). Universal health care and the removal of user fees. The Lancet, 373, 2078-2081.