Healthcare Issues Related to Excess Utilization of Insurance-Based Systems and Tax-Financed Systems Free Essay Example, 3000 words

It is apparent that health care financing exclusively relies on revenue from governmental taxation. However, this form of financing has become unsustainable due to inevitable economic constrains, which is also marked by low or stagnant growth of the health care sector. Many low-income countries have third party financing covers, which cover only health care costs of a given or small part of the populace. For this reason, many governments have attempted to raise supplementary funds for the health care sector by introducing user charges (Sexton 2010). A good example of this concept is the 29 African countries that designed a national system of user fees. This is a cost-sharing scheme started by African ministers of health in 1987. This scheme focuses on inclusion of every member of a community in the participation of payment of something towards health care. The rationale for this system is to improve health services. With such deliberations, it is true to argue that low income countr ies have embraced the concept of user fee. However, a major concern has been how this concept affects developing countries. We will write a custom essay sample on Healthcare Issues Related to Excess Utilization of Insurance-Based Systems and Tax-Financed Systems or any topic specifically for you Only $17.96 $11.86/pageorder now In essence, user fee has two roles. Firstly, they generate revenue, which translates to self sustaining health programs (Nyman 2003). Nevertheless, the extent to which this can be realized depends on price elasticity and demand, and also largely on the transactions costs of collecting user fees. User fee also plays a role of rationing health services especially due to the fact that imposing a charge on services would tend to divert away potential patients who might not be able to pay or even those who chose not to pay. In fact, studies have documented that the imposition of user fee reduces the rates of health service visits. An example of this is a study of the effect of a price rise in health facilities, in Zaire where de Bethune and colleague noted a decrease in utilization after there was a sudden increase in prices. A similar observation was made by Waddington and Enyimayew (1990), whereby three years after use fees were introduced in Ghana, a substantial drop had not been reversed.