User Fees, Optimal Pricing & Upward Sloping Demand Curves in Health
One of the most controversial subjects in global health is the topic of user fees for health services and commodities. Ever since Nancy Birdsall, David de Ferranti and John Akin declined to rule out user fees as a useful source of health financing way back in 1987, the World Bank has been pilloried for "advocating user fees" in the health sector, which the Bank has never done. By setting out explicit criteria for setting user fees in the 2004 World Development Report, the Bank resisted continuing political pressure to ban them outright and further fueled the debate. Among the donors, DFID (see also this white paper) has most adamantly rejected user fees as either effective or legitimate for improving access to health care by the poor. On the other hand, the social marketing of health care commodities, from condoms to antibiotics, is increasingly popular among actors such as PSI and KfW and presumes that the optimal price of these commodities, while heavily subsidized, is not free.
The obvious argument against user fees is based on the fundamental economic proposition that demand curves slope downward* - e.g. that the number of people willing to purchase a product or service declines as its price increases. It follows that lower prices should result in more health care utilization than higher prices, and that zero prices would be even better. However, a fascinating new study by Nava Ashraf, James Berry, and Jesse Shapiro of the market for home water purification solution in Zambia finds that in fact demand curves seem to flatten out as the price approaches zero, and may even slope upward - or, in plain English, that the act of paying a small amount (up to 18 cents, in this case) actually increases use over distributing Clorin free of charge.
The authors posit two reasons why people might behave contrary to the simple law of demand. First, the price effectively targets the distribution of the health commodity to those least likely to waste it. Second, people who have paid more for a product may have a greater psychological commitment to using it. They find strong statistical support for the first of these effects and weak support for the second.
If these results could be generalized to other health commodities, like bednets to prevent malaria, or to health services such as curative health clinic visits, the suggestion would be that sufficiently small user fees do little to discourage utilization; they might even increase it by stimulating the supply of health care quantity and quality.
Condoms and their sociology have indeed come a long way in India. But their, ahem, penetration has not really gone far into rural India, where they are distributed mostly through the State AIDS Control Societies (SACS) and social marketing channels. A lot of it is wasted due to the lack of proper distribution. Many of these pieces eventually find their way to making chappals, lining hut roofs, or oiling loom shuttles (with the non-staining lubricant). Bad distribution also leads to the problem of having outdated products in circulation. Vivek Anand, CEO of Humsafar Trust, says it’s silly to expect condom users to look at “user instructions and expiry dates in the dead of the night” when you have only one thing on your mind…
We tend to forget that this is the country that started the world’s first social marketing programme with the Nirodh campaign in the mid-1960s. The government procured condoms from various companies and coerced large-network FMCG and durables companies such as ITC, Union Carbide (till the Bhopal gas tragedy), Hindustan Lever and Voltas to distribute them. When the winds of liberalisation started blowing in the early 1990s, specialised social marketing agencies like PSI, Marie Stopes, Family Planning Association of India and DKT International entered the scene, and the private sector companies kept to their own domains.
A New Weapon in the Fight Against Anaemia
A nutritional supplement known as Sprinkles, which is a simple powder that parents can easily add to their children's food, reduces childhood anaemia by more than half, according to a recent study published in the Journal of Nutrition…
Among the children who received Sprinkles mixed into their food for two months, the incidence of anaemia declined from 54 percent to 24 percent, the study found. And even seven months after the children stopped taking Sprinkles, the rate of anaemia had declined even further, to 14 percent…
The study found that the use of iron-fortified food, such as wheat-soy blend or corn-soy blend, failed to reduce anaemia among young children on its own. In fact, the incidence of anaemia actually rose among the children who received only wheat-soy blend without Sprinkles.
Ruel is confident that Sprinkles -- a dry powder containing iron, zinc, and other vitamins -- could get around the problems facing iron syrups and other anti-anaemia measures…
Since 2005, the social marketing organisation Population Services International has been marketing Sprinkles commercially in Haiti under the name "Babyfer".
Pacific People Fail to Get Health Message
The majority of Pacific people have been left untouched by the healthy-food message of eating at least five servings of fruit and vegetables a day.
A survey for the Counties Manukau District Health Board found that less than 30 per cent of Pacific people knew this was the recommended intake of fruit and vegetables - set out in the '5-plus-a-day' message…
The "baseline" survey of 2400 adults was to gather more information for the health board's five-year, $10 million Let's Beat Diabetes scheme, an ambitious campaign to help defuse the timebomb of obesity and type 2 diabetes by changing eating, drinking and physical activity habits.
Fifty-six per cent of adults are overweight or obese and the rate of obesity has doubled in the past 30 years. Among children, 31 per cent are overweight or obese, but the rate is 41 per cent among Maori children and 61 per cent for Pacific youngsters aged 5-14.
When asked if the lack of Pacific awareness of the fruit and vegetables message was a concern, public health specialist Dr Tom Robinson said, "I guess it creates an opportunity".
"Let's Beat Diabetes is a social marketing campaign. That's partly about providing knowledge so, yeah, that creates opportunities to work with Pacific and Asian people in particular to increase their knowledge about healthy eating."