Delivering health subsidies in developing countries

Heavily subsidising essential health products has the potential to substantially decrease child mortality in sub-Saharan Africa. However, it is an open policy question whether such subsidies can be implemented effectively. A cost-effective approach to implementing health subsidy programmes is to distribute products through existing public health facilities. However, there is widespread concern that, because public health workers are paid a fixed wage and are difficult to fire, they will fail to implement the programmes effectively.

Issues affecting the provision of public health services

A number of studies have shown that the quality of public health service provision in developing countries can be quite poor (e.g. Chaudhury et al. 2006), and that petty corruption among public servants can be high (e.g. Azeem et al. 2011). In particular, health workers may demand under-the-counter payments from eligible clients (extortion), provide the product to ineligible people (leakage), or provide poor effort generally, for example, by failing to attend work or distribute products while at work (shirking).

While there is anecdotal evidence that these issues also affect subsidised distribution schemes, causing many governments and international donors to be reluctant to even try to set them up, it is unclear what the magnitudes of these problems truly are for targeted health subsidies. Evidence on this issue is lacking, in part because measuring extortion, leakage, and shirking is challenging.

An audit of an antimalarial programme in Ghana, Kenya and Uganda

To speak to this issue, my co-authors and I audited a programme recommended by the World Health Organisation (WHO) that is currently in place in only a limited number of countries, namely Ghana, Kenya and Uganda (Dupas et al. 2017). The programme involves providing free antimalarial bed nets to those most vulnerable to malaria; specifically, pregnant women and their unborn children, via antenatal care clinics.

At the time of the study, government-led programmes were in place in Kenya and Uganda. In Ghana, there was no such government programme, so we set one up through a non-governmental organisation (NGO).

Our audit included the following checks on health centre registers:

• Can listed patients who received a bed net be found or are they “ghost” patients?
• If they are real patients, can they confirm having received a free bed net from the health centre?
• Determining the number of decoy visits: undercover male enumerators went to health centres to try to obtain nets they were not eligible for.

Results

In contrast with much of the previous evidence on service delivery in developing countries, we found relatively high performance among health workers in all three countries: 

• Coverage was high: Close to 80% of eligible women received the free net at the clinic. 76% of them received a net at their first prenatal visit, as they should have.
• Extortion was rare: Only 1.4% of eligible women were asked to pay bribes.
• Leakage was limited: Ineligible men who tried to obtain a bed net from the health facility were only successful 4.7% of the time and in most of these cases, they received them for free. Less than 10% of community members thought an ineligible person could obtain a bed net at the local prenatal centre.

Administrative records from Ghana suggest that a maximum of 14.7% of nets were leaked to ineligibles. We estimate that this level of leakage only marginally undermines the cost-effectiveness of free bed net distribution schemes, shifting the cost per life saved from $200-$662 to $234-$776. This still falls below the World Bank’s cost-effectiveness threshold of $20,000 per life saved. In fact, given how cost-effective bed net distribution is, even very high rates of leakage would still make the programme worthwhile.

Conclusion

These results contrast sharply with the previous literature on health service provision in developing countries, raising the obvious question of why the researchers find such high performance. One possible reason is that distributing bed nets to prenatal clients requires little effort. However, this is an unlikely explanation, since we found that health workers performed well on other measures unrelated to the bed net distribution programme. For example, clinics were almost never closed, and nurses spent an average of 18 minutes with patients during their visits.

The audit data suggests relatively high levels of altruism and job motivation among health workers, and we thus conjecture that they do an okay job because they care about their patients and internalise the costs of not implementing the programme well.

References

Azeem, A,  LOfori-Kwafo, E Nuvor and M A Addah (2011), Realizing the MDGs by 2015: Anti-corruption in Ghana. Ghana Integrity Initiative. Berlin, DE: Transparency International.

Chaudhury, N, J Hammer, M Kremer, K Muralidharan and F Halsey Rogers (2006), “Missing in Action: Teacher and Health Worker Absence in Developing Countries”, Journal of Economic Perspectives 20(1): 91-116.

Dizon-Ross, R, P Dupas and and J Robinson (2017), “Governance and the effectiveness of public health subsidies: Evidence from Ghana, Kenya and Uganda”, Working paper, Stanford University.

Photo credit: DFID.