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How the Ethiopian health care system and the implementation of an increased user fee for health services in governmental health institutions

Essay Topic: ,


1. Dinition of User Fee

User fee health care defined as the mandatory and voluntary levies imposed on a person for consumption of goods or services in governmental or private health institution .In other words it is the amount of money levied on individuals for the use of goods and services from which they receive special benefits (Duff, 2004).

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2. Aim of the Essay

The aim of the essay is to show briefly the Ethiopian health care system and the implementation of an increased user fee for health services in governmental health institutions. The secondly, I will mention some points in the importance negative and positive effect of user for Ethiopian health care. Finally, I will mention some recommendation that the Ethiopian government should incorporate in the national health care plan of the country.

Back ground Information
Global History

The Private or voluntary health insurance first started in Europe in the early eighteenth century. In the nineteenth century, private insurance had expanded throughout Europe and spread to North and South America. The social or compulsory insurance was introduced in Germany for industrial workers in 1883, building on the existing voluntary procedures coverage was later extended to family members, their employees and pensioners. Payroll –based social insurance system developed steadily in Europe, and later in Latin America and Asia. The current health finance system in African countries highly related to the health care finance system of colonizing country in the past.

Epidemiological health transition from communicable disease to non-communicable disease, 56% of all deaths in the world was from non-communicable disease. These are unevenly distributed among different social classes. None communicable disease was account for 34% of the deaths in the poorest 20% of the world population as compared to 85% among the richest. This indicates that inexpensive effective interventions against communicable diseases still have a high priority in improving the health of the poor.

Recessions: the negative effect of structural adjustment program , rising international debts resulted in severe resource shortage for health care systems in many low-income countries in late 1989(Yates 2009), public budget cut , decline in quality and quantity of health care , underpayment of staff and patient dissatisfaction. Prevalence of malnutrition increased in most developing countries and infant mortality rise despite steady improvement during the previous decade (Stewart 1989).

In 1987 UNICEF and WHO launched the Bamako initiative , a strategy aimed to improve maternal health and reduce infant mortality in low income countries through a re-organization of primary health care system and drug distribution (Kanji 1989). World Bank in 1987 financing health service in developing countries: Agenda for reform which is based on introduction of user fee to cover 20% of health expenditure. The revenue will be used to improve health service, as a means of additional revenue generation, to reduce unnecessary demand , to increase peoples responsibility for their health and to increase rural health care for marginalized population by the revenue.

3. Ethiopia background


Ethiopia is one of the least developed countries in the world with low developmental indicators even the least from in sub-Saharan countries. Ethiopia is 171th out of 182 countries in the world with a value of 0.414 human development indexes which is a composite measure of three dimensions of human developmental indicators: life expectancy, education and GDP per capita. According to 2009 UNDP estimate, 44.2 percent of the population lives below the poverty line of under $1.25 per capita per day (UNDP 2009). The number of people living under poverty is expected to rise due the progressive global economic crisis and the country`s increasing population growth. Ethiopia has the worst health outcomes in the world with high under 5-mortality with a value of 166 per 1.000 and maternal mortality rates with a value of 850 per 100,000 (WHO 2009).

User fee in Ethiopia

Ethiopia health care has been predominantly public until recently with the change in the political policy of the country as democratic and free market. Currently almost half of the health care institutions are privately owned hospital and clinics. Until recently the cost of health care user fee in governmental institutions from out pocket was only 15% but now the cost is increased to 85% of total cost an individual health care consumption .The democratic government has under taken important steps to improve the population`s health status and to make health care more efficient and accessible for everybody. Some improvement in population health indicator such as immunization coverage and slight decline in malnutrition rates since 2006 the protection of basic services program. Nevertheless per capital public spending for health remain far below the average from sub-Saharan Africa. Insufficient equipment and a shortage of health a workers plus strong biases towards curative services and little involvement from the private sector and NGO. The condition further exacerbated by high population growth with an annual growth rate of 2.7 %( 2005-2010 , UNDP 2009). User fee at health care facility thus remain an important feature to generate resource from heavily underfunded health sector. The minister of health is currently considering national health care scheme.

Positive Argument

Ethiopia has been using user fee for health care service many decades to share the cost health care at least 15% of an individual total cost of health care. Since the last decade due to global economic inflation and lack of resources to cover the cost of public health care cost , the government increased the health care cost to 75%. This is very important to increase economic efficiency where by scarce resources are allocated to their most valuable uses both within the public sector and between the private and public sectors. The levied charge enhance the accountability of public sector , making it more responsive to differing preferences and changes in the demand for publicly provided goods and services as well as cost recovery and increased equity . The idea of benefit taxation is applied based on the principle of fairness as every payer pays only for the goods and services that they use.

A case of efficiency can be made if the revenue from user fee are channelled into provision of good quality care, increased availability of drugs , and prompt services which should mitigate the negative effects created by lack of access to quality care . Implementation of user fee has a minimal undesirable effect but these could themselves reinforce the adverse effect of user fees which is suffered by the poor. In Africa specifically, the bulk of the problem is financing health care for the poor and predominately rural dwelling. The poor are more sensitive to price changes but not to say health care should be free. In competitive market every economic agent should face their marginal cost of their action. In case health care, health care is a right, a necessity and has externality.

The use of community health insurance or prepayment schemes have been found to be viable even from experience in parts of Africa , further viable into the broader perspective of national health insurance schemes or microfinance institutions . The idea of universal coverage likely to increase access of the poor to health care most especially when cross subsidization is possible. Internal private bargain such that achievable the Coase theorem such that demand for heath care does not depend of the distribution of income. This is more related to social solidarity which is very likely to produce valuable results in the African setting.

Non-monetary access costs such as travel time are important determinants of health care choices. The geographical distribution of services may make access more difficult for some groups. The revenue can be re-invested to reduce non-monetary access costs and consequently minimize consumer’s welfare loss.

The elimination of user fee in some African countries was driven by political motivation for vote maximization (William Nordus submission).

Counter Argument

Experience in some African countries such as Uganda, user fee abruptly removed in 2001, South Africa in 1994 during the period of transition to democracy has led others similar countries such as Rwanda , Zambia , Brundi, Democratic Republic of Congo and Niger to implement similar reforms though on selected facilities or services showed increased utilization of public services and women are also likely to benefit from reduction in user fees.

The implementation of user fee may impose heavier burden on the poor who are most likely to face a higher burden of disease (Nyanator 2009 and Kutzin). It contradicts the very purpose for which public provision was intended and budgetary flexibility will be limited where revenues are ear marked to health expenditure on the publicly provided health services from which the revenue are derived . The presence of user fee can cause sustained decrease in health care service utilization by the poor and middle income family. The attitude individuals towards user fees can adversely impact on government revenue as well as their political viability.

The economic theory based on efficiency, marginal value of user fee in public must exceed private(Duff,2009). In early 1980 studies showed that price may not important determinant of demand late studies showed prices may have a significant negative impact of demand for health care especially in developing counties and on the poor. The poor are very sensitive to small changes to price even for health care . Strong link between health and poverty which could lead to medical poverty trap phenomena. The poor who already cannot afford to use private health care services due to high cost can no longer afford to use public . This leads to untreated morbidity, reduced access to health care, longer-term impoverishment and irrational drug use. Evidence further showed increased inequalities associated with user fees.

The actors of Ethiopian health care system are the World bank , WHO, UNICEF , the people, government , NGOs, , community leaders, politician and others. Ethiopian government health care has been using very low cost sharing 15% user fee for long period of time but recently due to the structural adjustment program most of the government health care units increased their user fee to 70% from the total cost. The government only covers 30% of the cost of health by covering only the salary of the health worker. All governmental health institutions charge 70% of the total individual health care cost which used as revenue to improve the quality of care and buying medical equipment and other running cost of the health institutions. The user fee in governmental health care units as expensive as the private health care cost which has maginillized the poor and rural dwelling people. The effect of user in poor society has been worse specially for mother and children as they are frequent user of the health care.


Health care financing remain a challenge in most low and middle income countries where disease burdens are high due to HIV/AIDS and rising prevalence of non-communicable diseases, scarce resources and constantly competing priority on the public budget (Gottret and Schieber 2006). Out of pocket payments for health care continue to be an important source for revenue for underfunded health system in many developing countries like Ethiopia.

Ethiopia has a long history and tradition for user fee for health services and it is in this aspect very different from most of the developing countries that introduced fees in the 1980s.Most of Ethiopian have never experienced free health care in their adult life. . User fees are seen as a financial barrier to healthcare usage, especially by poor households. Delayed or no medical care-seeking behaviours or inability to undergo the recommended hospital care due to high cost in government or private hospitals.

The government should try to encourage already existing social sickness fund system which traditional called “Eders”. In traditional Eder , the members will pay monthly fee which will used if someone lose his family by death for grief and financial stability. Sickness fund(Eder) is another type of social insurance system which is accepted and sustainable method if it is given special focus by the government in controlling how it works and expanding nationwide to protect household from impoverishment in case of major health events. Another alternative is Ethiopia should develop national health insurance system by means health tax from individual household.

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How the Ethiopian health care system and the implementation of an increased user fee for health services in governmental health institutions. (2019, Mar 17). Retrieved June 27, 2019, from https://phdessay.com/how-the-ethiopian-health-care-system-and-the-implementation-of-an-increased-user-fee-for-health-services-in-governmental-health-institutions/.