The impact of financing and quality changes on health care demand in Niger

This paper assesses the demand effects of a cost recovery and quality impro vement pilot study conducted in Niger in 1993. Direct user charges and indi rect insurance payments were implemented in government health care faciliti es in different parts of the country, and were preceded or accompanied by q uality changes in these facilities. Decision-making by patients is modelled as a three-stage process of reporting an illness, seeking treatment and ch oice of provider; and multinomial nested legit techniques are used to estim ate the parameters of the decision-tree. Overall, the results give a reason ably favourable impression of the policy changes. In neither case is there evidence of serious reductions in access or increases in cost. Particularly notable is that despite an increase in formal user charges, the observed d ecline in rates of visits is statistically insignificant, suggesting the su ccess of measures to improve quality of health care in public facilities. T he observed increase in the probability of formal visits in the district wi th indirect payments is also striking. Both contrast with the control regio n of Illela, where neither user charges were introduced nor were any effort s made to improve quality. The data suggest that higher utilization of form al care, probably due to improvements in quality, outweighed the decrease i n utilization that may have come about due to introduction of cost recovery , so that the net effect of the policy changes was an increase in utilizati on. Quality considerations appear to be important in ensuring the long-term success of cost sharing.