Health service pricing reforms in Kenya

In December 1989, the Government of Kenya implemented cost sharing reforms in a substantial portion of public health facilities. In September 1990 the Government suspended registration fees for out‐patient treatments, but reintroduced them in April 1992 after a lapse of a 20‐month period. Assesses the effects of these policy changes on demand for out‐patient services using a small data set from a rural district in central Kenya. Finds that, although medical services are inelastic with respect to user charges, cost sharing led to a significant reduction in out‐patient attendance: demand for out‐patient care declined by about 40 per cent. Consistent with this finding, suspension of registration fees in 1990 is associated with a 30 per cent increase in attendance. This increase occurred despite the retention of fees for diagnostic services. By March 1991, seven months after the suspension of fees, service demand had recovered remarkably and was only about 20 per cent below its original level. Further, finds that patients are more sensitive to fees for diagnostic services than they are to registration fees.