Academic journal article
By Wouters, A. V.
Bulletin of the World Health Organization , Vol. 70, No. 3
In developing countries, poor economic trends and budget cuts in the health sector have forced policy-makers to consider alternative sources of funding for health activities, e.g., the imposition of user fees. Several donor agencies such as the World Bank, Unicef, WHO, and USAID (United States Agency for International Development) have launched major initiatives to investigate the potential for cost recovery (by changing for services in public facilities) in the health sector (1-3).
In order to identify new strategies for health care financing, a great deal of research in health economics has attempted to estimate the importance of financial factors as time price, cash price, travel price, and income in influencing patients' utilization of various health care providers in the less developed countries (LDCs). Conceptually, many of these health care demand studies recognize that health care services are valued for their contribution on health rather than for something in themselves. These services, in combination with several intermediate (proximate) determinants of health such as environmental sanitation and nutrition, have a direct influence on health. In the economics literature, this is referred to as the health production function. The demand for health care depends on the available health production technology, otherwise known by economists as the "derived demand" for health care. In this review of health care demand studies, we find that a major aspect of the derived demand for health care has yet to be fully addressed by current studies, namely, how the health production technology affects the use of health care services. As will be shown, development, could significantly improve our and empirically, could significant improve our understanding of health care demand patterns in the less developed countries.
This theme is developed in three major steps. First, key components of the household production of health and the derived demand for health care are reviewed. Second, selected empirical findings of a representative sample of health care demand studies are examined in the light of this theme. Additional evidence from anthropology is briefly introduced. Finally, methodological approaches to test these concepts are discussed.
Health care demand
The concept of household production of
To understand the role of health care in health promotion, economists refer to Becker's framework which compares the household to a small firm which maximizes its welfare through the production of basic commodities such as health (4). The household combines its time and purchased market goods (such as medical care) to promote the health of it members, a process which depends on the health production technology environment which is available and known by the household. The technology environment specifies the array of inputs available to produce a commodity, in this case health, and how they are combined. The challenge to the household is to maximize the welfare of the household within the household budget constraint, using the available household health production technology. The demand for health care services is "derived" from a situation where maximization occurs within certain constraints. Following this approach, one finds that the willingness to pay for health care from a particular provider or for another health input depends on its marginal productivity (e.i., incremental contribution) to health and no the available amounts and prices of other inputs to health. Becker does not focus his theory on health, but it has been widely applied to health.
One of the most complete and rigorous applications of economic production theory to health is Grossman's human capital model (5). Although Grossman's approach includes only medical care, he states that other inputs such as nutrition, water supply and sanitation could be important inputs in the health production function. …