33359 World Bank Social Safety Nets Primer Notes 2003 ■ No. 9 Waivers and Exemptions for Health Services in Developing Countries Background Success of Targeting. In the low-income countries of In response to shrinking budgets and growing the review, coverage of the poor by waiver mech- demands, many developing countries have adopt- anisms was extremely low, mainly because gov- ed formal or informal user fees in government ernments did not adequately compensate health facilities. While they raise revenue, in the providers for the provision of subsidized services. absence of special provisions user fees may hurt Kenyan government providers, for instance, equity and efficiency. This paper reviews the suc- received no compensation whatsoever. Ghanaian cess of two such provisions—waivers and exemp- public providers received compensation, but tions. Waivers enable the poor to obtain free funding was uneven and often delayed. Thus, key healthcare while exemptions enable all people to to the success of waivers and exemptions systems receive certain services for free. The dilemma is is the sufficient and timely financial compensa- how to preserve user fees without hurting equity tion of providers. and efficiency. Coverage of the Poor and Leakage to the Non-Poor. In This paper reviews the international literature middle-income countries—Thailand and Chile— and the experience of seven developing coun- coverage of waivers was high. In these two coun- tries—Cambodia, Chile, Ghana, Indonesia, tries, however, income-eligibility levels were set Kenya, Thailand, and Zimbabwe—with waivers well above the poverty line, resulting in high lev- and exemptions, and draws lessons for countries els of ‘leakage’ (where subsidies benefit the non- wishing to introduce such mechanisms. poor). Assessing Waiver and Exemption Systems Administrative Costs. Virtually no information was Assessing the relative practical merits of waivers available about the administrative cost of waiver and exemptions in case-study countries was diffi- systems. This precluded an assessment of the effi- cult: the evidence was scattered and mixed, and ciency of targeting mechanisms (i.e., the share of the sources were dispersed and often informal. all subsidies devoted to the administration of the The review was chiefly concerned with (1) the system). degree to which waivers reduce out-of-pocket spending by the poor; (2) the increase in utiliza- National Policies on Waivers and Exemptions. All tion resulting from waivers and exemptions; and countries, except Cambodia, had an explicit (3) the enabling factors of successful waiver and national waiver policy and all explicitly exempted exemption systems. Below is a summary of the certain categories of preventative services for all main findings: citizens. At the same time, most of these coun- tries have had problems with their eligibility cri- Performance Monitoring and Evaluation. The lack of teria, particularly in terms of distinguishing the monitoring and evaluation was a major weakness poor from the non-poor. For example, in Kenya, a in all systems reviewed. In their absence, it is not national policy exhorted public providers to possible to measure performance of waivers and exempt the so-called ‘pauper’ patients from user exemptions and to take any required corrective fees, but the lack of guidelines meant each facili- measures. ty adopted its own interpretation of pauper Ricardo Bitran and Ursula Giedion prepared this note based on their paper “Waivers and Exemptions for Health Services in Developing Countries.” 2003. Social Protection Discussion Paper No. 0308. World Bank. Washington, D.C. patients. Formulating a clear definition of target Institutional Aspects. Providers need clear written beneficiaries is a necessary condition. It is also guidelines about how waivers and exemptions crucial that identification criteria be applicable should work, with enough flexibility to allow for and easily verifiable. regional or local variation if necessary. Such clari- ty was generally lacking in case-study countries. Countering Stigma. In most cases reviewed, the Further, the staff responsible for administering poor were often deterred from claiming waivers waiver systems lacked the necessary training and as they felt ashamed of their circumstances. supplies to carry out their job. Waiver applicants in a large public clinic in Cambodia, for example, were subjected to a pub- Disseminating the Existence of Waivers and lic means test in the waiting room. Shame often Exemptions. The poor must know they are eligible led prospective applicants to forego their right to for free or subsidized care and health facilities request a waiver. must know whom to waive. Likewise, the popula- tion should be informed about the existence of Determining Eligibility. There is no single answer as certain exempted services. Dissemination mecha- to who should be responsible for the waiver nisms must be tailored to the special characteris- process. Nevertheless, those determining eligibili- tics of the poor, such as the fact that they often ty should be aware of the selection criteria, be live away from major urban centers, have little adequately trained, and be fully informed about access to formal media, tend to have little educa- the constraints governing the waivers process tion, and work long hours. (i.e., how many waivers can be awarded in any given month). Conclusion Different countries have tried different approach- Access costs. Freeing the most vulnerable from es with waivers and exemptions. Those that care- out-of-pocket payments may not suffice to pro- fully designed and implemented their waiver sys- mote access to care. The poor often must over- tems—such as Thailand and Indonesia—have come access costs to healthcare beyond user had much greater success in terms of benefits fees, including transportation, lodging, and food incidence than those countries—such as Ghana, costs as well as the opportunity cost (the cost of Kenya, and Zimbabwe—that took a more impro- being away from work or from home). vised approach. The key to a waiver system’s suc- Cambodia’s Health Equity Fund not only waives cess is adequate financing. Systems—such as user fees for the poor but also reimburses their those in Thailand, Indonesia, and Cambodia— transportation and food costs associated with that compensate providers for the revenue they healthcare. must forego in granting waivers and exemptions have been more successful than those—i.e., Updating Fee Levels and Income-Eligibility Thresholds. Kenya—which expect providers to absorb the cost Fee levels and income-eligibility thresholds need of waivers and exemptions. to be adjusted periodically to ensure that they continue to cover those most in need of help. Other success factors include: the widespread dis- Otherwise, countries may inadvertently hinder semination of information about waivers and access to medical care or induce facilities to adopt exemptions to potential beneficiaries; financial their own fee schedules. For example, if eligibility support to poor patients for non-fee costs of is defined on the basis of income brackets kept obtaining healthcare; and clear criteria for the nominally constant, inflation may result in fewer granting of waivers. people qualifying for assistance. The World Bank Social Safety Nets Primer series is intended to provide a practical resource for those engaged in the design and implementation of safety net programs around the world. Readers will find information on good practices for a variety of types of interventions, country con- texts, themes and target groups, as well as current thinking on the role of social safety nets in the broader development agenda. World Bank, Human Development Network Social Protection, Social Safety Nets http://www.worldbank.org/safetynets Printed on 100% post-consumer recycled paper