User charges in health care: evidence of effect on service utilization & equity from north India

Background & objectives: User charges have been advocated on efficiency grounds despite the widespread criticism about their adverse effect on equity. We assessed the effect of user charges on inpatient hospitalizations rate and equity in Haryana State. Methods: The inpatient department (IPD) statistics of the public sector facilities in Yamuna Nagar district where user charges had been introduced were analysed and compared with Rohtak district which did not have user charge between 2000 and 2006. National Sample Survey data of Haryana for the 20042005 period were analyzed to compare utilization of public sector facilities for hospitalization, cost of hospitalization, and prevalence of catastrophic out-of-pocket (OOP) expenditure by income quintiles in three districts which had user charges and 17 districts of Haryana which did not levy user charges. Results: During 2000 and 2006, hospital admissions declined by 23.8 per cent in Yamuna Nagar district where user charges had been introduced compared to an almost static hospitalization rate in Rohtak district which did not have user charges (P<0.01). Public sector hospital utilization for inpatient services had a pro-rich (concentration index 0.144) distribution in the three districts with user charges and pro-poor (concentration index -0.047) in the 17 districts without user charges. Significantly higher prevalence of catastrophic health expenditure was observed in public sector institutions with user charges (48%) compared to those without user charges (35.4%) (P<0.001). Interpretation & conclusions: The findings of our study showed that user charges had a negative influence on hospitalizations in Haryana especially among the poor. Public policies for revenue generation should avoid user charges.