Strengths and Limitations of Voucher Programs

Demand-side financing (DSF) in the form of vouchers was a popular topic at the iHEA 8th World Congress on Health Economics, held last week in Toronto, Canada. Vouchers – distributed either free or for a small fee – entitle the holder to a specific package of services. Accompanying payments to participating facilities are intended to motivate providers to deliver care at a specified quality. Vouchers are often used in low-resource settings to increase the uptake of key health interventions such as reproductive health/family planning and safe delivery services, but their impact has been varied. A host of initiatives have recently been carried out to study the effectiveness of such programs on service uptake, particularly among the poor. Results of studies in Bangladesh, Kenya, Nepal, and Uganda presented at the Congress, though all of unique design, have demonstrated a number of common themes:

Vouchers effectively increase utilization

The distribution of vouchers seems to unequivocally result in increased utilization of covered services. Results of a study to measure the impact of vouchers on access to maternal and child health (MCH) services in eastern Uganda, presented by John Bua of Makerere University, have shown significant increases in the number of women attending the 4th ANC visit, from less than 100 per month from November 2008 to June 2009, to over 400 per month from November 2009 to June 2010 in the intervention area; utilization in the control group remained at an average 80 per month. Furthermore, utilization of deliveries services increased from about 150 women per month to over 450 per month during the same time period; utilization remained at less than 160 per month in the control group.

A study of the role of demand-side financing in lowering maternal mortality in Nepal, presented by Badre Pande of the Nepal Health Economics Association, also showed that the voucher resulted in increased utilization of MCH services in the study sites. An integral component of the scheme was a cash incentive given to both clients and service providers according to their geographic location. Women who needed to overcome rougher terrain to access services received a larger incentive. Evaluation of the scheme showed that utilization increased in accordance with the cash incentive received.

Pro-poor targeting remains a challenge

Although vouchers are primarily intended to increase service utilization among the lower income quintiles, population targeting remains an important challenge. Evaluation of a reproductive health voucher scheme in Kenya, presented by Timothy Abuya of the Population Council, concluded that because community workers were paid an incentive for every voucher sold, they may have been motivated to sidestep targeting guidelines in order to increase sales. Furthermore, the process of identifying poor women had actually resulted in significant social tensions, which negatively affected support for the program.

But even without concrete targeting, can vouchers increase service utilization among the poor populations? A study of the effect of maternal health vouchers on access to healthcare services in Bangladesh, presented by Shakil Ahmed of the University of Melbourne, aimed to tease out any equity increasing or reducing affects of the vouchers. The study, which included the distribution of vouchers to all populations after a brief attempt at specific pro-poor targeting, showed that while service utilization increased among all income groups, the rich-to-poor utilization ratios were significantly lower in the program area. In particular, the uptake of antenatal care, assistance of skilled birth attendants, institutional delivery and postnatal care were higher among the poor voucher recipients in the project area. Despite these promising results, there is still a low utilization of MCH services among the poor in Bangladesh. Appropriate pro-poor targeting may help further increase service uptake among low-income groups and increase the overall cost-effectiveness of the scheme by ensuring that funds are directed specifically at those not able to pay.

Supply side interventions are essential to the success of DSF schemes

Although voucher schemes in all study sites effectively increased demand for covered services, the studies also demonstrated a wide array of supply side challenges. In Uganda, a cost-effectiveness study of the scheme showed that patient transport was by far the costliest component of the program and organizing referral transport was a consistent issue. The presenter emphasized that scaling up the program would require large additional costs and sustainability would depend on greater use of local resources and significant community ownership of the scheme.

The quantity and quality of providers is perhaps the greatest supply side concern. In Nepal’s remote geographic regions, the effect of vouchers is limited due to a shortage of providers and supplies. In Kenya, the study found that a number of facilities able to offer RH services to voucher holders were not eligible for accreditation, reducing the supply of qualified providers and thus market competition. Additionally, participating facilities were accredited only once and subsequent quality and compliance monitoring was weak.

These and other studies show that vouchers are a promising mechanism to increase the uptake of key health interventions, especially among the poor, in low-resource settings. Achieving their full potential, however, will require more effective targeting and greater emphasis on supply side interventions. This will help ensure that increased demand for services is mirrored by an equally significant surge in provider capacity able to meet it.

Photo courtesy of Richard Lord, Population Council. The Population Council is conducting a multi-country evaluation of reproductive health voucher and accreditation programs as innovative business models for delivering essential RH services. For more information, visit