Slutsky Decomposition Of Price Effects In Public Health Care

Abstract

This paper employs the Slutsky decomposition of the effect of price change to identify impact of user fees on access to public health care. The paper starts with a theoretical outline that relates user fees to quality of health care before carrying out the Slutsky decomposition to identify the income and substitution effects of user fees in public health care. Delivery efficiency is observed as an important factor that shapes the impact of user fees on demand for the health care. The findings suggest that introduction of user fees in public health care without appropriate measures to boost quality of the services, may have negative effects on demand. Thus, delivery efficiency of public services matters as it fuels the effect of price change.

African Journal of Finance and Management Vol.13(1) 2004: 17-24