A supply-demand model of health care financing with an application to Zaire : a training tool

System requirements for computer disk: IBM-compatible microcomputer; 640K RAM minimum; DOS; Lotus 1-2-3, release 2.01 or higher; hard disk with 1MB free space. Developing countries are turning increasingly to cost recovery to pay for health care services; but the decision makers who must develop and implement systems for cost recovery are often unfamiliar with health care financing issues. In recent years, economists have begun to develop computer models to help decision makers formulate policy in this field. The model discussed in this manual is a training tool that uses information about the demand and supply of health services to help make projections about the effects of health care financing reform on the utilization and the financial performance of the health system. It is intended to help teach the broad interrelationships of certain health policy variables and to assess their impact. In itself the model does not pretend to be complete enough to be used as a decision making tool. The model may be used to explore the implications of policies such as charging uniform user fees to all; charging differential fees based on income; implementing cross-price subsidization between curative and preventive services; exempting certain patients from payment; and establishing different levels of insurance premium and co-payment. It can also be used to assess the effects on utilization and performance of changes in a number of nonfinancial parameters such as the geographic distribution of the population relative to the providers; the distribution of income; the crude birth rate; population size; the incidence of acute illnesses; and the prevalence of chronic conditions. This user-friendly computer model is flexible enough to allow the user to enter data on demand and costs from various developing country settings and to simulate various changes inhealth care financing under a broad range of circumstances. It has been used as a training tool in several seminars organized by the World Bank ' s Economic Development Institute. Annotation Describes a computer model to aid decisionmakers in the health services field in developing countries. As developing countries increasingly depend on user fees to finance health care services, decisionmakers in those countries face the difficult task of developing and implementing cost-recovery systems. In recent years health economists have developed computer models to aid in such analyses. This paper contains a user-friendly computer model on a 3A' diskette which combines information about demand and supply for health care obtained through surveys undertaken in Zaire. It allows the user to enter data from other settings and to simulate various changes in health care financing under a broad range of circumstances. The computer model is provided as a tool for users to assess the impact of health financing policies on health care use and health facility financial performance. The model has been developed in Lotus 1-2-3 and is contained in four spreadsheet files that can be run on any IBM- compatible microcomputer with at least 640 kilobytes of RAM memory. The paper explains in detail the assumptions and theory behind the model, and presents numerous simulations to illustrate how the model can be used. The capabilities and limitations are also outlined, along with a summary and conclusions