THE ABOLITION OF USER FEES AND THE DEMAND FOR HEALTH CARE: RE-EVALUATING THE IMPACT

The abolition of user fees in South Africa, a policy implemented in 1994 for children under the age of six and the elderly, as well as pregnant and nursing mothers, is examined via regression discontinuity. The analysis focuses on provider choice decisions for curative care treatment, but also examines potential externalities that could arise from the policy. As a result of the policy, curative care demand in the public sector is found to increase by approximately 7%; however, the demand for curative care in the private sector is found to decrease by nearly the same amount, suggesting that the policy led to provider choice substitution. The analysis further supports the hypothesis that the health of young children improved marginally.