How effective and fair is user fee removal? Evidence from Zambia using a pooled synthetic control

Despite its high political interest, the impact of removing user charges for health care in low-income settings remains a debatable issue. We try to clear up this contentious issue by estimating the short-term effects of a policy change that occurred in 2006 in Zambia, when 54 of 72 districts removed fees. We use a pooled synthetic control method in order to estimate the causal impact of the policy on health care use, the provider chosen, and out-of-pocket medical expenses. We find no evidence that user fee removal increased health care utilisation, even among the poorest group. However, we find that the policy is likely to have led to a substitution away from the private sector for those using care and that it virtually eliminated medical expenditures, thereby providing financial protection to service users. We estimate that the policy was equivalent to a transfer of US$3.2 per health visit for the 50% richest but of only US$1.1 for the 50% poorest.