Gertler P, Locay L, Sanderson W. Are user fees regressive? The result is that our findings are heterogeneous and hard to summarize quantitatively. User cost refers to the expenses borne by the owner or renter of a capital asset resulting from the use of the asset for a given period of time. As a result, a narrative approach to reporting the results has been adopted. Although growth in service uptake was often greater after the policy change, suggesting potential positive outcomes in the long run, this was not a statistically significant result. Again, the quality of the data and analysis from which these conclusions were drawn was judged to be low. Thus, if you are attending any economics classes, youll most likely have to to calculate marginal cost at some point. In a basic economic sense, cost is the measure of the alternative opportunities foregone in the choice of one good or activity over others. The impact of user fee exemption on service utilization and treatment seeking behaviour: the case of malaria in Sudan. Gilson L, McIntyre D. Removing user fees for primary care in Africa: the need for careful action. Good impact evaluations seem difficult to apply to health systems.45 This is partly for economic reasons (they are costly and labour intensive) and partly for ethical and political ones (it is difficult to give services to some communities and not to others in order to create control groups). occur whenever a good or service is transferred from a provider to a user across a technologically separable interface. Cost Theory – Types of Costs The concept is useful in determining the optimum levels of investment and exploitation in a renewable natural resource like forestry. A firm desiring to maximize its profits will, in theory, determine its level of output by continuing production until the cost of the last additional unit produced (marginal cost) just equals the addition to revenue (marginal revenue) obtained from it. The transaction costs of Variable costs, like the costs of labour or raw materials, change with the level of output. In Gabon,34 data from two increases in fees in a private hospital showed that demand became increasingly sensitive to price, which suggests a threshold effect. One study32 was found to be of good quality, while all others were potentially biased. These findings broadly support the view that user fees present a barrier to access to curative health services for those groups that would be eligible to pay for them. Main characteristics of studies on the introduction of user fees and its effects on health service utilization in low- and middle-income countries, according to literature review, Table 4. User charges for health care: a review of recent experience. This abrupt increase was rarely followed by a sustained increase in utilization growth. Studies also covered both public- and private-sector charges. Two questions remain. a)Marginal User Cost- when resources are scarce greater current use diminishes future opportunities, the marginal user cost is the present value o view the full answer Previous question Next question Get more help from Chegg Examples of user fees include highway tolls, parking charges and national park entry fees. Marginal User Cost Inter-Temporal Fairness (Sust. The scope of the review was wide. What is a marginal user cost? Thus the cost of generating electricity by burning high-sulfur bituminous coal can be measured not only by the cost of the coal and its transport to the power plant (among other economic considerations) but also by its cost in terms of air pollution. Over 20 specific IT cost management ratios and other IT support metrics are provided, such as IT budget as a percent of revenue and IT budget per employee/user, allowing IT executives to highlight opportunities to reduce IT costs, optimize IT expenses, and improve the efficiency, effectiveness, and governance … Total cost refers to the total expense incurred in reaching a particular level of output; if such total cost is divided by the quantity produced, average or unit cost is obtained. MUC stands for Marginal User Cost (resource economics). This simply reflects the fact that it costs more in total to produce more output. These quality shortcomings, in combination with such a limited number of studies on each topic, mean that many questions remain. A critical review of economic literature with particular reference to experience from developing countries. Marginal cost – definition. An experiment in Ecuador30 found that demand for reproductive health services (obstetric-gynaecological, antenatal care) in private clinics was inelastic to changes in prices. In addition, to provide more comparable results, we computed price elasticities (. McDowall D, McCleary R, Meidinger E, Hay R. Ojeda G, Murad R, Leon F, Williams T. Testing pricing payment systems to improve access and cost-recovery from Norplant. Marginal cost is the additional cost incurred in the production of one more unit of a good or service. We found several studies that had longitudinal data on utilization but had not performed a time series analysis.20–26 To be able to include these, we relaxed the original definition of ITS27 (Table 1) and set out to reanalyse the data appropriately. Observational or qualitative case studies,38 studies of policy implementation39 and costing studies play an important role in helping understand how policies get implemented. Weighing economic costs against human lives will inevitably seem crass. For a consumer with a fixed income, the opportunity cost of purchasing a new domestic appliance may be, for example, the value of a vacation trip not taken. When autocomplete results are available use up and down arrows to review and enter to select. Postslope is coded 0 up to the last point before the intervention phase and coded sequentially from 1 thereafter. Most studies providing longitudinal data (and reanalysed as ITS) were unable to isolate changes in charges for health services from other concurrent changes occurring in, or outside of, the health system. Eight papers presented data on the effects of introducing user fees (Table 3), five on the effects of removing fees (Table 4) and five on the effects of decreasing or increasing fees (Table 5 and Table 6). Such research may be overly burdensome and time consuming, while changes in policies are often driven by political agendas and happen quickly. More conventionally, cost has to do with the relationship between the value of production inputs and the level of output. Reflections on the current debate in low- and middle-income countries. Definition: The user cost of capital is the unit cost for the use of a capital asset for one period--that is, the price for employing or obtaining one unit of capital services. Bulletin of the World Health Organization. When used in isolation, it doesn’t tell us much. Its coefficient β3 therefore reflects the trend or growth rate in outcome after the intervention. What are some of the fundamental assumptions used in the main stream neoclassical economics? It differs from previous reviews15–17 in using a formal protocol and systematically appraising the evidence. The costs of providing mass transportation services are of two types, capital and operating. When used in combination with annual recurring revenue (ARR) and customer acquisition costs (CAC) to name a … Some are the result of specially-designed experiments; others are attempts to study the effects of a “real world” policy change. Only studies from low- and middle-income countries, as defined by the World Bank, were included. Some papers dealt with the change in price of a specific good, while others dealt with charges for basic health services more generally. Bratt JH, Weaver MA, Foreit J, De Vargas T, Janowitz B. They concur with those of some of the non-systematic reviews on user fees that have been completed.15–17 However, we feel that there are several important questions in this area that remain unanswered, and it is important to note that all but one of the studies had significant weaknesses. In the short-run, at least one factor of production is fixed, so firms face both fixed and variable costs. The development of the concept of user cost has been traced and its application in the economics of natural resources has been shown. Cost, in common usage, the monetary value of goods and services that producers and consumers purchase. User fees can entail any combination of drug costs, supply and medical material costs, entrance fees or consultation fees. Ranson MK, Sinha T, Morris SS, Mills AJ. This fundamental cost is usually referred to as opportunity cost. A critical perspective. O’Donnell O, van Doorslaer E, Rannan-Eliya R, Somanathan A, Adhikari SR, Harbianto D, et al. Economics is the study of how people allocate scarce resources for production, distribution, and consumption, both individually and collectively. For example, a new car manufacturing plant brings increased revenue for area restaurants and increased traffic leading to the need to spend for new highways. Quality criteria were adapted from those suggested by the EPOC group of the Cochrane Collaboration (Table 2). Criteria such as those suggested by the EPOC group are immensely valuable in lending rigour to the review process but should perhaps be modified to reflect the difficulties of isolating cause and effect in some of the settings we have described, where policy changes usually parallel other events and are dependent on broader contextual factors. Cost, in common usage, the monetary value of goods and services that producers and consumers purchase. It is also important to stress the value of many studies that were not included in this review because they were not designed to offer a direct measure of effect, such as studies on health-seeking behaviour7,40,41 or benefit-incidence analyses.42 Recently, several developments have emerged that translate the principles of systematic reviews into health-system research, while assessing qualitative and quantitative evidence43 or accounting for the complexity of interventions.44 In the user-fee case, such complexity is demonstrated by the desirability of studying utilization, equity, quality and implementation simultaneously to really understand effect. When only one criterion was unclear or unmet, it was scored as being of “moderate” quality, and when all elements were satisfied, the study was considered as being of “high” quality. The welfare implications of health care financing proposals in Peru. What Does Total Cost Mean? increasing in quantity). It must be stressed that the quality of the available evidence was low. Effects of reducing user fees on health service utilization in low- and middle-income countries, according to literature review, Table 10. They are typically paid for each visit to a health service provider, although in some cases follow-up visits for the same episode of illness can be covered by the initial payment. Be on the lookout for your Britannica newsletter to get trusted stories delivered right to your inbox. Gilson L. The lessons of user fee experience in Africa. Some recent articles have underlined the paucity of evidence on the effectiveness of policy interventions in low-income countries; We searched 25 databases covering the social science, economics and health literature. Five studies used longitudinal data to report the effects of abolishing user fees on utilization. However, high inflation at the time in Colombia may have caused people to overestimate the real fall in price. Marginal cost is the additional cost incurred in the production of one more unit of a good or service. Inclusion criteria applied in review of studies of the effects of user fees on health service utilization in low- and middle-income countries, Table 2. In: Diop F, Yazbeck A, Bitrán R. The impact of alternative cost recovery schemes on access and equity in Niger. A similar problem in two experimental studies was that high inflation may have confused the effects of price variations. Unlock answer. User fees can entail any combination of drug costs, supply and medical material costs, entrance fees or … The concept is useful in determining the optimum levels of investment and exploitation in a renewable natural resource like forestry. The impact of price changes on demand for family planning and reproductive health services in Ecuador. Russell S. Illuminating cases: understanding the economic burden of illness through case study research! 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