What Are the Advantages of Health Vouchers

Health vouchers are a specific type of demand-side subsidy. They have certain advantages over other types of demand-side subsidies, but they often entail higher transactions costs. In deciding whether to use a voucher scheme to deliver subsidies, policymakers must determine whether the ability to deliver subsidies more efficiently or effectively outweighs the additional administrative costs. They must also consider some of the limitations of vouchers. 

1 Health service providers include clinics, informal practitioners, hospitals, laboratories or other diagnostic services, pharmacies, community care service providers, health promoters, ambulances or other transport service providers, and vendors of prostheses. 

Health vouchers may encourage people to visit providers they might not otherwise have seen. They are particularly useful for subsidizing services that tend to be underconsumed from a social welfare perspective, such as family planning, treatment of infectious diseases, immunizations, mental health care, and maternal and child health services. They are also useful when knowledge of the existence of services is poorly disseminated within the community. 

The administrative cost of voucher schemes is one of their main drawbacks. However, they can be administered more easily than other demand-side subsidies. Requiring the provider to present a voucher in order to receive the subsidy can prevent irregularities and false claims. If designed well, the voucher can serve as a receipt and a data collection form, as well as a token of exchange. 

Vouchers Work Best for Service Packages of Fixed or Predictable Cost 

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