Two health zones in the Kivu Region, Kasongo and Kindu, have employed a s stem of pricing per episode for both ambulatory and inpatient care. It permits the patient to receive all services required, for one set fee. The hospital charges a referral fee to the health center for each hospitalized case referred. While this aystem achieves an important social objective of assuring continuity of care and access for people who might not otherwise be able to afford inpatient care, it has not proved financially viable. The nospital referral fee reportedly is inadequate to cover its operating costs, but the set fee c'nnot be raised without excluding ambulatory patients with minor illnesses. Both zones rely on substantial external subsidies from international donors to pay operating costs.

According to the manager of the USAID-financed Basic Rural Health Project (SANRU), several zones have also initiated prepayment systems using health cards. Area residents are allowed to purchase the health card at a set price which entitles the bearer to a fixed number of curative care visits. The price is discounted slightly from the full price which walk-in patients must pay. The advantage of this system is not necessarily the cost saving (since inflation may offset any benefits from price discounts), but rather that it provides farmers with a way of paying for health care when cash is available.

In the formal sector, Zairian laws require that employers pay for health care services for their employees and employee's dependents. Firm employees and their dependents represent about 18% to 27% of the country's 31 million population, according to two recent studies (1,S). Some large enterprises own and run their own health facilities, where they provide services to employees and dependents at no charge. Other firms contract with health zones or other private providers to treat employees.

Finally, there are several health insurance programs functioning in Zaire, most managed by non-profit or private organizations. These programs are the subject of this report.

## D. PREVIOUS RELATED WORK

# I. Health Financing Research: User Fees **vs.** Insurance

Considerable research and policy analysis on health financing has been conducted in Zaire, including studies sponsored by the GOZ, the World Bank, USAID/Kinshasa, AID's PRICOR and REACH Projects, and other donors (1, 3-16).

The Health Zones Financing Study, sponsorvd. by the SANRU Project and REACH Project in 1986, examined the financial performance *.! ten well-functioning health zones, one in each region of the country. The study revealed that approximately 80 percent of health zone operating expenses were being covered by user fees. The remaining expenses were financed through government and private subsidies, in equal proportions (4). Almost no ambulatory care is provided free of charge to the general public in Zaire. These surprising results provided evidence that Zairians were willing and able to pay for health care services, and indicated the importance of the decentralized community-managed health zone organizational structure.

Other studies have examined the different incentives of fee-per-visit versus fee-per-episode payment systems (11), the effects of inflation on health zone pricing policies (7), determinants of consumer demand for health care services (8,16) and deficiencies in health zones' financial management information systems (15).

This research has clearly demonstrated that user fee systems have increased the financial resources available to the public health sector, resulting in an increase of utilization of health care services by the population.

Several troubling issues remain, however. Health financing experts have questioned the 4