_et al_ . 2003). As a consequence, imposition of user charges may possibly result in significant negative externalities that could outweigh any fiscal savings (McPake, 1993; Creese, 1991; Gilson _et al_ ., 2000).

While the design of user fees for health is a highly relevant policy question with significant and farreaching implications for the poor, the ability to respond to and assess the impact of such policies is often constrained by data availability. Lack of data on service provision at the facility level makes it difficult to ascertain the extent to which the expected improvement in service quality has indeed materialized. Administrative data that lack information on users’ socio-economic characteristics make it difficult to identify the poor and thus assess how they are affected by reforms of health financing. Inability to control for other factors, such as the provision of infrastructure complementary to health services, makes it difficult to assess the trade-offs involved and to decide whether government should invest in health related services rather than, say, improving water supply. This paper explores the issue at hand with respect to the supply of health services, households’ demand for such services, and actual outcomes before and after the abolition of cost sharing in Uganda.

# **2.2 The public health system in Uganda**

Public or government hospitals in Uganda are graded in three categories; national referral, regional referral and district/rural hospitals.<sup>1</sup> At the time of independence in 1962, Uganda had one of the best public health care systems in Africa. The country was characterized not only by the largest and best equipped referral hospital in the region, but also had a well-functioning hospital in virtually every district, in addition to well-equipped dispensaries at the county and sub-county levels. Health care services were provided free of charge, and access to care was good. Following neglect and mismanagement in the 1970s and early 1980s, massive deterioration ensued. Today, the quality of many public health facilities is poor; they are characterized by underpaid and demoralized staff, together with shortages of trained personnel and medical equipment. A 1996 survey indicates that only between one-quarter and one-third of those requiring health care used government health facilities because of frequent lack of drugs, poor facilities, absence of qualified health workers, and long waiting times (Ablo and Reinikka, 1998). Private sector

> 1 Facilities are further graded as Health Centre (HC) II, III, and IV, depending on the administrative zone served by the facility; parish, subcounty and health sub-district. At the _parish_ level, the HC II provides outpatient and ante-natal care, immunisation and outreach. It is normally managed by an enrolled nurse assisted by an enrolled midwife and two nursing assistants. At the _sub-county_ level, the HC III, with one clinical officer, one enrolled nurse, two enrolled midwives and one nursing assistant, one health assistant, one laboratory assistant and a records officer, is expected to provide all the services mentioned earlier plus inpatient care and environmental health. At the _health sub-district_ level, a HC IV has at least one medical officer, two clinical officers, one registered midwife, one enrolled nurse, one enrolled midwife, one comprehensive nurse, two nursing assistants, one laboratory technician, laboratory assistant, health inspector, dispenser, public health dental assistant, anaesthetic officer, assistant health educator, record’s assistant, accounts assistant and two support staff. It is expected to provide the services mentioned earlier plus surgery. In addition, it supervises lower level units, collects and analyses data on health, and elaborates plans for the health subdistrict. Given limited government funding, many of these units suffer from inadequate staffing and have difficulty in complying with these goals.

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