Affordable Family Planning Services

Targeting subsidies to low-income family planning clients while shifting those who can afford to pay to the private sector keeps services affordable for all clients and contributes to the financial sustainability of programs.

As the number of contraceptive users increases worldwide, growth is fastest among those least able to pay for services. But many programs face decreases in government assistance and donor funding. So it is hard to keep services affordable and ensure that people can choose, obtain, and use high-quality contraceptives whenever they want them. Targeting subsidies to low-income users while encouraging people to pay what they can through the private sector keeps services affordable. It also contributes to the financial sustainability of programs. But clients who can afford the private sector will only do so if it is an attractive alternative.

A “whole market approach” helps target services to appropriate groups.

Understanding how demand and supply are segmented across different socioeconomic groups helps managers make services more affordable and target subsidies more efficiently. A market segmentation analysis helps determine where and on whom public, commercial, and NGO programs each should focus marketing efforts.

Using demographic and market research data—for example, from Demographic and Health Surveys—a market analyses identifies both who is being served in the family planning marketplace and who is underserved. In Romania, an analysis found that a large percentage of potential family planning users in urban areas were both willing and able to pay commercial prices. Free public supplies were then targeted to rural family planning clinics and low-income urban areas, and the private sector scaled up services in wealthier urban areas.

Programs can also use analysis results to target branded products to different economic groups. In Bangladesh the Raja condom is promoted as a mainstream condom brand, while the higher-priced Sensation condom brand targets a more upscale market .

A variety of strategies can help public and NGO programs target subsidies and establish appropriate fees.

  • Establish fees that people can pay. Instituting or increasing fees may be necessary or desirable in some cases. If so, programs must find a way to ensure that services remain available to those who cannot pay. Means testing, needs assessments, and wealth index can help programs decide who can and cannot pay for services. These approaches can be difficult and time-consuming. In some cases the cost of designing and implementing means testing can be so high that it seriously offsets the revenues gained from the fees.
  • Vouchers make private-sector services affordable for the poor. Many people prefer private-sector health care because of perceived higher quality. A way to make private-sector services affordable to the less well off is through voucher systems—also known as output-based aid (see below). Vouchers usually are certificates or other tokens that people can redeem with providers who meet certain standards—often a pool of pre-approved providers. Vouchers contributed to the success of family planning programs in South Korea and Taiwan in the 1960s and 1970s. More recently, small-scale programs in Bangladesh, China, India, Kenya, Nicaragua, and Uganda have experimented successfully with voucher systems to subsidize vasectomy, female sterilization, and IUD services, and safe deliveries. Voucher programs can also target specific groups, such as young people or expectant mothers for reproductive health services.
  • Output-based voucher system. In Kenya, through a partner NGO, the government sells family planning service vouchers, or certificates, to low-income clients at a subsidized price amounting to US$1.40 each for any family planning method. The clients give the vouchers to the providers that they select among accredited facilities, including governmental, nongovernmental, and faith-based organizations, and private physicians and midwives. The provider then submits claims to a voucher management agency to obtain reimbursement for the services provided. Conventionally, the government would pay facilities according to the inputs they would need to provide services, such as labor, supplies, and equipment. The voucher system, however, is called “output-based” because it links payment to actual services provided. Thus, it encourages facilities to provide more services. Also, by creating competition, it encourages providers to offer high-quality services that attract clients. Experience has shown this approach to be less costly and provide better quality services than conventional voucher approaches.
  • Health insurance also can help make private-sector services affordable. In general, consumers make regular affordable payments (premiums) to a third-party insurer. This entitles them to health care coverage for a range of private-sector services. The insurer reimburses the consumers for health fees paid or else pays the providers directly, eliminating or significantly reducing large out-of-pocket payments. Many countries have added family planning and reproductive health services to health insurance plans. Health insurance programs can be privately or publicly funded. For public health insurance, the government may be the insurer or it can subsidize insurance by paying consumers’ premiums. The government finances public insurance programs from general revenue or with payroll taxes. Private health insurance is financed by individuals, families, or employers. It competes with other insurers for customers, and plans have different prices and benefits packages. Many developing countries have private insurance programs that serve primarily middle-class households.

For more information about keeping family planning services affordable, see the Elements of Family Planning Success Toolkit, which includes links to costing tools, primers about health insurance programs, country experiences with vouchers, and other resources on public-private partnerships.