Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment

In Kenya, cost-sharing (charging a small fee) significantly decreased the demand for insecticide-treated nets (ITNs).

• Overall, 60% of women in the sample claimed to be using the ITNs.
• Demand for ITNs dropped by 60 percentage points when the price was increased from zero to 40 Kenyan Shillings (ksh) – which is still $0.15 less than the common cost-sharing price available to pregnant women at prenatal clinics in the region.
• The results show that there may be an incentive effect on providing free ITNs. Prenatal clients who came in for free nets were 12% more likely to come in for a repeat visit. Given the increased prenatal care received by these women, women who received free nets were 18 percentage points (from a base of 69%) less likely to be anemic. Effective coverage of the population of anemic women was estimated to be 60% lower under cost-sharing.
• Cost-sharing does not impact wastage; women who received free ITNs were as likely to use them as those who paid subsidized prices.
• Cost-sharing was found to be at best only marginally more cost-effective than free distribution, but free distribution would save many more lives. Free distribution was estimated to save between 38 and 36 children’s lives per 1000 prenatal clients, however, when the price increases to 40 Ksh, the authors estimate that only between 16 and 12 children’s lives per 1000 prenatal clients would be saved, assuming a high externality effect.

Charging any price for ITNs, even small, subsidized prices, deters pregnant women from buying and using them.

A randomized control trial was conducted at 20 health clinics in four different health districts in Kenya. Four clinics were part of the control group, five distributed ITNs at no cost, five sold the nets at a price of 10 Kenyan Shillings (a 97.5% subsidy), three sold them at 20 Kenyan Shillings (a 95% subsidy), and three sold them at 40 Kenyan Shillings (a 90% subsidy). The cost-sharing fees charged were comparable to subsidies offered by similar interventions in the region. To gauge the effect of cost-sharing on usage, researchers visited a sub-sample of women in their homes in the months after distribution to see if they still had the nets and were using them. Researchers also measured the hemoglobin levels of study participants to screen for anemia to investigate whether women with the highest need for ITNs were more likely to pay for and use the nets.