Cambodia's Health Equity Funds paid hospitals to treat the poor — and the poor came back

Cambodia's 1996 National Health Financing Charter let public facilities charge user fees, which helped push back under-the-table payments but deterred the poor: two-thirds of total health spending was out-of-pocket at the point of care, and the official exemption system was unfunded, so staff had no reason to honor it. Sick people on very low incomes postponed care, self-medicated, or went into debt.

From 2000, health equity funds emerged as third-party payers run by district-level agents, often local NGOs. Village-level identification put a card in the hands of the poor; the card bought free care at public facilities plus reimbursement of transport and food, and the facility was reimbursed monthly for the foregone fees. Treating a poor patient now earned the hospital money instead of costing it.

The evidence from studies of rural and urban funds: up to 28 percent of HEF-funded patients had not attended a public facility at all before holding a card; borrowing for the current episode of care was 4 percent among cardholders versus 17 percent among non-beneficiaries in the urban site; HEF patients rarely faced unofficial charges, and no stigma or difference in treatment was observed.

By 2019 the scheme covered all public health facilities nationwide, paying for over 2 million outpatient visits and over 100,000 hospital admissions a year for the poorest, with payments deposited directly into facilities' bank accounts. The World Bank's H-EQIP runs more than 80 percent of its financing through these results-based instruments.

Paid the hospital for exempting, not the poor for coming

Hospitals were reimbursed per verified poor patient, so each admission earned money instead of losing it.

Transport and food reimbursement attacked the largest barrier — indirect costs — not just the ticket price.

Community identification of the poor bypassed staff discretion, which had failed as an unfunded waiver system.

Third-party verification of cases kept informal charging in check without adding inspections.

Exemptions without compensation push staff to quietly collect anyway. When you waive a fee, pay for the waiver — a third-party purchaser turns free care from an unfunded order into a paid service.

The fund grew from pilots into nationwide coverage of the roughly three million poor identified by Cambodia's IDPoor census. In 2017, verification moved from an internationally recruited firm to an independent government Payment Certification Agency, and Cambodia's health equity funds and Service Delivery Grants became a leading example of pro-poor strategic purchasing. The problem is not fully solved: 6.3 percent of the population — and 13.4 percent of disabled people — still incur catastrophic health spending, and costs beyond the ticket price remain only partly covered.