Informal payment for health care and the theory of 'INXIT'

Abstract

Informal payments are known to be widespread in the post-communist health care systems of Central and Eastern Europe. However, their role and nature remains contentious, with the debate characterized by much polemic. This paper steps back from this debate to examine the theoretical basis for understanding the persistence of informal payments. The authors develop a cognitive behavioural model of informal payment, which draws on the theory of government failure and extends Hirschman's theory of 'exit, voice, loyalty', the behavioural responses to 'decline in firms, organizations and states'. It is argued that informal payment represents another possible behavioural reaction: 'inxit', which becomes important when the channels of exit and voice are blocked. The theory is applied to explain informal payments in Hungary, but can be shown to be relevant to other countries facing similar issues. The paper examines the proposed policies to tackle informal payments, and on the basis of the theory of 'inxit' it advocates that solutions should contain an appropriate balance between exit and voice to optimize the chances of maintaining a good standard of public services