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Vouchers for health - using voucher schemes for output-based aid

This Note examines an innovative, donor-supported voucher scheme to treat and prevent sexually transmitted diseases in Nicaragua. Voucher schemes enable donors to purchase outputs rather than inputs while also offering beneficiaries a choice of provider, a feature that sets them apart from other output-based approaches, such as supply-side subsidies to providers operating under performance-based contracts. Choice creates incentives to lower prices or raise quality (or both).