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HEALTH POLICY AND PLANNING. 1996 Dec; 11(4):428-37.Health sectors are being restructured in many parts of the world to shift the financial burden of health care away from the public sector onto individual citizens. This paper describes a study conducted to investigate the willingness of patients and households to pay for rural district hospital services in northwestern Tanzania. Surveys conducted included interviews with 500 outpatients and 293 inpatients at 3 district-level hospitals, interviews with 1500 households, and discussions with 22 focus groups within the catchment areas of the primary health care programs of these hospitals. Information was collected on the willingness to pay fees for certain hospital services, willingness to become a member of a local insurance system, and exemptions for cost-sharing. The surveys found a considerable willingness among respondents to pay for district hospital services. However, most respondents favored a local insurance system over user fee systems, a finding which applied at all places and in all of the surveys. More female respondents favored a local insurance scheme. The conditions needed to introduce a local insurance system are discussed.