This paper uses two methods to compare the impact of health care payments under insurance and user fees. Concentration indices for insured and uninsured groups are computed following the indirect standardisation method to evaluate horizontal inequity in utilisation of basic health care services. The minimum standard approach analyses the extent to which out‐of‐pocket health spending contributed to increased poverty. The analysis uses cross‐sectional household survey data collected in Rwanda in 2000 in the context of the introduction of community‐based health insurance. Results indicate that health spending had a small impact on the socio‐economic situation of uninsured and insured households; however, this is at the expense of horizontal inequity in utilisation of care for user‐fee paying individuals who reported significantly lower visit rates than the insured. Copyright © 2005 John Wiley & Sons, Ltd.