Capitation in New Zealand’s Primary Health Care Sector: The Perverse Consequences of Neglecting Financial Risk Allocation

Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at https://about.jstor.org/terms ANU Press is collaborating with JSTOR to digitize, preserve and extend access to Agenda: A Journal of Policy Analysis and Reform This content downloaded from 130.216.158.78 on Wed, 15 May 2024 01:36:22 +00:000 0 0 0 0 0 0 0 0 0 0 All use subject to https://about.jstor.org/terms Abstract Using analysis of the management of 'random' and ' controllable ' risk in capitation contracts , this paper critiques the arrangements in the New Zealand Primary Health Care Strategy (NZPHCS) introduced in 2002. Total system costs have undoubtedly risen under the mixed capitation model adopted , relative to fee-for-service. By requiring only those treated to pay all costs not factored into the government's prospective capitation payments, the burden of unanticipated risk-management costs falls disproportionately on the sickest patients. Rather than resources being allocated on the basis of health need , the sickest individuals bear a disproportionate share of the cost of random demand shocks.