The impact of capitation on health insurance membership and the provision of care in Ghana (with Bintu Bayong)
Abstract: To address escalating health care costs, in 2012, the National Health Insurance Authority (NHIA) for Ghana piloted a capitation model in the Ashanti region. Employing a difference-in-differences strategy, we use district-level data from 2010-2014 to examine the impact capitation had on health insurance membership and the associated provision of care. Findings suggest that, relative to control districts, capitation reduced membership by 39 percent, putting downward pressure on total outpatient department (OPD) usage (falling 48 percent) and cost (falling 38 percent). However, in per-member terms, neither OPD usage, nor cost, changed during this period - i.e., cost savings were the result of declining renewals. When observing each year of capitation, per-member cost rebounded in 2013 after an initial 34 percent decline, however, per-member usage did not deviate from pre-capitation levels. Additionally, there appears to have been a cost-shift in that capitation produced rising inpatient department cost - an avenue not affected by capitation - at both the total (29 percent) and per-member (68 percent) level. Lastly, although premium exempt, capitation particularly reduced membership among the poor. Thus, future policies should be cognisant of declining membership, incentives for cost increases and cost-shifting, along with the potential inequitable impacts of capitation.