Effect of capitation payment on membership, outpatient (OPD) utilization and cost under the national health insurance scheme in Ghana

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University of New Brunswick
In 2012, the National Health Insurance Authority (NHIA) in Ghana introduced a capitation policy within the districts of the Ashanti region, reducing the generosity of their previous insurance program. The key objective of this policy was to lessen escalating healthcare utilization and cost. Employing a natural experiment design, this study uses district-level longitudinal data from 2010-2015 categorized under two main groups, the intervention districts, and the control districts, to examine the impact capitation had on health insurance membership, along with outpatient department (OPD) utilization and cost. This difference-in-differences approach identifies the effect of capitation on each of these factors using ordinary least squares. Findings from this study suggest that a less generous insurance policy reduced program membership by 39 percent, putting resulting downward pressure on OPD utilization (falling 48 percent) and cost (falling 38 percent). Hence, initial results imply the policy met the expectation of the NHIA in that capitation would reduce or slow down OPD utilization and claims cost. However, capitation tended to impact economically vulnerable populations to a greater degree with large decreases in membership occurring especially among those in poverty (upwards of a 70 percent reduction in membership). Additionally, there appears to have been a cost-offset in that capitation also produced rising inpatient department costs by almost 29 percent among impacted districts, suggesting a negative fiscal externality. Thus, policy makers may wish to be cognizant of the inequitable impacts of capitation along with the potential for cost-offsets which reduce the intended objectives of capitation.