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Risk Adjustment and Primary Health Care in Chile


  • Verónica Vargas


  • Juergen Wasem


Chile´s primary health care (PHC) payment system uses income of the municipalities and the geographic location of health centres (HCs) to adjust current capitation payments. Concerns over the ability of the formula to direct health resources where greater health needs are discussed. We uses a sample of 10,000 individuals was drawn and two years data was collected from a region in Chile. Three models were tested: i) age and gender, ii) age, gender and the presence of two key diagnoses and iii) age, gender and the presence of seven key diagnoses, to estimate how significant their effects were on utilization and per-capita expenditures. Regression analysis was performed to calculate the predictive values of the independent variables and two tests applied to select the best and next best model. The main results are the following. First, the use of services by age and gender confirmed international trends, where children under five, women and elderly were the main users of PHC services. Second, women consulted twice as much as men. Thrid, clear difference by SES were observed, indigents aged 65+ under-utilised PHC services. From the three models simulated, the major improvement in the predictive power took place from the demographic to the demographic plus two diagnoses model. Improvements were limited when five other diagnoses were added (Rsquare= 28%). The conclusion is that the current normative formula used by the MOH provides little incentives to care appropriately for indigents and people with chronic conditions such as diabetes and hypertension. A capitation payment that adjusts for age, gender, and presence of hypertension and diabetes will better guide resources to those with poorer health and lower SES. Keywords: Primary health care, Payment system, Risk adjustment

Suggested Citation

  • Verónica Vargas & Juergen Wasem, 2005. "Risk Adjustment and Primary Health Care in Chile," ILADES-Georgetown University Working Papers inv162, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
  • Handle: RePEc:ila:ilades:inv162

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    References listed on IDEAS

    1. Van de ven, Wynand P.M.M. & Ellis, Randall P., 2000. "Risk adjustment in competitive health plan markets," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 14, pages 755-845 Elsevier.
    2. Brian Hutchison & Jeremiah Hurley & Stephen Birch & Jonathan Lomas & Stephen Walter & John Eyles & Fawne Stratford-Devai, 2000. "Needs-based primary medical care capitation: Development and evaluation of alternative approaches," Health Care Management Science, Springer, vol. 3(2), pages 89-99, February.
    3. Randall P. Ellis, 2012. "risk adjustment," The New Palgrave Dictionary of Economics, Palgrave Macmillan.
    4. Arlene Ash & Randall P. Ellis & Gregory Pope & John Ayanian & David Bates & Helen Burstin & Lisa Iezzoni & Elizabeth McKay & Wei Yu, 2000. "Using Diagnoses to Describe Populations and Predict Costs," Papers 0099, Boston University - Industry Studies Programme.
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    Cited by:

    1. Camilo Cid & Randall P. Ellis & Verónica Vargas & Juergen Wasem & Lorena Prieto, 2015. "Global Risk-Adjusted Payment Models," Boston University - Department of Economics - Working Papers Series wp2015-021, Boston University - Department of Economics.

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    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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