Capitation funding: population, age, and mortality adjustments for regional and district health authorities in England.

OBJECTIVE--To assess the effect of each of the components of the national capitation funding formula--population projections and age and mortality weighting--at regional and district level. DESIGN--Application of age-cost and mortality weights to the projected 1997 populations of regions and districts, based on the Department of Health public health common dataset. SETTING--Regional and district health authorities in England. RESULTS--The application of the age-cost and mortality weights to projected populations resulted in greater changes in the shares of weighted populations relative to the estimated 1991 population at district level (mean 0, range -17% to 28%) than at regional level (mean 0, range -9% to 6%). At district level mortality weights had less scope for influence (mean 0, range -9% to 14%) than population projections (mean 0, range -16% to 31%) or age weights (mean 0, range -20% to 30%). CONCLUSIONS--The adjustments to the 1991 population shares due to the application of the national capitation funding formula depend on the interaction of three elements: the projected population by age group, the age-cost weight, and the mortality weight. Since each is open to uncertainty, either in terms of measurement (projected population, particularly for births and the over 85s) or method (derivation of the age-cost and mortality weights), the formula should be implemented cautiously at district level. Ways should be considered of incorporating elements of uncertainty into the model. Further research is required on the elements and degree of uncertainty in each of these components, as well as on the relative health needs of different populations.