Better off by risk adjustment? Socioeconomic disparities in care utilization in Sweden following a payment reform

Abstract

Reducing socioeconomic health inequalities is a key goal of most health systems. A challenge in this regard is that healthcare providers may have incentives to avoid or undertreat patients who are relatively costly to treat. Due to the socioeconomic gradient in health, individuals with low socioeconomic status (SES) are especially likely to be negatively affected by such attempts. To counter these incentives, payments are often risk adjusted based on patient characteristics. However, empirical evidence is lacking on how, or if, risk adjustment affects care utilization. We examine if a novel risk adjustment model in primary care affected socioeconomic differences in care utilization among individuals with a chronic condition. The new risk adjustment model implied that the capitation—the monthly reimbursement paid by the health authority to care providers for each enrolled patient—increased substantially for chronically ill low-SES patients. Yet, we do not find any robust evidence that their access to primary care improved relative to patients with high SES, and we find no effects on adverse health events (hospitalizations). These results suggest that the new risk adjustment model did not reduce existing health inequalities, indicating the need for more targeted incentives and interventions to reach low-SES groups.