Capitated Payment Formulas for Public Housing

Section 525 of the 1990 National Affordable Housing Act calls for a study of prospective, capitated payment systems for Public Housing Agencies (PHAs), which would incorporate federal payments for both operating and modernization expenses. In the health care field, prospective and capitated systems are used to pay hospitals and health maintenance organizations for providing services to eligible patients. The purpose of this report is to examine the applicability of such funding schemes to public housing, and to assess the likely implications of funding public housing agencies on a prospective, capitated basis. This study is not intended to devise the actual parameters of a capitated funding formula nor does it provide a final formula for allocating funding to individual PHAs on a capitated basis. Instead, this report provides an exploratory assessment of 1) whether the capitated funding concept can be transferred from health care to public housing; 2) how different types of PHAs might be affected by such a system; and 3) the feasibility and impacts of a capitated funding system for PHA management, and public housing conditions.