How not to fund hospital and community health services in England

Summary.  The paper focuses on the hospital and community health service component of the current formula for the target allocation of annual 'weighted capitation' funding of England's 304 primary care trusts—a formula that responds to political pressure to tackle continuing health inequalities. The history of allocation formulae for the National Health Service is briefly reviewed, before exposing the composition and provenance of the hospital and community health service component. Under the heading 'Logical and statistical deficiencies' we consider various frameworks, model misspecification, allowance for age, ins and outs of supply, unmet need and wrong signs, and replicability and robustness—questions that are relevant to trust in the current formula based on the regression of age-standardized current utilization on a multiplicity of socioeconomic variables. We conclude that it might be better to put future resources into developing direct, rather than proxy, measurement of health needs.