Developing Needs-based Funding Formulae Using Individual-level Linked Survey and Utilization Data: An Application to Home Care Services in Ontario, Canada

A common goal of health policy is to allocate public health care resources according to need. This paper presents a method for developing needs-based funding formulae using individual-level linked health survey and utilization data. Needs-based funding shares are developed in three basic stages: (1) estimate the full utilization model, including both need-related and non-need-related adjustors; (2) predict individual-level needs-based home care utilization holding all non-need factors constant; use individual-level estimates and sample weights to develop regional needs-based allocations. The results suggest that methods based on such data offer considerable potential; however, they all raise several new challenges.