Distributive justice in Medicaid capitation: the evidence from Colorado

In 1995, the state of Colorado began a new funding program for the provision of mental health services to Medicaid recipients. Medicaid funding was restructured from a fee-for-service system into a capitated managed care system. The restructuring altered the way in which mental health resources were allocated within Colorado's mental health system. This article explores the ethical principles inherent in the allocation of mental health resources within Colorado. The allocation system before and after the capitation pilot is analyzed according to three models of distributive justice. Under capitation, access to care corresponds to egalitarian ideals, while service delivery and outcomes follow a more utilitarian philosophy. Results from several empirical studies of the Colorado Medicaid system are used to support this ethical analysis. The analysis leads to the suggestion that the fair-opportunity rule may be a useful principle for developing just distribution systems in other states in the future.