Those designing payment systems for health care in low and middle income countries are increasingly looking to capitation payment, in order to avoid the cost inflation experienced with fee-for-service payment. However, there is virtually no documentation of the experience of introducing capitation payment, or of its effects. This paper draws on several research studies to explore responses by health care providers at both the market and facility level to the introduction of capitation payment, in the context of a new compulsory insurance scheme for workers in Thailand. The paper ends by identifying lessons for both Thailand itself and for other countries.