This newsletter describes how theArgentine Maternal-Child Health Insurance Program uses aninteresting approach of combining output-based contractingwith an output-based funding mechanism. Particularlyinnovative is the combination of enrollment numbers andperformance indicators as a way to address the tradeoffbetween quantity and quality. The program's transfer ofperformance risks to health service purchasing units andservice providers helps increase accountability and theprogram design has also allowed the government to introducesignificant structural changes to the health system atprovincial level such as linking financing to results(service delivery and outcomes), implement output andquality information systems with regular audits, improvecosting and pricing capacity, and establish performancebased incentives for health personnel. The paper givesconclusions and touches on how the achievements so far showthe advantages of the concept of combining output-basedcontracting with output-based funding.