Inefficiencies in healthcare spending compared across different nations: Some countries maximize their healthcare investment, while others show signs of excessive waste.
In a study that analysed the health spending efficiency of 201 countries over a 28-year period, it was found that after a certain level, national health care spending has diminishing returns for people's wellbeing. The research, though not published in The Lancet Global Health journal, draws upon recent studies and expert analyses to identify key factors contributing to efficient and wasteful health spending.
Countries with a focus on preventive care, such as those with higher vaccination rates and widespread use of prenatal care, tend to have more efficient health spending. Preventative measures help reduce the burden of disease, lower downstream costs, and improve population health outcomes.
Public financing also plays a significant role in health spending efficiency. A larger share of health spending coming from public sources, rather than private insurance or out-of-pocket payments, is associated with greater efficiency. Public systems often benefit from economies of scale, reduced administrative costs, and a focus on population health.
Streamlined administration and lower overhead are also crucial for efficient health systems. Systems with high administrative costs, such as the US, experience significant waste.
Universal insurance coverage ensures that more of the population can access care, reducing financial barriers and promoting timely interventions. Transparent governance and low levels of government corruption are linked to more effective use of health resources.
On the other hand, excessive administrative costs, an overemphasis on curative care, high prices and private sector dominance, poor resource allocation, and fragmented insurance coverage contribute to wasteful health spending.
The study highlights that peer comparison is valuable: if countries at similar spending levels achieve better outcomes, it is worth examining their policies for transferable lessons. For instance, despite lower per capita spending, countries with strong preventive care and public financing systems achieve comparable or better health outcomes than those with much higher expenditures.
The findings suggest that nations seeking to maximise health outcomes per dollar spent should prioritise structural and policy factors such as preventive care, public financing, universal coverage, low administrative costs, and good governance. These factors have been consistently identified as the main drivers of efficient health spending in empirical research.
- Investment in education-and-self-development, particularly in medical-conditions and health-and-wellness, can lead to a more efficient health system by fostering a better understanding of preventive care, contributing to higher vaccination rates and widespread use of prenatal care.
- In terms of finance, business models that prioritize public financing, emphasizing economies of scale, reduced administrative costs, and a focus on population health, can result in more efficient health spending.
- For a well-rounded approach, countries should also consider policies that promote education-and-self-development, encouraging lifelong learning and personal growth, as part of comprehensive strategies for health and wellness.
