Copyright Page
© 2022 International Monetary Fund
WP/22/48
IMF Working Paper
Fiscal Affairs Department
Patterns and Drivers of Health Spending Efficiency Prepared by Mercedes Garcia-Escribano, Pedro Juarros, and Tewodaj Mogues
Authorized for distribution by David Coady March 2022
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
ABSTRACT: Demands for ramping up health expenditures are at an all-time high. Countries’ needs for additional health resources include responding to the COVID-19 pandemic, closing gaps in achieving the Sustainable Development Goal in health in most emerging and developing countries, and serving an ageing population in advanced economies. Facing limited fiscal space for raising health spending focuses policymakers’ attention on ensuring that resources are used efficiently. How sizable are the potential gains—in terms of freeing up resources and delivering better health outcomes—from improving health spending efficiency? How has efficiency evolved over the past decade? What can policymakers do to boost it? This paper estimates health spending efficiency across countries using bias-corrected data envelopment analysis and finds sizable differences in efficiency across countries, in particular among emerging and developing countries compared to advanced economies. The examination of the evolution of efficiency reveals that important efficiency gains have been made in the majority of countries. The paper also explores some of the key drivers of efficiency and finds that lower income inequality, less corruption, and health interventions oriented at expanding population access to basic health services are associated with greater efficiency.
RECOMMENDED CITATION: Garcia-Escribano, Mercedes, Pedro Juarros, and Tewodaj Mogues, 2022, “Patterns and Drivers of Health Spending Efficiency,” IMF Working Papers 22/48 (Washington: International Monetary Fund).
| JEL Classification Numbers: | H51, I1 |
| Keywords: | health sector, expenditure efficiency, universal health coverage |
| Author’s E-Mail Address: | MGarciaEscribano@imf.org; PJuarros@imf.org; TMogues@imf.org |
| JEL Classification Numbers: | H51, I1 |
| Keywords: | health sector, expenditure efficiency, universal health coverage |
| Author’s E-Mail Address: | MGarciaEscribano@imf.org; PJuarros@imf.org; TMogues@imf.org |
Title Page
WORKING PAPERS
Patterns and Drivers of Health Spending Efficiency
Prepared by Mercedes Garcia-Escribano, Pedro Juarros, and Tewodaj Mogues1
Contents
I. Introduction
II. Existing Evidence on Health Spending Inefficiency
III. Data and Methodology
IV. Patterns in Health Spending Efficiency
V. Evolution of Health Spending Efficiency over Time
VI. Determinants of Efficiency
VII. Conclusion
APPENDICES
I. Description and Source of Data
II. Robustness of the Results Using as Output Health-Adjusted Life Expectancy (HALE)
III. Robustness of the Results Using as Output An Index of 8 Key Health Indicators
References
FIGURES
1. Health Expenditures, 2017
2. Health Outcomes
3. Spending to Reach Sustainable Development Goals
4. Trends in Health Expenditures and Life Expectancy, 2000–17
5. Illustrative Efficiency Frontier
6. Health Spending Efficiency, 2017
7. Cross-country Variation in Health Spending Efficiency, 2017
8. Years of Life Lost due to Inefficient Health Spending
9. Wasted Resources due to Inefficient Health Spending
10. Change in Health Spending Efficiency by Income Group, 2007–17
11. Evolution of Spending Efficiency, 2007–17
12. Change in Life Expectancy Driven by Efficiency and Technology, 2007–17
13. Distribution of Variables by Country Income Group
14. Second Stage: Gains from Policy Actions
15. Relationship between Health Spending and UHC, by Income Group
TABLE
1. Determinants of Health Spending Efficiency
APPENDIX FIGURES
AII.1. Health Spending Efficiency, 2015
AII.2. Years of Health-adjusted Life Years Lost due to Inefficient Health Spending
AII.3. Wasted Resources due to Inefficient Health Spending
AII.4. Change in Spending Efficiency by Income Group, 2005–15
AII.5. Evolution of Spending Efficiency, 2005–15
AII.6. Change in HALE driven by Efficiency and Technology, 2005–15
AII.7. Second Stage: Gains from Policy Actions
AIII.1. Health Spending Efficiency, 2015
AIII.2. Wasted Resources due to Inefficient Health Spending
AIII.3. Second Stage: Savings from Improving Policy
APPENDIX TABLES
AI.1. Sources for and Descriptions of Data and Variables
AII.1. Determinants of Health Spending Efficiency (Output in Efficiency Score Estimation: HALE)
AIII.1. Determinants of Health Spending Efficiency (Output in Efficiency Score Estimation: Health Index)