Health Outcomes And The Cost-Quality Trade-Off In Health Care: Empirical Study Of OECD Countries

Abstract

This study applies multivariate regression analysis to cross-section data of 30 OECD countries to determine if there is a trade-off between health care cost and the quality of the health system on one hand, and better health outcomes on the other. It also investigates whether a higher quality health system leads to superior health outcomes. The empirical results provide positive answers to the above two questions. Indices of responsiveness, fairness or accessibility, and overall efficiency of the health system developed by the World Health Organization were used in this study to measure health system quality. The rate of infant mortality and a disability-free or healthy life expectancy measure developed by the WHO are used as indicators of health outcomes. The empirical models control for the effects of cross-country differences in literacy level and health-risk or lifestyle. The study finds evidence that the more responsive and accessible the country’s health system is, the longer is the healthy life expectancy of its people. Moreover, the more accessible and efficient the country’s health system is, the lower is the rate of infant mortality.