Healthcare policy tools as determinants of health-system efficiency: evidence from the OECD

This paper assesses which policy-relevant characteristics of a healthcare system contribute to health-system efficiency. Health-system efficiency is measured using the stochastic frontier approach. Characteristics of the health system are included as determinants of efficiency. Data from 21 OECD countries from 1970 to 2008 are analysed. Results indicate that broader health-system structures, such as Beveridgian or Bismarckian financing arrangements or gatekeeping, are not significant determinants of efficiency. Significant contributors to efficiency are policy instruments that directly target patient behaviours, such as insurance coverage and cost sharing, and those that directly target physician behaviours, such as physician payment methods. From the perspective of the policymaker, changes in cost-sharing arrangements or physician remuneration are politically easier to implement than changes to the foundational financing structure of the system.