Quotation Chen, Simiao, Kuhn, Michael, Prettner, Klaus, Bloom, David E., Wang, Chen. 2021. Macro-level efficiency of health expenditure: Estimates for 15 major economies. Social Science & Medicine.




The coronavirus disease 2019 (COVID-19) pandemic highlights the importance of strong and resilient health systems. Yet how much a society should spend on healthcare is difficult to determine because additional health expenditures imply lower expenditures on other types of consumption. Furthermore, the welfare-maximizing (“efficient”) aggregate amount and composition of health expenditures depend on efficiency concepts at three levels that often get blurred in the debate. While the understanding of efficiency is good at the micro- and meso-levels—that is, relating to minimal spending for a given bundle of treatments and to the optimal mix of different treatments, respectively—this understanding rarely links to the efficiency of aggregate health expenditure at the macroeconomic level. While micro- and meso-efficiency are necessary for macro-efficiency, they are not sufficient. We propose a novel framework of a macro-efficiency score to assess welfare-maximizing aggregate health expenditure. This allows us to assess the extent to which selected major economies underspend or overspend on health relative to their gross domestic products per capita. We find that all economies under consideration underspend on healthcare with the exception of the United States. Underspending is particularly severe in China, India, and the Russian Federation. Our study emphasizes that the major and urgent issue in many countries is underspending on health at the macroeconomic level, rather than containing costs at the microeconomic level.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Social Science & Medicine
Citation Index SSCI
Language English
Title Macro-level efficiency of health expenditure: Estimates for 15 major economies
Year 2021
Reviewed? Y
URL https://reader.elsevier.com/reader/sd/pii/S027795362100602X?token=12ED1CF2B0009BFA259E70C8A6999C1E7C00163C4838DF69BAE62B7DAE2140706A9BAD5E0D5785E4B49A1FF6C30B0709&originRegion=eu-west-1&originCreation=20210804134930
DOI https://doi.org/10.1016/j.socscimed.2021.114270
Open Access Y
Open Access Link https://reader.elsevier.com/reader/sd/pii/S027795362100602X?token=12ED1CF2B0009BFA259E70C8A6999C1E7C00163C4838DF69BAE62B7DAE2140706A9BAD5E0D5785E4B49A


Prettner, Klaus (Details)
Bloom, David E. (Harvard T.H. Chan School of Public Health, United States/USA)
Chen, Simiao (University of Heidelberg, Germany)
Kuhn, Michael (IIASA, Austria)
Wang, Chen (Chinese Academy of Medical Sciences & Peking Union Medical College, China)
Department of Economics (Crespo Cuaresma) (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
3911 Economics of the health system (Details)
5371 Macroeconomics (Details)
5404 Demography (Details)
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