Why some countries get their money’s worth on healthcare and others are more wasteful

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Wealthy countries spend trillions of euros on health care every year, but not all of them are getting their money’s worth, a new analysis has found.

Higher levels of health spending are linked to better outcomes, but after a certain point, more money may not be efficient or practical. The more a country spends on medical care, the more it must pay to continue boosting citizens’ health, according to the study published in The Lancet Global Health journal.

In countries that spend $100 (€85) per capita on health care, for example, spending another $92 (€79) per person earns them an additional year of healthy life. But in countries that spend $5,000 (€4,272) per capita, another healthy year would cost $11,213 (€9,580).

“Countries around the world have made significant progress in converting dollars into health,” wrote the researchers from the US-based Institute for Health Metrics and Evaluation (IHME).

“However, more reductions in inefficiency need to be made in an era of tightening health-care budgets [and] to maximise the returns on their health care spending”.

The researchers determined health spending inefficiency by comparing a country’s total health spending – including the amount they spend and how they spend it – to the number of years people there can expect to live in good health.

The study included 201 countries and territories, and covered a 28-year period from 1995 to 2022.

Drivers of efficient and wasteful spending

Globally, health spending became more efficient between 1995 and 2019, but this progress was disrupted during the COVID-19 pandemic. While it began to recover in 2022, there are still major “inefficiency gaps” between countries, the analysis found.

The United States spends more per capita on healthcare than any other wealthy country. But its system is not particularly efficient, which costs Americans 6.2 years of healthy life.

China was the most efficient country with zero waste, meaning it optimised its spending to deliver the best possible health outcomes for its citizens, according to the analysis.

Most European countries were considered fairly efficient. Exceptions included Ukraine, Lithuania, Latvia, and to a lesser extent, the Netherlands, Belgium, Belarus, Finland, Norway, and the United Kingdom.

Beyond their actual budgets, the most efficient countries tended to have better governance, greater uptake of primary care, infrastructure that makes it possible for people to access medical services, and more public spending on health care compared with the private sector.

Notably, the study does not take into account health care quality, but rather tracks how well a country scores among those with similar levels of spending.

The study authors said policymakers could use the findings to maximise their investments in health, which could be particularly important given many countries are facing pressure on their budgets.

“Expanding government-provided health-care coverage would decrease the inefficiency of the health care system,” the researchers argued.

“Countries should also focus on strengthening democracy, building infrastructure, and increasing the use of, and access to, preventive care,” they added.