Health Care Efficiency Across Countries: A Stochastic Frontier Analysis

This study addresses the increasingly important issue of efficiency of national health care systems. It uses the stochastic frontier technique to estimate a health production function where the inefficiency term is modeled as a linear function of relevant explanatory variables. The results show that inefficiency of national health care systems is inversely related with per capita income and directly related with income inequality. An important policy related finding is that health care systems are more efficient when greater shares of total health care expenditure come from public sources and out of pocket, rather than from private insurance coverage.