Does increased health care spending afford better health care outcomes? Evidence from Austrian health care expenditure since the implementation of DRGs

Abstract

While it is commonly accepted that health care costs have been rising to unprecedented levels, the question remains whether the increased expenditure actually affords increased health outcomes. It was the objective of this study to search for associations between health care spending and health care outcome, after adjusting for potential confounding variables, using aggregate data collected since the introduction of diagnosis-related groups (DRG) into Austrian health care financing in 1997. Two parameters of health care outcome, mortality and years of life lost (YLL), were regressed on direct and indirect measures of health care spending. We used ordinary least squares, Prais-Winsten, and 2-stage least squares regression in model building to account for autocorrelation and endogeneity. Our findings showed that health care spending was associated with mortality and YLL reduction. The strongest association among the independent variables was seen for spending for prevention. The strongest association for the dependent variables was seen for cardiovascular disease followed by injuries. Also, socio-economic status (SES) was shown to be an important confounder in all studied associations. Our data suggest that increases in health care spending produce significant increases in health. Health care spending should not be constrained, but instead an optimised resource allocation would afford an increase in health per expenditure. Emphasising spending in prevention and reduction of SES gradients would strengthen this association.