The Link Between Health Care Systems and Financing: Evaluation of Payment Systems in Selected OECD Countries

Abstract

Background: Financial incentives and institutions play a key role in determining health care expenditures. The health care sector in Europe is mostly publicly funded and financed in contrast to other OECD-countries. The financing is through taxes and service provision by public hospitals and health centers in the Nordic countries. In contrast the corresponding public shares are close to or below 50 percent in the Netherlands, in Switzerland especially in the USA. Aims: The following questions are to be investigated in this article. Firstly how does the budgeting model influence health care spending. Secondly how does the public share of health care spending correlate with total spending. And thirdly how do other factors, such as exogenous technological change, relative prices of health care etc. affect health spending. Methods: The research panel data is drawn out from OECD Health Data 2007. It includes 10 industrialized countries with different health care systems from 1971 to 2005. A dynamic nonlinear regression model is estimated for the data. Results: The main results of the study are that in the sample the fee-for-service system in primary care is 22 percent higher in HCE costs and on the contrary the global budgeting of hospitals is 34 percent lower in costs. Conclusions: The key in provision of specialized health care services is that the political and economic incentives of budget setters are passed through to service providers more closely when they act in the same organizational framework. Publicly financed and produced systems do well in comparison to insurance based and privately funded and organized health care schemes.