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Why is there such a gap between health expenditures and outcomes in Norway compared to Finland?

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Author Info

  • Melberg, Hans Olav

    () (Institute of Health Management and Health Economics)

Abstract

According to the OECD Norway spends 47% more on health care per capita compared to Finland and about 30% more than the other Nordic countries. At the same time indicators of health status show that Norway is not better on important indicators of health. This raises the question of why there is such a gap between spending and outcome in Norway compared to the other Nordic countries. This paper lists a number of possible explanations and quantifies their importance. The conclusion is that higher wages may explain up to 38% of the difference between Norway and Finland and differences in staff levels explain about 25%. Data errors are difficult to quantify, but the data on in long term care suggests that it accounts for at least 20% of the difference. Diminishing or zero marginal return is a controversial explanation for the lack of difference in outcomes despite higher spending and a brief review of the literature shows conflicting evidence. Finally, the last section argue that a convincing explanation of the growth of health spending should be based on a model that takes into account the fact that health care to a large extent is provided outside the free-market and that people seems to have special moral intuitions when it comes to the provision of health services as opposed to many other goods.

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File URL: http://www.hero.uio.no/publicat/2009/2009_10.pdf
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Bibliographic Info

Paper provided by Oslo University, Health Economics Research Programme in its series HERO On line Working Paper Series with number 2009:10.

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Length: 26 pages
Date of creation: 14 Dec 2009
Date of revision:
Handle: RePEc:hhs:oslohe:2009_010

Contact details of provider:
Postal: HERO / Institute of Health Management and Health Economics P.O. Box 1089 Blindern, N-0317 Oslo, Norway
Phone: 2307 5309
Fax: 2307 5310
Email:
Web page: http://www.hero.uio.no/eng.html
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Keywords: Health expandures; OECD; wages; Norway;

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