Is More Public Health Spending Always Better? A Comparative Efficiency Analysis with DEA

Amid rising healthcare costs and growing demands on health systems, evaluating the efficiency of government health spending has become increasingly important. This study examines the relative efficiency of healthcare spending in five countries—Poland, Germany, Hungary, Italy, and South Korea—over the period 2014 to 2023, using a Data Envelopment Analysis (DEA) model with a Variable Returns to Scale (VRS) orientation. The analysis incorporates two input variables (health expenditure per capita and as a percentage of GDP) and two output indicators (life expectancy and infant mortality rate), with the latter transformed inversely to account for its undesirable nature in the DEA framework. Results show that South Korea consistently achieved the highest efficiency scores, remaining close to or on the efficiency frontier throughout the decade. Hungary demonstrated significant progress, reaching full efficiency in the final years, while Germany consistently underperformed despite high health expenditures, suggesting deep structural inefficiencies. Italy showed moderate but improving efficiency, culminating in full efficiency by 2023, whereas Poland, despite strong initial performance, experienced a decline in recent years. Slack analysis revealed that inefficiencies were more evident in input usage particularly health expenditure per capita—than in output generation. These findings highlight that effective governance, strategic health reforms, and system integration are more critical to achieving efficiency than the absolute level of spending. The study underscores the value of DEA as a methodological tool for health policy evaluation and offers practical insights for improving the efficiency of public healthcare spending.