Is the quest for efficiency harmful to health equity? An examination of the health efficiency-equity nexus in OECD countries over the past two decades

Background: Has the quest for efficiency in OECD health systems impacted the social gradient of health? We examined the cross-dynamics of the health system equity-efficiency nexus among OECD countries in the past two decades. Methods: We used a three-step methodology based on annual macro-level data from 36 OECD countries for the period 2004–2021. First, we estimated the efficiency of health systems using a stochastic frontier analysis. We then assessed the equity of health systems using simple measures of income-related inequality in self-assessed health. Lastly, we estimated the dynamic relationship between health system efficiency and equity using a panel Granger causality analysis. We also stratified the analysis by type of health system: viz. publicly- vs. privately-dominated health service provision. Findings: We find evidence for a bidirectional causality between health system efficiency and equity. An increase in health system efficiency leads to an increase in socioeconomic inequalities in health; a result particularly salient in countries with predominantly private health service provision. Interestingly, decreases in socio-economic inequalities in health are likely to lead to higher health system efficiency, especially in countries where the health system relies predominantly on public provision. Interpretation: The pursuit of efficiency gains in OECD health systems has not been a precondition for socioeconomic equity in health. Adverse effects of efficiency-seeking interventions on health equity are particularly apparent in the private provision of healthcare. However, addressing health inequalities provides a plausible route to enhance efficiency.