The impact of cost-containment policies on health expenditure: Evidence from recent OECD experiences

Many governments have enacted health cost-containment policies in recent years, and many are currently considering further reform alternatives to tackle growing health spending and promote efficiency in the health system, particularly in light of projections regarding future cost pressures in this sector. The focus of this study is to assess the most robust empirical evidence on the public spending effects of health policy alternatives to contain excess cost growth in the system. A stylised theoretical framework of the relationships between potential cost-containment measures, economic incentives and quantities, and health expenditure is suggested. The developed framework provides structural guidance for reviewing the evidence on the cost-containment impacts of various reforms implemented in OECD countries in the last decades. The accumulated evidence indicates that there are various alternative policies in a government’s toolkit that can be combined to achieve better cost control in the health system, provided institutional aspects and policy interactions are carefully considered. JEL classification: I10, I18, H51. Keywords: Health financing, cost containment, provider payment, health system reform.