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Hyungue Lim and Jongsung Kim
''Relative (in)efficiency and its opportunity cost of the U.S healthcare spending: a data envelopment analysis approach''
( 2022, Vol. 42 No.2 )
Among the OECD countries, the U.S. spends the most on healthcare. However, the health outcome of the U.S. population, measured by life expectancy at birth, is not better than that of other high-income OECD countries. This signals an inefficiency in healthcare spending in the U.S. We use the Data Envelopment Analysis (DEA) to measure such inefficiencies. DEA results provide information about what optimal outcome could have been at certain point in time. We further calculate the aggregated value of inefficient healthcare spending in the U.S. and call this value the opportunity cost. We found that from 2000 to 2017, the opportunity cost was at least 3% of the GDP each year, and the total value of the opportunity cost amounted to at least 26% of 2017 GDP.
Keywords: Healthcare Expenditure, Opportunity Cost, Life Expectancy, DEA, Efficiency
JEL: I1 - Health: General
D6 - Welfare Economics: General
Manuscript Received : Apr 14 2021 Manuscript Accepted : Jun 30 2022

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