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Determinants of the efficiency of public health spending in Latin America: A stochastic frontier evaluation

Abstract:

The objective of this article is to establish the level of efficiency of public health spending in Latin America and verify its relationship with certain institutional characteristics, such as regulatory quality state, participation of the private sector, decentralization and size of the bureaucracy. A stochastic frontier of true random effects is estimated, which relates per capita public spending on health to the neonatal and infant mortality rate and life expectancy after sixty years. The resulting inefficiencies are returned with respect to the set of institutional explanatory variables. It is evidenced the important role of public health spending in obtaining certain levels of health performance. However, its efficiency can be improved, especially via optimizing the regulatory quality of the state. We conclude that Latin America have created complex health systems, but have failed to improve coordination between the system's actors, which explains inefficiencies. Government stewardship is essential.