Policy Tools for Allocative Efficiency of Health Services

Health care should be provided efficiently, given the potential gains for patients and the population and the high cost of some kinds of care. Emphasizing the most cost-effective services can in principle attain the greatest health gains. Policies are implemented through tools available to policy makers, particularly those in government who can influence not only public expenditure and service delivery but also how private insurers and providers allocate resources among diseases and individuals. Example's of tools that nudge a health system toward greater value for money, while respecting fairness and the wishes of taxpayers, patients and health workers, include specifying coverage by insurance or public provision, promoting or limiting medical procedures, and methods of contracting for service delivery and paying providers. Policy Tools reviews an enormous research literature for evidence that particular policies can improve how efficiently health services are delivered, aiming not only at what policies to recommend but at what it takes to make them effective.