Improving Cost-Effectiveness in the Health Care Sector in Iceland

Health outcomes and the quality of health care in Iceland are very good by international comparison, whileincome-related health inequality appears to be smaller than in most other countries. However, thehealth-care system is costly and, according to OECD estimates, public expenditure on health and long-termcare could reach 15% of GDP by 2050 if no restraining measures are taken. This highlights the importanceof raising cost-effectiveness and spending efficiency more generally. To this end, it would seem advisableto remove impediments to private provision and open up the health sector to competition. At the sametime, the introduction of cost-sharing should be considered where it does not exist (as in hospitals),although concerns about equity need to be taken into account. This would relieve the burden on publicfinances, as would the introduction of spending ceilings, cost-efficiency analysis and activity-basedfunding arrangements. The high cost of pharmaceuticals should be reduced by promoting competition andthe use of inexpensive generic drugs.