This paper tests the null hypothesis of a zero effect of cesarean section rate on health outcome against the alternative of a positive effect. Using data from 59 hospitals in Sweden from 1988–92, we specify two separate linear regression models for health outcome, one with perinatal mortality, and the other with rate of asphyxia, as dependent variable. We estimate the models by single-year cross-section regressions and as pooled data systems. The null hypothesis cannot be rejected, i.e., we do not find any significant positive effect of cesarean section rate on health outcome. Thus, we conclude that an increase in cesarean section rate does not imply lower perinatal mortality or lower rate of asphyxia. This in turn indicates that the minimum cesarean section rate is optimal.