Study: US Health System Costs Four Times More Canadian Way

LOS ANGELES - In the United States, a legion of administrative health care workers and health insurance employees who play no direct role in providing patient care costs every American man, woman and child an average of $2,497 per year.

Across the border in Canada, where a single-payer system has been in place since 1962, the cost of administering health care is $551 per person - less than a quarter as much.

That spending mismatch, tallied in a study published this week in the Annals of Internal Medicine, could challenge some assumptions about the relative efficiency of public and private health care programs. It could also become a hot political talking point on the American campaign trail as presidential candidates debate the pros and cons of government-funded universal health insurance.

It's been decades since Canada transitioned from a U.S.-style system of private health care insurance to a government-run single-payer system. Canadians today do not gnash their teeth about co-payments or deductibles. They do not struggle to make sense of hospital bills. And they do not fear losing their health care coverage.

To be sure, wait times for specialist care and some diagnostic imaging are often criticized as too long. But a 2007 study by Canada's health authority and the U.S. Centers for Disease Control and Prevention found the overall health of Americans and Canadians to be roughly similar.

Some Canadians purchase private supplemental insurance, whose cost is regulated. Outpatient medications are not included in the government plan, but aside from that, coverage of "medically necessary services" is assured from cradle to grave.

The cost of administering this system amounts to 17% of Canada's national expenditures on health.

In the U.S., twice as much - 34% - goes to the salaries, marketing budgets and computers of health care administrators in hospitals, nursing homes and private practices. It goes to executive pay packages which, for five major health care insurers, reach close to $20 million or more a year. And it goes to the rising profits demanded by shareholders.

Administering the U.S. network of public and private health care programs costs $812 billion each year. In 2018, 27.9 million Americans remained uninsured.

"The U.S.-Canada disparity in administration is clearly large and growing," the study authors wrote.

The new figures are based on an analysis of public documents filed by U.S. insurance companies, hospitals, nursing homes, home-care and hospice agencies, and physicians' offices. Researchers from Hunter College, Harvard Medical School and the University of Ottawa compared those to administrative costs across the Canadian health care sector, as detailed by the Canadian Institute for Health Information and a trade association that represents Canada's private insurers.

Compared to 1999, when the researchers last compared U.S. and Canadian health care spending, the costs of administering health care insurance have grown in both countries. But the increase has been much steeper in the United States, where a growing number of public insurance programs have increased their reliance on commercial insurers to manage government programs such as Medicare and Medicaid.

As a result, overhead charges by private insurers surged more than any other category of expenditure, the researchers found.

Caption: The yearly cost of administering health care is $2,497 per person in the United States, according to a study. It's $551 in Canada.

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