Health Spending Gap Widens Between U.S., Canada
By Amanda Gardner, HealthDay Reporter
HealthDayNews — The yawning health-care spending gap between the United States and Canada is widening further, in large part because of administrative costs, a new study says.
According to research published in the Aug. 21 issue of the New England Journal of Medicine, the United States exceeds Canada by $752 in per capita spending on health-care administration, a huge increase from a decade ago.
If the United States adopted a single-payer system similar to the one in Canada, the authors contend, these costs would be significantly reduced.
“As medicine has become more businesslike, we see a huge increase in the amount of administrative work. If you run health care as a public service the way they do in Canada, there’s less administrative work to do,” says Dr. Steffie Woolhandler, first author of the paper and an associate professor of medicine at Harvard Medical School.
An accompanying editorial, however, argues that these numbers may overestimate total U.S. spending by at least $50 billion.
According to Woodhandler and her colleagues, the few studies that have examined administrative costs in the U.S. health-care system have relied on data collected before 1991 and therefore do not reflect various organizational and technological changes implemented since then. Managed care, for instance, has achieved a firm foothold, and many more administrative tasks are managed electronically.
Although logically it could be expected that these changes would reduce the administrative burden, this study says just the opposite has occurred.
“We’ve seen a great deal of talk about computerization and the Internet simplifying administrative tasks, but the experience on the ground is that things are getting heavier and not lighter,” Woolhandler says.
According to Woolhandler’s calculations, the United States spent about $450 per capita in 1987 on health-care administration, while Canada spent one-third as much. In 1999, U.S. spending was up to $294.3 billion, or $1,059 per capita, compared with just $307 per capita up north.
These seemingly abstract numbers translate into real issues for patients and providers.
Woodhandler gave this example: “When you walk into my office, you talk to a clerk who determines what kind of insurance you have. In Canada, she’d know. She determines if you’re still eligible. In Canada, you’re automatically eligible as long as you are alive. If I want to refer [a patient to a specialist], I have to look up to see which one I can refer them to. It’s not an issue in Canada. If they want medication, I have to look up which medication is covered.”
She adds, “That’s even before they leave the office. After leaving the office, you have a whole circus that goes on about sending a bill and if you have a period or a comma or a number in the wrong place, they reject it.”
The editorial writer, Henry Aaron, an economist with the Brookings Institution in Washington, D.C., describes the U.S. health-care system as “an administrative monstrosity, a truly bizarre melange” and describes himself as someone who is “yearning to believe” the conclusions from the study.
And yet, he says, he can’t do that. Instead, he says the numbers may be inflated and cites a morass of arcane accounting principles to support his point.
Even if the differences were large, he continues, a single-payer system without cost-sharing or private insurance is unlikely to take root in the United States.
Why? For a number of reasons, including a fundamental “distrust of centralized authority,” he says.
To muddy the waters further, a third article in the journal contends that the Canadian system is not as streamlined as it would seem.
Needed reform has been delayed and onerous regional differences are accruing, say Drs. Allen Detsky and C. David Naylor, who are Toronto health experts.
“Canadians have certainly gotten more dissatisfied with their system over the last decade,” says Karen Davis, president of the Commonwealth Fund in New York City. “In the early 1990s, the federal government had to cut health spending. In the last five years, the Canadian government has tried to reverse that.”
Even though Canada’s system is far from perfect, Davis adds, it is “a sound system” and one the United States could afford to emulate to a certain degree.
“Part of the problem is, we’re such an isolationist country that we think we have the best health-care system in the world,” she says. “We just have an automatic shutdown whether we have anything we can learn from other countries.”
She adds, “In the sober light of day, when we look at the facts, there are a lot of areas where we can improve performance.”
“The one thing we clearly do is waste money,” she continues. “One of the solutions that we can learn from the Canadian experience going forward is to really simplify and streamline some of our administration.”
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