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Health care administration 300 perc canada { August 21 2003 } Original Source Link: (May no longer be active)
http://www.nationalpost.com/national/story.html?id=03E24528-2A19-4BB9-8F83-6E9EB4550EA8http://www.nationalpost.com/national/story.html?id=03E24528-2A19-4BB9-8F83-6E9EB4550EA8
U.S. health administration costs 300% higher than in Canada
Multi-payer system: Privately managed care a 'monstrosity,' economist says
Brad Evenson
National Post
Thursday, August 21, 2003
The U.S. health care system spends over 300% more on administration than the Canadian system, a new Harvard Medical School study has found.
And researchers say the hundreds of billions in extra spending do not make patients healthier.
"Health [systems] with the highest administration costs tend to have the lowest clinical quality," said study co-author Steffie Woolhander, an associate professor of medicine at Harvard.
The study is published today in the New England Journal of Medicine.
When hands-on medical costs were excluded, the cost of treating a U.S. patient in 1999 was US$1,059, more than triple the Canadian cost of US$307.
The researchers said the United States could trim US$209-billion by adopting the "parsimonious" Canadian-style system.
Dr. Woolhander said the problem with the Canadian health system is that it does not spend enough on medical care, which results in long waiting lists for treatment. Americans spend about US$5,600 per patient -- 83% more than is spent in Canada.
"From our point of view, your funding is too low but your system is very good," she said.
"We have a systemic problem here. There is lots of money sloshing around, yet we have 41 million people with no health insurance, seniors who can't afford medications, and multiple other problems."
Academics blame much of the spending on the multi-payer system of privately managed care in the United States.
"I look at the U.S. health care system and see an administrative monstrosity, a truly bizarre mélange of thousands of payers with payment systems that differ for no socially beneficial reason," economist Henry Aaron of the Brookings Institution, a U.S. think-tank, wrote in a related commentary.
However, Mr. Aaron said Americans would never accept a Canadian-style health care system.
"The U.S. health care administration, weird though it may be, exists for fundamental reasons, including a pervasive popular distrust of centralized authority," he wrote.
Mr. Aaron also disputed the estimated savings of switching to a single-payer Canada system -- he puts it at US$159-billion.
Much of the U.S. red tape arises from disputes between insurance companies over who pays for care.
"A lot of patients I see have three or even four insurance companies paying," said Dr. Vernon Lister, a Miami doctor.
"And every company wants to dispute the bill. They've got armies of people doing nothing but bean counting, and not one of them is doing anything to improve patient care. Not one."
Studies from other countries show the greater the number of payers, the higher the costs. Germany, for example, has a public health system but multiple payers. As a result, its administrative costs are much higher than Canada's but lower than in the United States.
As U.S. health care has grown in complexity, so has its employee rosters.
Between 1969 and 1999, the number of administrators -- including clerks, consultants and managers -- rose to 27.3% from 18.2%. In Canada, it grew to 19.1% in 1996 from 16% in 1971.
For example, one of the biggest U.S. private health plans, WellPoint, looks after 10.1 million customers and has 13,900 administrative staff. By contrast, the Ontario Health Insurance Plan covers 11.7 million people with about 1,400 employees.
Insurance overhead eats up the lion's share of the U.S. administrative costs, at US$259 per patient in 1999 compared with US$47 in Canada. U.S. hospitals spent US$315 per patient on administration, while Canadian hospitals spent US$103.
bevenson@nationalpost.com
© Copyright 2003 National Post
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