Author: Kevin Dickinson / Source: Big Think
- The United States scores dramatically lower than other high-income countries in healthcare benchmarks, despite overspending them.
- A recent report published in JAMA suggests this discrepancy results from runaway administrative costs and U.S. practitioners charging more for the same medical services.
- By taking lessons from Canada’s single-payer system, the U.S. may be able to reduce its healthcare costs but simultaneously improve medical access for wider range of the population.
Americans are split over Canada’s single-payer healthcare system. Some see it as a model to be adopted by the United States. Others see it as an inefficient system that will hinder America’s competitive edge. Proponents of either side can, of course, regale you with stories of former neighbors, distant cousins, or one-time coworkers who fled across the border to seek that elusively greener healthcare on the other side.
In truth, each system has its flaws. Canada’s healthcare is universal, assuming you ignore the gaping oversight of not covering essential prescriptions; meanwhile, the U.S. has some of the best healthcare in the world, if you don’t mind bankrolling a litany of unnecessary tests and treatments.
But Canada dominates its southern neighbor in one healthcare facet: cost savings. Despite publicly funding universal healthcare, Canada spent only 10.45 percent of its national GDP in 2014. The United State’s expenditure was 17.4 percent of GDP. Per capita, Canada spent $4,641. The U.S.? Double that.
How does Canada do so much more with less?
Amputating administrative costs
(Photo from Our World in Data)
In 2014, Canada spent 10.45 percent of its national GDP on healthcare. The United State’s expenditure was 17.4 percent.
According to a report published in the Journal of the American Medical Association, the reason the U.S. outspends Canada — and 10 other high-income countries —is not due to social spending or healthcare utilization. The culprit was price inflation across the board.
The report detailed that in the U.S. medical practitioners earn significantly more, individual services cost more, and Americans spend more on pharmaceuticals per capita.
Administrative costs were also singled out as a major price driver. According to the report, U.S. administration accounted for 8 percent of healthcare expenditures. In other high-income countries, that amount ranged from 1 to 3 percent.
“We have this discombobulated, fragmented system that leads us to have very high administrative costs, and everything is disconnected,” said Dan Polsky, executive director of the University of Pennsylvania’s Leonard Davis Institute of Health Economics. “You have to go from one system to another when you go from one provider to another. Some health [information] gets lost with the transfer from one provider to the next. And there’s a private healthcare system that funds you when you are under 65,…
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