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US health system costs four times more to run than Canada's single-payer system

Melissa Healy, Los Angeles Times on

Published in Health & Fitness

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 just $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.

Progressive contenders for the Democratic nomination, including Sen. Bernie Sanders of Vermont and Sen. Elizabeth Warren of Massachusetts, are calling for a "Medicare for All" system. More centrist candidates, including former Vice President Joe Biden and former South Bend, Ind., Mayor Pete Buttigieg, have questioned the wisdom of turning the government into the nation's sole health insurer.

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 United States, 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. And in 2018, 27.9 million Americans remained uninsured, mostly because they could not afford to enroll in the programs available to them.

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