Transcript Slide 1
Administrative Cost in Health Care Nov. 18, 2009 Himmelstein and Woolhandler 2000 1995 1990 1985 1980 1975 1970 1965 1960 Percent of GDP 15% 10% U.S. Canada 5% 0% Americans Lead the World in Hours Worked 1399 Norway 1560 Germany 1656 France 1731 U.K. Japan 1889 U.S. (1980) 1883 U.S. (1997) 1966 0 250 500 750 1000 1250 Hours/worker-year - 1997 Source: International Labor Organization, 1999 1500 1750 2000 Poverty Rates, 1997 U.S. and Other Industrialized Nations Netherlands 6% France 8% Sweden 9% Canada 11% UK 11% Germany 11% US 17% 0% 5% 10% 15% % of Population Below Poverty Level Source: Luxembourg Income Study Working Papers Note: U.S. figure for 1997, other nations most recent available year 20% On the one hand, • Greater poverty makes our health care system work harder • But on the other hand … Poverty-related illness is partly an effect of our health care system • Our system for health care financing exacerbates the effect of poverty on health • by making the opportunity cost high for the poor to obtain health care Who Pays For Health Care? Regressivity Of U.S. Health Financing Share of Health Payments/Share of Income 3.5 3 3 2.5 2 1.5 1.75 1.31 1.27 1.23 1.15 1 1.1 1.07 0.99 0.64 0.5 0 POOREST INCOME DECILE Source: Oxford Rev Econ Pol 1989;5(1):89 RICHEST Who Pays For Canada's NHP? Province Of Alberta Share of Health Payments/Share of Income 2 1.5 1.2 1 0.74 0.77 15,000 25,000 0.85 1.3 1.3 100 K 125 K 1 0.5 0 35,000 50,000 75,000 FAMILY INCOME Source: Premier's Common Future Of Health, Excludes Out-of-Pocket Costs Why are hospital administrative costs less in Canada? • Global budgets – Operating budget – Capital investment budget • Negotiated with Province • No bills. • No need to track and bill for individual services and goods Why are physicians’ administrative costs lower in Canada? • • • • Single payer One place to send bills One set of rules T. R. Reid: France, Germany, Japan, though with multiple competing private insurers, have – One system of submitting bills – One set of rules for what gets paid for – One set of prices Why are Canada’s system administrative costs lower? • No need to determine who is eligible for what – Canada’s overall administrative % close to Medicare (before Medicare + Choice), less than Medicaid • No marketing of insurance • No billing or collecting insurance premiums Number of Insurance Products Private insurers’ High Overhead Variation in Medicare Spending: Some Regions Already Spend at Canadian Level Infant Mortality Infant Deaths by Income, Canada 1996 Even the Poor Do Better than U.S. Average 9 8 7 6 5 4 3 2 1 0 7.8 6.5 4.7 5.1 5.2 3.9 Wealthiest 20% Middle 20% Poorest U.S. 20% Average 3500 3000 2500 2000 3048 1680 2227 Source: JAMA 2000; 283:2152 New York Homeless Boston Homeless 730 Toronto Homeless 1500 1000 500 0 Toronto Non-Homeless Annual Deaths Per 100,000 Men Age 45-64 Homeless in Toronto Death Rate Elevated, But Lower than In U.S. What's OK in Canada? Compared to the U.S…. • Life expectancy 2 years longer • Infant deaths 25% lower • Universal comprehensive coverage • More MD visits, hospital care; less bureaucracy • Quality of care equivalent to insured Americans’ • Free choice of doctor/hospital • Health spending 5/8 U.S. level What's the Matter in Canada? • One spigot makes it easy to cut flow of funds • Government funding cuts → 30% of hospital beds • closed during 1990s → waits and dissatisfaction But spigot has turned back up recently. Waits are shorter. U.S. Coalition of Service Industries “We believe we can make much progress in the [WTO] negotiations to allow the opportunity for U.S. businesses to expand into foreign healthcare markets ... public ownership of healthcare has made it difficult for U.S. private-sector healthcare providers to market in foreign countries.”