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.”