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Per Capita U.S. Health Care Costs Triple Canada's

August 21, 2003
The overhead cost of operating the United States health-care system is more than three times that of running Canada's on a per capita basis, and the gap is getting bigger, according to a study published today in the New England Journal of Medicine.

Savings gleaned from a national health insurance system like Canada's would be enough to provide medical insurance for the 41 million Americans who now lack coverage, the researchers said.

The study puts the administrative cost of the U.S. system at $294 billion per year, compared to about $9.4 billion in Canada. That translates to a per-person cost of $1,059 in the U.S. and $307 in Canada. A similar study, conducted in 1991, put per-capita costs in the U.S. at $450 and Canadian costs at one-third of that.

The study by Dr. Steffi Woolhandler of the Harvard School of Medicine found that Americans spend more on administrative costs because of the many private companies supplying insurance coverage. The multitude of companies create increased paperwork while Canadian doctors send their claims to a single insurer, the government.

"What we've got now under the current health-care system in the U.S. is a giant food fight between doctors, hospitals, patients and insurance companies as to who gets stuck with the bill," Woolhandler said.

Also, the study noted, private insurers spend large sums on marketing and underwriting, costs that the Canadian system doesn't have to bear.

However, in an editorial the Journal said that Woolhandler's study may be overestimating the gap between the two nations. Editorial writer Dr. Henry Aaron, an economist with the Brookings Instition in Washington, said the authors have overestimated the cost of the U.S. system by about $50-billion.

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