Costs of Health Care Administration in the United States and Canada

Woolhandler, Steffie; Campbell, Terry; Himmelstein, David U.
August 2003
New England Journal of Medicine;8/21/2003, Vol. 349 Issue 8, p768
Academic Journal
Background: A decade ago, the administrative costs of health care in the United States greatly exceeded those in Canada. We investigated whether the ascendancy of computerization, managed care, and the adoption of more businesslike approaches to health care have decreased administrative costs. Methods: For the United States and Canada, we calculated the administrative costs of health insurers, employers' health benefit programs, hospitals, practitioners' offices, nursing homes, and home care agencies in 1999. We analyzed published data, surveys of physicians, employment data, and detailed cost reports filed by hospitals, nursing homes, and home care agencies. In calculating the administrative share of health care spending, we excluded retail pharmacy sales and a few other categories for which data on administrative costs were unavailable. We used census surveys to explore trends over time in administrative employment in health care settings. Costs are reported in U.S. dollars. Results: In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada. Canada's national health insurance program had overhead of 1.3 percent; the overhead among Canada's private insurers was higher than that in the United States (13.2 percent vs. 11.7 percent). Providers' administrative costs were far lower in Canada. Between 1969 and 1999, the share of the U.S. health care labor force accounted for by administrative workers grew from 18.2 percent to 27.3 percent. In Canada, it grew from 16.0 percent in 1971 to 19.1 percent in 1996. (Both nations' figures exclude insurance-industry personnel.) Conclusions: The gap between U.S. and Canadian spending on health care administration has grown to $752 per capita. A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system. N Engl J Med 2003;349:753-9.


Related Articles

  • Healthy People Need Healthy Communities. Docksai, Rick // Futurist;May/Jun2009, Vol. 43 Issue 3, p10 

    The article discusses the need for healthy people to have healthy communities in the U.S. It notes on the recent reports obtained from the Robert Woods Johnson Foundation that most white Americans are at far higher risk of many major health problems compared to other races residing in the...

  • Forces of Change. Taylor, Humphrey // Pharmaceutical Executive;Jun2005, Vol. 25 Issue 6, p48 

    The article examines the forces likely to play a role in bringing about a change in the healthcare industry of the United States. The author notes that as the economy grows, Americans will spend a higher percentage of the gross domestic product (GDP) on healthcare. Over the last decade, aging...

  • A new model for health care delivery. Kepros, John P.; Opreanu, Razvan C. // BMC Health Services Research;2009, Vol. 9, Special section p1 

    Background: The health care delivery system in the United States is facing cost and quality pressures that will require fundamental changes to remain viable. The optimal structures of the relationships between the hospital, medical school, and physicians have not been determined but are likely...

  • Disease Management – Promises and Pitfalls. Bodenheimer, Thomas // New England Journal of Medicine;04/15/99, Vol. 340 Issue 15, p1202 

    The author discusses the problems involved with treating chronic illnesses in the United States. Surveys regularly reveal failures to comply with well-established guidelines for the critical clinical aspects of care for patients with a host of chronic conditions. Fewer than 25 percent of...

  • HIGHER LIFE EXPECTANCY AT LOWER COST: COUNTRIES WHICH OUTPERFORM THE UNITED STATES. Randall, Maury R.; Suk, David Y. // Global Journal of Business Research (GJBR);2009, Vol. 3 Issue 2, p117 

    In this paper we identify countries that have better outcomes than the United States with respect to life expectancy. Using this sample of countries, relationships between the life expectancy outcomes and health care costs are examined, and we also test whether the extent of public financing has...

  • Rafting the Rapids of Reform with the Governing Directors on Board. HUBER, GEORGE A.; FRIEDE, SAMUEL A. // Frontiers of Health Services Management;Summer2015, Vol. 31 Issue 4, p29 

    WE CAN CLOSELY relate to the excellent analyses by and practical recommendations of Deborah Zastocki, FACHE, and James Hinton based on our experiences serving on the boards and committees of various healthcare organizations, studying and teaching about the delivery of healthcare services, and...

  • The Promise Of Health Care Cost Containment. Garber, Alan; Goldman, Dana P.; Jena, Anupam B. // Health Affairs;Nov/Dec2007, Vol. 26 Issue 6, p1545 

    Today the United States may be on the cusp of changing from a cost-unconscious health care system to one that seeks value. The consequences of adopting a value- based approach to coverage have not been well studied; however, several broad strands of the health literature suggest that spending...

  • The Value and Evolving Role of the U.S. Poison Control Center System. Spiller, Henry A.; Griffith, Jill R. K. // Public Health Reports;May/Jun2009, Vol. 124 Issue 3, p359 

    Poison control centers (PCCs) in the United States play a hybrid role, functioning as part of the public health infrastructure and as direct-service providers, while offering poison treatment advice. In 2003, partially in recognition of their place in the public health infrastructure, Title XII...

  • Fixing the problems. Merx, Katie // Crain's Detroit Business;6/23/2003, Vol. 18 Issue 25, p11 

    The author recalls a government hearing a year or so ago in which a physician illustrated the problem with the health care system in the United States. Unless the nation's health care system is thoroughly overhauled, the double-digit health-insurance rate increases will not decrease, a panel of...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics