Overall Health Of Americans And Canadians Is Similar, But Americans Pay Four Times As Much In Health-Care Costs (One Big Reason: Compensation Packages For Insurance Executives)

Igor Derysh, Salon, February 15, 2020:

The cost of administering health care in the United States costs four times as much as it does in Canada, which has had a single-payer system for nearly 60 years, according to a new study.

The average American pays a whopping $2,497 per year in administrative costs ... compared to $551 per person per year in Canada, according to a study published in the Annals of Internal Medicine last month. The study estimated that cutting administrative costs to Canadian levels could save more than $600 billion per year.

The data contradicts claims by opponents of single-payer health care systems, who have argued that private programs are more efficient than government-run health care. ...

Canada had administrative costs similar to those in the United States before it switched to a single-payer system in 1962, according to the study's authors, who are researchers at Harvard Medical School, the City University of New York at Hunter College, and the University of Ottawa. But by 1999, administrative costs accounted for 31% of American health care expenses, compared to less than 17% in Canada. ...

Americans pay far more for the same care.

The average American spent $933 in hospital administration costs, compared to $196 in Canada, according to the research. Americans paid an average of $844 on insurance companies' overhead, compared to $146 in Canada. Americans spent an average of $465 for physicians' insurance-related costs, compared to $87 in Canada. ...

Despite the massive difference in administrative costs, a 2007 study by the Centers for Disease Control and Canada's health authority found that the overall health of residents in both countries is very similar, though the US actually trails in life expectancy, infant mortality, and fitness.

Many of the additional administrative costs in the US go toward compensation packages for insurance executives, some of whom pocket more than $20 million per year, and billions in profits collected by insurers.

"Americans spend twice as much per person as Canadians on health care. But instead of buying better care, that extra spending buys us sky-high profits and useless paperwork," said Dr. David Himmelstein, the study's lead author and a distinguished professor at Hunter College. "Before their single-payer reform, Canadians died younger than Americans, and their infant mortality rate was higher than ours. Now Canadians live three years longer and their infant mortality rate is 22% lower than ours. Under Medicare for All, Americans could cut out the red tape and afford a Rolls Royce version of Canada's system."