The Physicians for a National Health Program (PNHP)

The Physicians for a National Health Program (PNHP)

Introduction

This report compares the cost of health care bureaucracy in the U.S. to that in Canada in 2003. We also calculate the cost of excess bureaucracy in each of the 50 states and the District of Columbia. These state-by-state estimates represent the amount spent on administration and the potential savings through the implementation of a single payer, universal health care program similar to Canada's. This information should be useful to consumers, national and state legislators, health policy experts, economists, and others concerned with skyrocketing medical costs and declining access to medical care.

Administrative Costs 1969-1999

The administrative structure of the U.S. health care system consumes a large share of health spending. In 1999, administrative spending consumed at least 31.0 percent of health spending, according to a report in today's New England Journal of Medicine. In contrast, administrative costs in Canada, which has had a national health program since 1971, are about 16.7% of health spending.

In 1969 administrative personnel accounted for 18.2% of the health care work force in the U.S. By 1999 administration's share had risen to 27.3% of total employees - a 50% increase. This figure excludes the 926,000 employees in life/health insurance firms, and 724,000 employed in insurance brokerages. Overall, at least 31.0% of health spending was devoted to administration in the U.S. in 1999.

In contrast, administration's share of health employment in Canada (where a national health program has been in place since 1971) grew only 17% between 1971 and 1986, and has remained virtually unchanged since 1986. In 1996 administrative workers accounted for 19.1% of health employees vs. 27.3% in the late 1990s in the U.S. (both of these figure exclude health insurance company workers, who are far more numerous in the U.S. ...