To evaluate administrative costs to insurers and providers in 2017, David U. Himmelstein, Terry Campbell and Steffie Woolhandler analysed government reports, accounting data, physician surveys and census data on healthcare-based employment from the US and Canada. And their resulting paper, Health Care Administrative Costs in the United States and Canada, 2017, highlighted that US administrative healthcare costs (34.2 per cent) for 2017 represented twice the amount spent on healthcare administration in Canada for the same period.
“US insurers and providers spent US$812 billion on administration, amounting to $2,497 per capita (34.2 per cent of national health expenditures) versus $551 per capita (17 per cent) in Canada,” the paper reads. Compared to Canada, the US spent more on hospital administration ($933 compared to $196); $255 for nursing homes, home care and hospice administration compared to $123; and $465 for physicians' insurance-related costs compared to $87.
In addition, 2.4 per cent of the growth in US healthcare administration costs was due to growth in private insurers' overheads, mostly because of high overheads in their Medicare and Medicaid care plans.
“The gap in health administrative spending between the US and Canada is large and widening, and it apparently reflects the inefficiencies of the US private insurance-based, multi-payer system. The prices that US medical providers charge incorporate a hidden surcharge to cover their costly administrative burden,” the paper asserted.
Moreover, Himmelstein noted: “It's ultimately patients who pay for the sky-high administrative costs, making care less affordable and driving up medical debts.”