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Large Gap Found in Health Administrative Spending for U.S., Canada

Last Updated: January 08, 2020.

There is a large and widening gap in health administrative spending between the United States and Canada, according to a study published online Jan. 7 in the Annals of Internal Medicine.

WEDNESDAY, Jan. 8, 2020 (HealthDay News) -- There is a large and widening gap in health administrative spending between the United States and Canada, according to a study published online Jan. 7 in the Annals of Internal Medicine.

David U. Himmelstein, M.D., from City University of New York at Hunter College in New York City, and colleagues quantified 2017 spending for administration by insurers and providers in the United States and Canada.

The researchers found that U.S. insurers and providers spent $812 billion on administration, translating to $2,497 per capita compared with $551 per capita in Canada (34.2 versus 17.0 percent of national health expenditures). Overall, $844 versus $146 were spent on insurers' overhead; $933 versus $196 on hospital administration; $255 versus $123 on nursing home, home care, and hospice administration; and $465 versus $87 for costs related to physicians' insurance in the United States versus Canada, respectively. Since 1999, there was a 3.2-percentage point increase in administration's share of U.S. health expenditures; 2.4 percent was due to growth in overheads of private insurers, mainly due to high overhead in Medicare and Medicaid managed-care plans.

"Despite these imprecisions, the U.S.-Canada disparity in administration is clearly large and growing," the authors write. "Discussions of health reform in the United States should consider whether $812 billion devoted annually to health administration is money well spent."

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