Even though the US does not have health care for everyone, we still spend more than twice as much per a person than Canada.
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.
Now Canada has been criticized for not providing enough, for being underfunded. So what if the US took the Canada system and doubled the funding? We would still be at two thirds the cost of what we have now, which does not cover everyone.
And here is the first reason why – we have health insurance companies that take 31 cents of every health care dollar right off the top!
After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States
The second reason why the US has such incredible high per person health care costs compared to Canada is how we do health care:
Americans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse. For example, Rochester, Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which is eight thousand dollars less than the figure for McAllen. Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s quality ranking tended to be.
Note that Mayo model is not only the most efficient, but is widely regarded as the best health care. People come from all over the world for the Mayo healthcare. In the Mayo model, we have the most efficient cost ($6,688) and in the McAllen model, the least efficient ($6,688 + $8,000). By using the Mayo model and by assuming a normal distribution of costs between the best and worst models, we could half the savings ($4,000) over an average cost ($6,688 + $4,000) = 37%. So if we assume that health care cost ranges normally between the between the best and worst, by the numbers in this articles, then 37% of the money being spent on health care could be improved. Since only 69 cents of the health care insurance dollar goes to health care, 37% of 69 cent is 26 cents. So take away 26 cents, which leaves 43 cents on health insurance dollar really being spent on good core health care.
And basically this diagram analysis confirms the comparison with Canada costs, which is 29% of what the US spends. This confirms the recommendation that the US would like a more fully funded Canadian model.
Crossposted at MN Progressive Project.