Aug 21, 2003 Financial Times FRONT PAGE - FIRST SECTION: Tax-funded healthcare 'could save US $200bn'
By Christopher Bowe in New York
Switching to a government-funded health system like Canada's would save the US $200bn a year by cutting administrative costs, enough to pay for all 41m uninsured American, according to two new studies.
The reports claim that the complex paperwork involved in the US system costs three times as much per head as in Canada, and that nearly one-third of the more than $1,000bn of US healthcare spending goes on bureaucracy.
A study published today in The New England Journal of Medicine found that the US would have saved $209bn in 1999 if administrative costs had been at the Canadian level.
A separate report by Harvard University and Public Citizen, the consumer watchdog, estimates that in the current year a US national health system would save $286bn.
That sum would be enough to insure the 41m Americans without healthcare coverage and to give all seniors a prescription drug benefit.
"Americans spend almost twice as much per capita on healthcare as Canadians who have universal coverage and live two years longer," said Dr Steffie Woolhandler, author of the NEJM study.
But critics attacked the reports, arguing that the complexity of the US system was partly due to the level of government involvement and claimed that that US model provides higher-quality treatment than nationalised programmes.
They also said the private companies in the US system had a greater incentive to keep costs down and to invest to improve efficiency.
Susan Pisano, of the American Association of Health Plans, an insurers' lobby group, said: "One does need to ask the question: where are the cost-control systems going to come from? Quality, affordability, choice, service and innovation: the private sector wins hands down when it comes to those."
Ms Pisano claimed the Canadian system had lost public confidence over the past decade, and that waiting lists represented another, perhaps more important, cost. "That's how they pay," she said.
In an editorial in NEJM, Henry Aaron, of the Brookings Institution, wrote that administrative costs may be 24 per cent lower than the studies estimate and that the reports "clearly exaggerate" the cost differences between the US system and Canada's.