Report cites huge savings in Canada-style health plan

Suzanne Struglinski

Friday, Aug. 22, 2003 | 10:24 a.m.

WASHINGTON --Nevadans could save about $1.5 billion in health care administration costs per year if the country adopted a national health insurance program similar to Canada's, according to a Public Citizen report released this week.

The savings, if put to use, would be enough to cover $4,585 apiece for the 344,000 uninsured people in the state. Nevadans currently spend about $8 billion in health care costs with $2.1 billion going just toward administration expenses, according to the report.

"My small group practice must deal with dozens of different plans, each with its own regulations on coverage, eligibility and documentation," said David Himmelstein, Harvard Medical School associate professor and co-founder of Physicians for a National Health Program. "This wastes my time and the time of my colleagues looking up which drugs and specialists each plan will pay for."

Himmelstein, who is also a primary care doctor in Cambridge, Mass., explained that Canada's single health care agency allows doctors there to simply check one of 10 boxes on a form and send all bills to one place.

Along with two other researchers, Himmelstein discovered paperwork and other health care administration costs totaled about $294 billion in the United States in 1999, or about a third of total health spending that year, according an article published Thursday in the New England Journal of Medicine. That amount is three times the amount spent per capita in Canada.

The study evaluated administrative costs associated with health insurers, employers' health benefit programs, hospitals and other medical practices.

The researchers found that administrative costs accounted for about 30 percent of total health care costs compared with about 17 percent in Canada. The study evaluated administrative costs associated with health insurers, employers' health benefit programs, hospitals and other medical practices.

"A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system," the study concluded.

A "complementary report" by Himmelstein and Public Citizen Health Research Group Director Sidney Wolfe found the United States could save $286 billion in 2003 if it streamlined administration costs to mimic those of the Canadian system. This translates in about $6,940 for each of the 41.2 million uninsured Americans, according the Public Citizen report.

"These data should awaken governors and legislators to a fiscally sound and humane way to deal with ballooning budget deficits," Wolfe said. "In the current economic climate, with unemployment rising, we can ill afford massive waste in health care."

The Public Citizen report notes that the savings estimates are on the lower end of the spectrum because they do not include potential savings a national health program could generate by curbing inflation and other costs.

But local insurers say public-private partnership offers a better option.

Sally Vogler, director of public relations for Anthem Blue Cross and Blue Shield, said the company has been participating in discussions on how to offer better access to quality health care.

Vogler, who had yet not seen the reports, said comparisons to the Canadian health care system often overlook that a switch would put the government in control of health care. She said that causes concern, considering how other federal health programs, such as Medicare or Medicaid, are managed.

"It doesn't appear to us that it's working," Vogler said of the federal plans.

Marie Soldo, Sierra Health Services executive vice president for government affairs, said public-private partnerships have worked best locally where the company has made contracts with the state for some Medicaid programs.

Soldo said the private sector has better access to innovative technologies and an emphasis on customer service.