Canada Does Better Job Than United States Controlling Health Care Administrative Costs

From 2000 to 2002, researchers at the Cambridge Medical Care Foundation examined trends in health care administrative costs. Their major focus was a comparison of costs in the United States and Canada for 1999. They also compared trends over time and addressed the relationship of administrative spending to quality and overall costs.

The Cambridge Medical Care Foundation, part of the Cambridge Health Alliance, is a nonprofit organization dedicated to community health.

Key Findings

  • Administrative costs per capita were $1,059 in the U.S. and $307 in Canada; these costs accounted for 31 percent of health care spending in the U.S. versus 16.7 percent in Canada.

  • Between 1965 and 1999, direct government health spending, public employers' benefit spending, and tax subsidies all rose more rapidly than did overall health care costs.

  • From 1997 to 2000, higher administrative costs at HMOs were consistently associated with lower quality.