While a similar share of workers were employed in healthcare administration in the United States and Canada five decades ago, U.S. administrative employment has far outpaced its northern neighbor since Canada launched a single-payer health system, according to a recent study.
The ratio of healthcare administrative personnel employed in the U.S. was 43.8 people per 10,000 population when Canada switched to single payer, compared with 40.8 people per 10,000 in Canada, the research showed.
In 2017, the gap had grown to 129.7 people per 10,000 population in the United States compared with 88.9 people in Canada.
"The gap in health administrative spending between the United States and Canada is large and widening, and it apparently reflects the inefficiencies of the U.S. private insurance-based, multipayer system," the researchers wrote.
The study was conducted by David Himmelstein and Steffie Woolhandler, professors at the City University of New York, and Terry Campbell, the executive director of research operations and strategies at the University of Ottawa. Himmelstein and Woolhandler are co-founders of the single-payer advocacy group Physicians for a National Health Program, have served as unpaid policy advisers to Sen. Bernie Sanders (I-Vt.) and have coauthored research manuscripts with Sen. Elizabeth Warren (D-Mass.). The study was published in Annals of Internal Medicine.
"It's actually the data that guided us to the solution, the solution didn't give rise to the data," Himmelstein said.
The study showed that private insurers contributed to most of the increase in administrative costs between 1999 and 2017. Of the 3.2 percentage point increase in administrative costs as a share of overall health spending, 2.4 percentage points were due to the expanding role that private insurers have assumed in Medicare and Medicaid.
However, an initial economic analysis of the 2017 version of Sanders' Medicare for All proposal produced by researchers at the University of Massachusetts at Amherst found that administrative savings that could be gleaned if the United States were to switch to a single-payer system would come in part from the loss of more than 1 million jobs in healthcare administration.
"The administrative simplicity means that we don't need so many people working in private health insurance, and people working in providers offices and hospitals engaged in administration, and it's the biggest single source of savings," analysis author and University of Massachusetts professor Robert Pollin said at a December roundtable on Medicare for All costs.
However, the analysts expect Medicare for All would be a net job producer through lowering operating costs for small- and medium-sized businesses.
