Medicare spending has grown nearly three times faster in the United States than in Canada since 1980, according to new research that suggests cost controls could save Americans millions in government healthcare costs.
The study, published in the Archives of Internal Medicine, found per capita costs for American seniors on Medicare have outpaced Canada's program, which covers all Canadians, not just the elderly, but is also called Medicare.
The first-of-its-kind study — conducted by Dr. David U. Himmelstein and Dr. Steffie Woolhandler, professors at the City University of New York's School of Public Health — analyzed decades of Medicare spending data for people aged 65 and older in the U.S. and Canada.
After adjusting for inflation, they found U.S. Medicare spending rose 198.7 percent from 1980 through 2009, but just 73 percent in Canada. The researchers said the findings have important implications for the debate on how to bolster and save America’s Medicare program.
"Had U.S. Medicare spending per elderly enrollee increased as slowly as in Canada, the savings from 1980 through 2009 would have totaled $2.156 trillion," said Himmelstein. "That's equivalent to more than one-sixth of the U.S. national debt."
The researchers cited several reasons for the disparity. Canada's program contains spending by requiring less paperwork and administrative costs, which account for 16.7 percent of total health spending vs. 31 percent in the U.S. Canada also relies on lump-sum budgets for hospitals; spending controls for new buildings and equipment; a single-buyer system to rein in drug and device prices; low litigation and malpractice costs; and an emphasis on primary care.
"In a nutshell, including the elderly in a universal, nonprofit, publicly administered single-payer system has been the key to Canada's cost control,” Woolhandler said. “Although U.S. Medicare is often called a single-payer system, that's not quite accurate. It's true that traditional Medicare is relatively efficient … but Medicare is only one of many healthcare payers in the United States.”
The article also cited several studies that show Canadians’ overall public health is comparable, if not better than, Americans’ health.