Uwe Reinhardt on comparing U.S. to Canada
How the U.S. measures up to Canada’s health care system
Worldfocus
January 28, 2009
As part of Worldfocus’ Health of Nations signature series, correspondent Edie Magnus conducted this half-hour interview with Uwe Reinhardt on January 20, 2009, the day of President Barack Obama’s inauguration.
Edie Magnus: What do you think of Canada’s national health care system?
Uwe Reinhardt: I think it’s a high performer in the following sense: Canadians spend half as much per capita on health care as we do in the U.S., and yet if you go up there, sure you have to wait for some MRI image or for some heart procedures, but overall the system produces very good health outcomes. People are more satisfied there with their care than Americans are with theirs. So if you diagnosed it like a physician, you’d give that system an A and you’d have a hard time giving more than a B to ours.
Edie Magnus: Why do you think it is that most Americans don’t see it that way?
Uwe Reinhardt: Most Americans, first of all, are bombarded with propaganda. You don’t know how many think tanks are paid by certain industry — insurance, drug, organized medicine — to feed out negative stories about the Canadian health system. They do of course have mishaps, as do we, but there is a whole industry collecting them and beaming them out here. That is one.
Secondly, people are always more comfortable culturally with whatever they have than with some other system.
Third, people imagine having the worst illness, and if you are really very sick in the U.S., you generally do have more hope than in any other country if you are very sick, particularly if you are well insured. But if you sort of live the average life of Americans and have a Canadian system, they have better primary care, easier access to it. They would never go bankrupt over health care, because they don’t do that up there. They would realize what they are missing here.
Edie Magnus: We were in a hospital that was affiliated with McGill University, and it was a regional system that had six hospitals that were affiliated with one another, and they annually have some 39,000 inpatients, and they do about 34,000 surgeries and they deliver about 3,000 babies. And managing all of this is a staff of 12 people doing the billing, the administration. What would an equivalent hospital in the U.S. take to run administratively?
Uwe Reinhardt: You’d be talking 800, 900 people, just for the billing, with that many hospitals and being an academic health center. We were recently at a conference at Duke University and the president of Duke University, Bill Brody, said they are dealing with 700 distinct managed care contracts. Now think about this. When you deal with that many insurers you have to negotiate rates with each of them. In Baltimore, they are lucky. They have rate regulations, so they don’t have to do it. But take Duke University, for example, has more than 500,000 and I believe it’s 900 billing clerks for their system.
Edie Magnus: What are 800, 900 people doing?
Uwe Reinhardt: Well first of all there’s a contract. With each different managed care contract you have different rates. You have different things that need pre-authorization, not depending on the contract. You haggle over every bill. You submit the bill, the insurer rejects it, you haggle, and it may take 90 days to settle one bill. They don’t have that in Canada. You see, we spend in this country an enormous amount of money just administering claims. It’s a huge wrestling match over the payment.
Edie Magnus: When we pay a medical bill, how much of that bill goes to these kinds of administrative costs?
Uwe Reinhardt: Well, in general what you’ll find in our official statistics, we’re spending 7 percent on administration, but that only accounts for the insurers’ administrative costs and that includes Medicaid, which burns only two percent of its money throughput on administration. On the other hand, Medicare and Medicaid both cost the hospitals administrative costs that are booked as medical care, but it’s really administrative costs.
Steffie Woolhandler and David Himmelstein of Harvard did a study comparing Canada and the U.S. looking at what it costs employers, providers, doctors and hospitals and the insurance mechanism and compared Canada and the US, and they found that we in 1999, spent $300 billion on administration for all these three functions, and that was about 24 percent of national health spending there, but they say it was actually 31 percent because of the fraction of spending that they could actually identify and link to administrative costs. So they came to 31. So it’s somewhere between 25 and 30 percent that goes for administration and it doesn’t even include the patients’ time of billing. Anyone who has had anyone really sick in their family knows how much time you spend haggling over the bills and they have none of that in these systems.
Edie Magnus: I know that there’s some dispute about all those numbers, about what percentage of our spending the administrative costs represent, but you have said that with what America could be saving in administrative costs, that it could completely fund universal health care for all Americans.
Uwe Reinhardt: Oh yes, I’m totally convinced of that.
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Edie Magnus: Would national health care work in the United States?
Uwe Reinhardt: Yes.
Edie Magnus: Would Canada’s plan work in the United States?
Uwe Reinhardt: Well, it works. We have a Canadian health plan in America. It’s called Medicare. It works. Don’t tell me Medicare doesn’t work. Tell that to the elderly. One way to test it is to say “Let’s take it away.”
Full transcript and video:
http://worldfocus.org/blog/2009/01/28/how-the-us-measures-up-to-canadas-health-care-system/3783/#comments
Comment:
By Don McCanne, MD
Save this link until you have 27 minutes to watch the complete video. It will be well worth your time.