By David Pittman, Washington Correspondent, MedPage Today
MedPage Today, Oct. 30, 2012
Medicare spending in the U.S. has grown nearly three times faster since 1980 than spending on a similar population group in Canada, a study has found.
Spending per Medicare enrollee rose in the U.S. from $1,215 in 1980 to $9,446 in 2009. In Canada, per capita spending on elderly patients in the country’s national healthcare system grew from $2,141 to $9,292, David Himmelstein, MD, and Steffie Woolhandler, MD, at the School of Urban Public Health at City University of New York, reported online in the Archives of Internal Medicine. Adjusted for inflation, those figures translate to a 198.7% growth rate in the U.S. compared with 73% in Canada.
Canada’s higher base-year spending figure “reflects its more comprehensive benefits, covering about 80% of seniors’ total health costs, vs about 50% in U.S. Medicare,” they noted.
As U.S. policymakers discuss ways to curb spending in the Medicare program, Himmelstein and Woolhandler looked to Canada to see how our neighbors to the north have managed to rein in costs.
“Before the mid-1960s, the two nations’ healthcare financing systems were similar, and health care costs were comparable,” they wrote in an editor’s correspondence. “Since then, overall U.S. costs have grown more rapidly, but no study has compared spending for the elderly — the populations covered by Medicare in both nations.”
For example, they found spending on physician services grew 100.7% in Canada between 1980 and 2009, but by 274.3% in the U.S. during the same time period. The authors suggested this might be because a higher percentage (51% vs. 32%) of Canadian doctors are primary care physicians who are generally thriftier about spending for tests and procedures.
Himmelstein and Woolhandler obtained spending data from the two countries, but generally focused on 1980 onward because those data were more detailed. They adjusted figures for inflation and government accounting procedures, and ignored Medicare Part D drug spending.
Had U.S. Medicare costs risen at Canadian rates, the U.S. would have saved $154.2 billion in 2009, they noted.
“By 2009, the $2.156 trillion in excess spending attributable to U.S. Medicare’s faster growth was equivalent to more than one-sixth of the national debt,” the authors wrote.
Himmelstein and Woolhandler pointed to several aspects of the Canadian system that helped it contain costs:
* Canada’s single-payer system has simplified administration and associated costs to 16.7% of overall spending compared with 31% in the U.S. American providers must deal with multiple payers and the hassle that comes with them.
* Hospitals in Canada also receive prospectively determined global operating budgets. The method removes incentives to provide unnecessary care and simplifies billing.
* “Canadian hospitals cannot use operating surpluses to fund new buildings or equipment but must request separate capital appropriations,” the authors wrote. “Hence, they cannot expand by over-providing lucrative services, gaming the payment system through up-coding, avoiding unprofitable patients, or cost-shifting.”
* Canada’s provincial plans use purchasing power to hold down drug and device prices.
* The country’s malpractice costs have remained relatively low.
Life expectancy grew faster for Canadian elderly too, signaling the country’s cost-containment efforts had little or no impact on quality, the authors wrote. Also, some clinical outcomes suggest care is better in Canada.
Meanwhile, policymakers in the U.S. have offered to provide vouchers to Medicare beneficiaries to limit costs, or to reward providers with payments based on limiting utilization rather than using a fee-for-service system that rewards volume. Neither approach has been proven effective yet, they noted.
“Canada’s road-tested cost-containment methods offer an alternative,” the authors wrote.
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Action Points
* Medicare spending in the U.S. has grown nearly three times faster since 1980 than spending on a similar population group in Canada, a study has found.
* Note that the study found that spending on physician services grew 100.7% in Canada between 1980 and 2009, but by 274.3% in the U.S. during the same time period.
Reviewed by Robert Jasmer, MD; Associate Clinical Professor of Medicine, University of California, San Francisco. The authors did not report any conflicts of interest.
Primary source: Archives of Internal Medicine
Source reference:
Himmelstein, DU, and Woolhandler S “Cost control in a parallel universe: Medicare spending in the United States and Canada” Arch Intern Med 2012; DOI: 10.1001/2013.jamainternmed.272.
http://www.medpagetoday.com/PublicHealthPolicy/Medicare/35644