Medical Spending Differences in the United States and Canada: The Role of Prices, Procedures, and Administrative Expenses

David M. Cutler and Alexis Pozen

Scholarly Articles from Harvard University Department of Economics

Abstract: The United States far outspends Canada on health care, but the sources of additional spending are unclear. We evaluated the importance of incomes, administration, and medical interventions in this difference. Pooling various sources, we calculated medical personnel incomes, administrative expenses, and procedure volume and intensity for the United States and Canada. We found that Canada spent $1,589 per capita less on physicians and hospitals in 2002. Administration accounted for the largest share of this difference (39%), followed by incomes (31%), and more intensive provision of medical services (14%). Whether this additional spending is wasteful or warranted is unknown.

Date: 2010
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