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

  • Cutler, David M.
  • Pozen, Alexis
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    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.

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    Paper provided by Harvard University Department of Economics in its series Scholarly Articles with number 5343032.

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    Date of creation: 2010
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    Publication status: Published in Inquiry
    Handle: RePEc:hrv:faseco:5343032
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    1. Pozen Alexis J & Cutler David M, 2009. "Comparing Health of People with Heart Disease in the United States and Canada," Forum for Health Economics & Policy, De Gruyter, vol. 12(2), pages 1-15, September.
    2. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
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