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Correction
to
Woolhandler et al.,
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In the United States, persons who wish to spend more on health care than the norm have a simple way of doing so: they can purchase premium private medical insurance. Notwithstanding the Medicare prescription-drug plans currently being discussed, it is generally not an option in the United States to increase medical expenditures through the taxation system, given contemporary political and fiscal constraints. In Canada, however, increases in medical expenditures are possible largely only through the taxation system. And even if, as some surveys suggest, most Canadians are willing to spend more on health care,3 taxpayers cannot be sure that any given tax increase will actually go to health care expenditures. Therefore, Canadian taxpayers generally resist tax increases, and underfunding and chronic shortages result.
Jasjeet S. Sekhon, Ph.D.
Harvard University
Cambridge, MA 02138
jasjeet_sekhon{at}harvard.edu
References
Policymakers beyond America's borders, however, do read the Journal. They are not nearly so constrained by cultural blinders. During the 1990s, for example, Taiwan moved to universal health insurance coverage and opted for a single-payer system, after carefully studying health care systems abroad. Similarly, Canadian policymakers are forever being encouraged by critics to move Canada's health care system closer to the U.S. approach. These foreign policymakers and their policy analysts will find cross-national work on administrative costs highly relevant, quibbles over methodology notwithstanding.
Uwe E. Reinhardt, Ph.D.
Tsung-mei Cheng, L.L.B.
Princeton University
Princeton, NJ 08544
reinhard{at}princeton.edu
Vicente Navarro, M.D., Ph.D.
Johns Hopkins University Bloomberg School of Public Health
Baltimore, MD 21205
vnavarro{at}jhsph.edu
With 21 business units diligently working to provide affordable health services to 50 million Americans, UnitedHealth Group will continue to invest in information technology and efficient business practices that reduce the cost of health care administration. We appreciate this opportunity to correct the record.
Reed Tuckson, M.D.
UnitedHealth Group
Minnetonka, MN 55343
Since the implementation of nationwide health insurance, infant mortality and life expectancy have improved faster in Canada than in the United States.1 Although Canadians may spend too little, they get far better value for their money. A system combining Canadian efficiency and U.S. spending levels, as we have proposed elsewhere,3 would be the world's best.
We disagree with Sekhon that tax-based funding automatically means underfunding. In the United States, government expenditures for health care have expanded faster than private expenditures. Moreover, the government generously supports medical education and research, along with defense contractors and tobacco prices. In Canada, the electorate has recently forced governments to boost health care spending. Government spending can be skimpy or exuberant, depending on who is for it and who is against it.
Navarro and also Reinhardt and Cheng criticize Aaron's political judgment. His economic critique of our methods was also flawed, because it was based on incorrect assumptions about comparative wages. He started from a hypothetical example of a nation with wages 1/10 those in the United States, positing that lower wages (a feature of Canada's system that could not be imported) account for much of Canada's administrative savings. Yet Canada's lower health care prices are not explained by lower wage rates. In 1996 (the latest year for which data are available), the average annual pay of hospital administrative workers in the two nations was virtually identical: $26,807 in Canada and $27,570 in the United States (unpublished analysis of data from the March 1997 U.S. Current Population Survey and the 1996 Canadian Census). Aaron's recalculation of our figures is based largely on his incorrect wage assumption.
Finally, Tuckson calls our attention to errors in Table 3 of our article. The correct enrollment figure for United Healthcare is 16,500,000, putting United Healthcare's number of employees per enrollee at the low end of U.S. insurers, rather than the high end (though still 10 times as high as Canada's provincial plans). Our error derives from our incorrect assumption that a table in UnitedHealth Group's annual report provided complete data on enrollment. In fact, after a recent reorganization, UnitedHealth Group began doing about half of its health insurance business under the Uniprise name.
Steffie Woolhandler, M.D., M.P.H.
Cambridge Hospital
Cambridge, MA 02139
Terry Campbell, M.H.A.
Canadian Institutes of Health Research
Ottawa, ON K1A 0W9, Canada
David U. Himmelstein, M.D.
Harvard Medical School
Boston, MA 02115
References
Reinhardt and Cheng observe that other nations can learn from the mistakes of the United States. They suggest that my showing that the estimated difference between U.S. and Canadian administrative costs is exaggerated and my argument that today's Canadian institutions for health care administration have little relevance to the current debate about U.S. health care reform means that I think other nations have nothing to learn from the many policy blunders of the United States. This allegation is unfounded. Nothing in my editorial or my other work supports it.
Reinhardt and Cheng also dismiss as a "quibble" my demonstration — based on one of several questionable procedures — that Woolhandler and colleagues overstate the difference between Canadian and U.S. administrative costs by $50 billion, or nearly one third. It is not clear to me just how much larger than $50 billion an error would have to be to graduate from being a "quibble."
Sekhon notes that a single-payer system need not ration care but can be readily used for that purpose. He sees the capacity to ration as a drawback, because rationing causes queues and other distortions. In contrast, I regard the capacity of single-payer plans to ration effectively as a potential virtue. The need to ration care for the well insured is rapidly becoming inescapable in the face of an avalanche of new and costly technology. No system of rationing will be free of distortions, and a single-payer system may do the job well or poorly, depending on how it is organized and run. But creating politically sustainable institutions to ration health care sensibly and compassionately is one of the leading challenges that our nation cannot avoid and has yet to meet.
Henry J. Aaron, Ph.D.
Brookings Institution
Washington, DC 20036-2188
haaron{at}brookings.edu
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