The Deteriorating Administrative Efficiency of the U.S. Health Care System

Abstract

In 1983 the proportion of health care expenditures consumed by administration in the United States was 60 percent higher than in Canada and 97 percent higher than in Britain. To assess the effects of recent health policy initiatives on the administrative efficiency of health care, we examined four components of administrative costs in the United States and Canada for 1987: insurance overhead, hospital administration, nursing home administration, and physicians' billing and overhead expenses. Most data were provided by the two nations' federal health and statistics agencies, supplemented by state and provincial data and published sources. Because data on physicians' billing costs were limited, we estimated a range for these costs by two methods that rely on different sources of data. All figures are reported in 1987 U.S. dollars.