Canadian Health Insurance:

Estimating Costs and Savings for the United States

HRD-92-83: Published: Apr 28, 1992. Publicly Released: Aug 24, 1992.

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Pursuant to a congressional request, GAO provided information on the methodology it used to derive estimates of the difference between the current level of U.S. health care expenditures and the cost of having a new program with key elements of a Canadian-style system.

GAO noted that: (1) in Canada, each provincial plan provides for universal insurance coverage with no deductibles or copayments, controls on provider reimbursement, and administration by a single, public payer; (2) analyses that attempt to estimate how U.S. health spending would change under a Canadian-style system all suggest significant potential for administrative savings, but estimates of the potential additional costs of increased utilization generated by the elimination of copayments vary widely; (3) to develop data on potential savings, it compared U.S. administrative expenses of insurers, physicians, and hospitals to those in Ontario; (4) to calculate the potential new costs, it relied largely on empirical data from U.S. and Canadian experiences with providing free care to patients; and (5) it derived its estimates primarily from government statistical sources supplemented by data from private organizations.