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Can Multi-payer Financing Achieve Single-Payer Spending Levels?

Author

Listed:
  • Newhouse Joseph P

    (Harvard University)

  • Sinaiko Anna

    (Harvard University)

Abstract

Many believe the high level of United States health care costs compared with other countries is attributable to high administrative costs inherent in our pluralistic health care financing system. Instead of the well known statistics examining the percentage of GDP that various countries spend on health care, which show the US as a large outlier, we show the percentage of Gross State Product various states spend on health care. Even adjusting for age and income, there is considerable variation across the states in spending levels, with the lowest quintile of states spending approximately the same percentage as the higher spending OECD countries other than the US. This implies that the US' pluralistic financing system may not be an important cause of the large percentage of GDP that the US devotes to health care. Even in the low spending states, however, absolute amounts of spending are higher than in other OECD countries. Although a more centralized payment system may be a sufficient condition to spend at the percentages of GDP found in northern Europe, it is not a necessary condition.

Suggested Citation

  • Newhouse Joseph P & Sinaiko Anna, 2008. "Can Multi-payer Financing Achieve Single-Payer Spending Levels?," Forum for Health Economics & Policy, De Gruyter, vol. 10(1), pages 1-13, April.
    • Handle: RePEc:bpj:fhecpo:v:10:y:2008:i:1:n:2
    DOI: 10.2202/1558-9544.1091
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    References listed on IDEAS

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    1. 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.
    2. Pauly, Mark V, 1986. "Taxation, Health Insurance, and Market Failure in the Medical Economy," Journal of Economic Literature, American Economic Association, vol. 24(2), pages 629-675, June.
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