THE AMERICAN STATES AND CANADA - A COMPARATIVE-ANALYSIS OF HEALTH-CARE SPENDING

Most comparisons of the relative effectiveness of cost containment in the Canadian and U.S. health systems trace Canada's greater success to its single-payer approach. However, these studies ignore the substant ial variation that exists in hospital and personal health care spendin g among both the American states and the provinces and territories of Canada. Four American states have adopted all-payer hospital rate sett ing; one other uses competitive bidding. All five show rates of growth in per capita hospital spending comparable to (and in some cases, low er than) the Canadian jurisdictions. Hospital spending, as a percentag e of state gross domestic product (GDP), declined or remained constant in four of the five states. In four out of the five, growth in per ca pita spending on personal care, as a percentage of GDP, remained or fe ll below the national average. By contrast, in Canada, per capita spen ding on both hospitals and personal health care increased as a percent age of GDP in ten out of eleven jurisdictions. In each of the U.S. sta tes, government played a central role in structuring the terms of paym ent and thus strengthened the hand of purchasers over providers. This strategy, rather than specifically a single-payer or universal health insurance approach, seems to be the key to limiting the growth in heal th costs to the growth in state or national income.