The authors reply: As Sekhon points out, Canada's health care spending is low ? 57 percent of the U.S. figure per capita1 ? despite universal, nationwide health insurance. Modest differences in net physician income account for little of the cost differential, about 2 percent. However, Canada's frugality has caused shortages of some expensive services. These shortages are overblown in the press, which seldom reports that the rates of most services provided to Canadians ? doctor visits, hospital days, immunizations, and even transplantations and hip replacements ? are similar to American rates.1 Moreover, the quality of care appears to be similar to that for insured Americans.2
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administrative workers in the two nations was virtually identical: $26,807 in Canada and $27,570 in the United States (unpublished analysis of data from the March 1997 U.S. Current Population Survey and the 1996 Canadian Census).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.