U.S. physicians could save $28 billion annually with Canadian-style health insurance system Posted: August 11th, 2011

Each year, the average U.S. physician spends $83,000 to manage their communications with health insurance companies and other payers. According to an analysis by the University of Toronto, that is nearly four times the cost incurred by Canadian physicians. Under the Canadian single-payer health insurance system, physicians spend an average of $22,000 for these administrative costs.

"The major difference between the United States and Ontario is that non-physician staff members in the United States spend large amounts of time obtaining prior authorizations and on billing," said Professor Dante Morra, one of the report authors, in a statement.

In the U.S., physicians must work with a number of different health insurance companies and health plans, each with its own coverage criteria and requirements. However, in Canada, all health insurance is routed through a single payer - the government. Overall, U.S. physicians spend $28 billion more than Canadian physicians each year on administrative costs related to health insurance.

Although it does not appear likely the U.S. will adopt a single payer system, the study authors say there are other ways to reduce costs. These include standardizing transactions as much as possible and using electronic methods of communication and payment. Accountable care organizations also have the potential to save administrative costs.