Higher costs for physician and institutional services account for most of the differences in health spending between Canada and the United States.

The most recent comparison of health spending among developed countries published by the Organization for Economic Cooperation and Development reveals that the gap in health sending between the United States and other developed countries continues to grow. The OECD Health Data 2004 report further confirms that higher spending on physician and hospital services in the United States accounts for nearly 60 percent of the difference between American and Canadian health spending while prescription drugs accounts for less than 10 percent of the difference.

Differences in health spending between Canada and the United States are attributable to a number of factors. These include macro-economic differences such as per capita gross domestic product, differences in health system regulation such as price controls, and other health service cost-containment mechanisms in Canada. In addition, Americans pay more than three times as much for legal liability as Canadians which contributes significantly to higher American costs for health services and supplies.