The Price of Public Health Care Insurance | 2016 Report | The Fraser Institute

by Milagros Palacios, Feixue Ren, and Bacchus Barua

SUMMARY

Canadians often misunderstand the true cost of our public health care system. This oc­curs partly because Canadians do not incur direct expenses for their use of health care, and partly because Canadians cannot readily deter­mine the value of their contribution to public health care insurance.

In 2016, the estimated average payment for public health care insurance ranges from $3,620 to $11,795 for six common Canadian family types, depending on the type of family.

For the average Canadian family, between 2006 and 2016, the cost of public health care insurance increased 1.4 times faster than average income, 1.3 times as fast as the cost of food and at about the same pace as the cost of shelter.

The 10% of Canadian families with the low­est incomes will pay an average of about $443 for public health care insurance in 2016. The 10% of Canadian families who earn an average income of $60,850 will pay an average of $5,516 for public health care insurance, and the fami­lies among the top 10% of income earners in Canada will pay $37,361.  Read more . . .

Introduction

Health care in Canada is not “free.” While Cana­dians may not be billed directly when they use medical services, they pay a substantial amount of money for health care through the country’s tax system. Unfortunately, the size of these tax payments is hard to determine because there is no “dedicated” health insurance tax. As a re­sult, individuals and families often cannot fully appreciate the true cost they pay towards the public health care system.

The purpose of this research bulletin is to help individual Canadians and their families better un­derstand how much health care actually costs them personally so they can determine wheth­er they are receiving good value for their tax dollars.

Why the misunderstanding?

One reason why Canadians don’t know the true cost of health care is because the physician and hospital services that are covered by tax-funded health care insurance are free at the point of use.1 This situation leads many people to grossly underestimate the true cost of health care. When people speak of “free” health care in Canada, they are entirely ignoring the substan­tial taxpayer-funded cost of the system.2

Furthermore, health care in Canada is financed through general government revenues rather than through a dedicated tax,3 which blurs the true dollar cost of the service. Indeed, Canadi­ans cannot easily work out precisely what they pay to government each year for health care because there are many different sources of government revenues that may contribute to funding health care, including income taxes, Employment Insurance (EI) and Canada Pension Plan (CPP) premiums, property taxes, profit taxes, sales taxes, taxes on the consumption of alcohol and tobacco, and import duties, among others. Some Canadians might assume that in those provinces that assess them, health care premiums cover the cost of health care. How­ever, the reality is that these premiums cover just a fraction of the cost of health care and are paid into general revenues from which health care is funded.

The available numbers can be difficult to digest. For example, health spending figures are often presented in aggregate, resulting in numbers so large they are almost meaningless. For instance, approximately $144 billion of our tax dollars were estimated to have been spent on publicly funded health care in 2015 (CIHI, 2015).4

It is more informative to measure the cost of our health care system in per capita dollars: the $144 billion spent equates to approximately $4,024 per Canadian (CIHI, 2015; Statistics Canada, 2015; authors’ calculations). This would be the cost of the public health care insurance plan if every Canadian resident paid an equal share.

However, not all Canadians pay equal tax amounts each year. Some Canadians are chil­dren and dependents and are not taxpay­ers. Conversely, higher-income earners bear a greater proportion of the tax burden than low­er-income earners and thus contribute propor­tionally more to our public health care system. Various tax exemptions and credits also fur­ther complicate matters. Clearly, the per capita spending measure does not accurately repre­sent the true cost of public health care insur­ance for Canadian individuals and families. . . .

For the details go to the Fraser Institute . . .

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Despite this huge hidden cost—

Canadian Medicare does not give timely access to healthcare, it only gives access to a waiting list.

–Canadian Supreme Court Decision 2005 SCC 35, [2005] 1 S.C.R. 791

http://scc.lexum.umontreal.ca/en/2005/2005scc35/2005scc35.html