# Friday, June 17, 2016
                 
Canadian Healthcare Cost
How many times have you heard about Canada’s "free" public healthcare system? More than just a couple of times we bet!

Yet the fact remains that the Canadian single-payer healthcare system is not free. It is actually paid for via various taxes levied upon Canadian citizens.

And this brings us to the question: how much is the health care system actually costing Canadians?

Canadian Healthcare Basics

Before we get into the cost details of Canada’s healthcare system let’s first discuss how the system actually works.

Canada has "single payer" health care that is publicly funded. This means that the government pays for all health care costs, with the costs being passed on to the public via taxes.

When a Canadian goes to a hospital and receives medical treatment they do not have to pay any money up front. The medical facility then bills the provincial government for services rendered to the patient.

The provincial government pays for this by levying provincial taxes on its citizens. In addition the provinces receive money from the Canadian federal government for healthcare in the form of transfer payments. (Note that as of 2016 the province of British Columbia also charges its residents a non-voluntary fee for healthcare services).

In order to be eligible for these transfer payments each province must spend the money on healthcare services in a manner that is in keeping with the Canada Health Act. This act, created in 1984, states that "the primary objective of Canadian health care policy is to protect, promote and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers".1

Cost of Public Healthcare to Canadian Citizens

It is difficult to put an exact dollar amount on how much the average Canadian family pays out for healthcare since no Canadian province has a tax that is specific to healthcare.

In fact, there are a wide variety of taxes that pay for healthcare costs. Just some of these are provincial and federal income taxes, EI (employment insurance), sales taxes, CPP (Canada Pension Plan) contributions and property taxes.

According to a 2014 Statistics Canada study the average Canadian family paid out $3,961 per person for healthcare (in 2014). However, this does not take into account that some Canadians don’t pay taxes (.e.g. children) as well as the amount of tax Canadians pay (depends on income as well as available deductions).

The Fraser Research Institute released a report in 2015 that examined healthcare costs and taxes on a "per family" basis that took these factors into account.2 According to this report, in 2014/2015 approximately 23.9% of all tax revenues was spent on healthcare.

The breakdown of healthcare costs on a per family basis is as follows (source: The Fraser Institute's Canadian Tax Simulator, 2015):
Family Type
Average Cash Income ($) Average Total Tax Bill ($) Tax Rate
Health Care Insurance ($)
 Unattached Individuals 42,244
17,644
41.8%
4,222
2 Parents, 0 Children
104,339
49,169
47.1%
11,767
2 Parents, 1 Child
121,701
50,376
41.4%
12,055
2 Parents, 2 Children
119,082
49,038
41.2%
11,735
1 Parent, 1 Child
54,821
19,392
35.4%
4,641
1 Parent, 2 Children
53,209
53,209
29.8%
3,789

.
Upon examination of these figures you can see that Canadian healthcare certainly isn’t free, especially when one considers that provincial healthcare plans do not cover prescription drugs and routine dental services.*

Future of Canadian Healthcare

In this day and age of fiscal belt tightening we have to wonder: what is the future of the Canadian healthcare system?

In the last decade or so we see debt expanding at a rapid pace. The government of Canada is projected to have a federal debt of 1.6 billion in 2016. In addition most Canadian provinces are deep in the red as well.

Over the last decade or so we have seen a reduction in healthcare services covered by provincial healthcare plans. Combine this with the debt issue and it is a likely bet that services covered by Canadian healthcare plans will continue to see some sort of reduction.

But is this trend sustainable? Is it possible that Canada will change from a single-payer system to a multi-payer system? Only time will tell!

Conclusion

We hope you found this article about the costs of the Canadian healthcare system informative.

If you have any questions please contact us, we are experience insurance brokers and are here to help!
 

* There are numerous assistance programs for low-income families and other residents for high prescription drug costs, homecare, and more, depending on the province of residence.

Sources

1 http://laws-lois.justice.gc.ca/eng/acts/C-6/page-2.html#docCont
2 https://www.fraserinstitute.org/sites/default/files/price-of-public-health-care-insurance-2015-rev.pdf
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