VANCOUVER—A typical Canadian family of four will pay an estimated $15,847 for public health-care insurance this year, finds a new study released by the Fraser Institute, an independent, public policy think-tank.
“Canadians pay a substantial amount of money for health care through a variety of taxes—even if we don’t pay directly for medical services,” said Bacchus Barua, director of health policy studies at the Fraser Institute and co-author of The Price of Public Health Care Insurance, 2022.
“Understanding how much Canadians actually pay for health care, and how much that amount has increased over time, is an important first step for taxpayers to assess the value and performance of the health-care system, and whether it’s financially sustainable,” Barua said.
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.
Most Canadians are unaware of the true cost of health care because they never see a bill for medical services, may only be aware of partial costs collected via employer health taxes and contributions (in provinces that impose them), and because general government revenue—not a dedicated tax—funds Canada’s public health-care system.
According to Barua 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.”
However, Canadians do not pay equal amounts of tax each year. Some Canadians are children and dependents and are not taxpayers. Further, 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.
The study estimates that a typical Canadian family consisting of two parents and two children with an average household income of $156,086 will pay $15,847 for public health care this year. Couples without dependent children will pay an estimated $15,229. Single Canadians will pay $4,907 for health care insurance, and single parents with one child will pay $5,812.
Between 1997 and 2022, the cost of public health care insurance for the average Canadian family increased 3.9 times as fast as the cost of clothing, 2.2 times as fast as the cost of food, 1.8 times as fast as the cost of shelter, and 1.8 times as fast as the average income.
The 10 percent of Canadian families with the lowest incomes will pay an average of about $690 for public health care insurance in 2022. The 10 percent of Canadian families who earn an average income of $76,704 will pay an average of $7,374 for public health care insurance, and the families among the top 10 percent of income earners in Canada will pay $41,914.
According to the report, 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.
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.
Furthermore, health care in Canada is financed through general government revenues rather than through a dedicated tax, 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, employer health taxes and contributions 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 revenue from which health care is funded.
