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Health Insurance Estimate Comparison: How Much Will You Pay for Health Coverage In the Canada vs the U.S.?

on 20 Dec, 2018

Much has been said and written lately about the health care systems in Canada and the United States. Most of these discussions have centered on the costs of health insurance and the levels of care provided.

Doctors and politicians on both sides of the border and both sides of the political spectrum have declared their respective system the best. Is there a clear advantage for a public health system versus a private payer system?

Best at what and best for whom are the two questions which really matter. Here’s a comparison of health insurance estimates for a typical Canadian versus an American.

Public Healthcare

Canada offers universal healthcare by law and the United States does not, but in reality, the insurance situation in both countries is much more complicated.

Canada

Canadian law mandates that every citizen and permanent resident be provided hospital services both on an in-patient and out-patient basis.  It also requires that physician services be rendered by a qualified practitioner. This practitioner can be a doctor, a nurse practitioner, or another licensed practitioner.

These services are to be provided “if medically necessary.” The law defines medically necessary as those services necessary to maintain health, prevent disease, diagnose or treat an injury, illness or disability.

Of course, there is a cost associated with these services, but they are not billed directly to the person receiving them. Instead, they are covered as part of the taxes Canadian residents pay each year. This means they are largely “buried” and the average individual has no idea what a stay in a hospital actually costs.

U.S.

There is no legal mandate to offer any medically necessary treatments to individuals free of charge in the United States. The Affordable Care Act requires everyone to have some form of insurance (and provides tax penalties for those who don’t) but it doesn’t say a word on what sort of coverage the plan provides or who will provide the services.

Provincial/State Healthcare Services

The benefits Canadians receive under their national healthcare system are not unified.

Canada

Canada’s health insurance program isn’t truly national at all. It is made up of 15 different provincial and territorial plans that are knit together by reciprocal agreements.

It seems seamless to the typical Canadian because if he lives in Toronto, but is injured on holiday in British Columbia, he is still able to use his national health care card to be accepted for treatment in any hospital or doctor’s clinic. British Columbia would bill Ontario, and not our injured tourist, for the costs of his treatment.

Each province is free to set out its own guidelines of what else their plan will cover. Most provincial plans are nearly identical, however. Most do not cover ambulance services, dental procedures (unless done in a hospital), or eyeglasses or cosmetic surgeries, for example.

Prescription drugs are perhaps the biggest item (by cost and by number of people affected) these plans typically don’t cover. But, Ontario does cover the cost of some medications for its residents under age 25.

U.S.

While they are under no legal obligation to do so, most private insurance companies do cover some or all of an enrollee’s costs if they are injured or become sick while away from home. It is normal for an insurance policy to spell out what must be done to receive coverage while traveling.

If these provisions of their specific plans are followed (usually notifying the insurance carrier within a certain time or visiting plan-approved clinics), the injured American may not even see a bill. He might be required to pay for some or all of his treatment up-front and get reimbursed after submitting the invoices to his insurance company.

Private Insurance Plans

The benefits of having health insurance are clear. So are the out-of-pocket costs for some health services, like an ambulance ride to the hospital.

Canada

To make up the difference in their provincial plan, most Canadians, like their American counterparts, turn to private insurance. Here’s where we can truly begin to compare plans and costs more accurately.

Also like Americans, most Canadians get their private insurance through their employers. While an American is free to reject his employer’s plan and shop for a plan which fits his needs and budget, a Canadian cannot. If his employer offers a plan, a Canadian citizen must enroll in it.

There is a loophole, however. If the employee is on a leave – a maternity leave for example – they are allowed to purchase insurance from another provider. They can then elect to keep this (usually cheaper) insurance if they like.

U.S.

The cost of healthcare in the U.S. is borne entirely by individuals. They are free to choose to accept their employer’s health insurance plan, if one is offered, or to purchase their own.

The Affordable Care Act provides a marketplace for individuals to shop for insurance plans which are rated as “bronze,” “silver” or “gold” depending on the coverage. The premiums are considerably different for each level of service.

Health Insurance Estimates

In Canada, an individual will pay on average $355 per month or $4,257 annually in health insurance premiums according to the Fraser Institute. In America, the average individual will pay $440 per month or $5,280 per year.

Figures for a family of four are even more striking. In Canada, the monthly cost is $459 and an annual cost of $5,516. In America, that same family of four will pay $14,016 annually for health insurance.

As a country, it’s estimated total health expenditure in Canada in 2018 is expected to reach $253.5 billion, or 11.3% of the country’s gross domestic product (GDP).  This translates into roughly $6,839 in spending per person.

United States health spending for 2018 is projected to be nearly $3.5 trillion or 17.9% of GDP. Per person spending for the U.S. would be roughly $10,711.

Adding it All Up

Despite significant costs to both Canadians and Americans, by this comparison, it does appear Canada has a superior health care system. The bottom line cost of health insurance for the average Canadian is only 64% of the average American’s.

The costs, however, don’t begin to count until each individual is sure they have the right insurance coverage for their particular health circumstances. If you’re a Canadian trying to get a personalized health insurance estimate, check out this article by Insurdinary on how to decide which insurance company is the best.

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