How Much Does it Cost for Health Insurance in Canada?

Despite the rumors, health insurance in Canada isn't really free.  The actual cost of health care in Canada is thousands of dollars and can reach tens of thousands of dollars.

Universal health coverage covers everyone who is a citizen or deemed a permanent resident. It doesn't cover everything they need.

In fact, it isn't even really universal. There is no one plan. There are actually 15 different provincial and territory plans that makeup "health insurance, Canada."

Core Provisional Plan Coverage

By law, all the plans are required to provide hospital services provided to patients (and out-patients) if the services are medically necessary.  The legal definition of "medically necessary" goes on to include those services necessary to maintain health, prevent disease, diagnose or treat an injury, illness or disability.

They are also required to provide medically required physician services rendered by medical practitioners. There is no legal provision that the services all be rendered by a doctor. In fact, practitioners make up the majority of caregivers.

The law also requires that the provinces and territories extend medically necessary hospital and physician coverage to eligible residents traveling through reciprocal agreements with other provinces.  These agreements protect Canadians from being presented with a bill for services in case of an accident or illness.

Provisional Plan Differences

From this point on, the provisional plans actually differ quite a bit from one another in what they cover. For instance, beginning January 2018, the Ontario Health Insurance Plan (OHIP) gives residents under age 25 some medications free of charge. Alberta residents do not have this option.

Most do offer additional benefits under their respective plans covering children's health care, or senior care. These services may be fully, or partially covered, so there may be some out-of-pocket costs associated.

Supplemental Private Insurance

That's why nearly two-thirds of Canadians have supplemental insurance plans. Some they bought themselves, but most of these supplemental plans are offered through their employers.

Those who are self-employed and purchase private insurance plans usually do know their premium costs. Most employed Canadians cannot tell you what their total health insurance costs. Since they are required to take the insurance offered by their employer (unless you are on leave), the premium is just another deduction on their pay-slip that is usually ignored. These employees don't even know if they are splitting that premium equally with their employer or paying more or less than them.

Total Out of Pocket Costs

What people do see is their out-of-pocket expenses. Changes to supplemental insurance programs over the past years have impacted deductible rates as well as items covered.

Pre-existing conditions can also play a big part in how much you pay for health care. Your condition may prevent you from being able to get supplemental coverage.  Most often, however, it means there are exclusions in your health plan or higher deductibles. Both of these mean higher costs to you.

Average Costs for Health Insurance in Canada

When you add it all up, health care costs quite a bit. The Fraser Institute's 2016 report broke down the cost of public health insurance for a family of two adults and two children on an income scale.

The 10% of Canadian families with the lowest incomes, earning an average of $14,028, paid an average of $443 in premiums. The 10% of families at the top end of the scale earned $281,359 and paid an average of $37,361.

It's the middle ground that has created a bit of controversy over the Fraser Institute's numbers. In 2016, they pegged that average on that scale as being a family earning $60,850 who paid $5,516 in premiums. An individual earning $42,914 paid $4,257 in premiums.

A year later they said the average family of four earning the average 2017 salary of $127,000 would pay nearly $12,000 in premiums. The actual math on the two figures was not that far off, but there was a lot of political posturing and controversy over whether a median income or average income was a more meaningful measure and more representative of the country and actual spending.

Health Insurance Costs Rising

All the noise pointed people away from the real meat of the Fraser studies. That was how much health costs had increased and how fast they were increasing.

For that average family, the cost of health insurance rose 1.4 times faster than their incomes did between 2006 and 2016. Incomes were up 26% in that time, but health insurance was up 37%.

To put it in perspective, the cost of shelter rose 36% during that time and the cost of food rose 30% during that time. Insurance costs rose 1.3 times as fast as these basic costs.

Canadian Costs versus the World

So where does this leave our average family of four? In their 2015 report, the Canadian Institute of Health Information (CIHI) noted that Canadians were among the highest health care spenders in the world. They estimated the average spend at $5,782 per person.

That put the personal spending above the average but nowhere near the biggest spenders. As it has for years, the average American spent twice as much as $11,916. An average family in Sweden spent slightly more at $6,601 and the same family in the UK spent $5,170.

How to Reduce Costs?

The amount and the speed at which premiums for health insurance in Canada are rising have individuals and families looking for ways to reduce their costs. While some may be tempted to drop their private insurance (if they can) and just rely on their provincial plan, most people do recognize the benefits of health insurance.

If you've been looking for a way to reduce your costs, you should read Insurdinary's article on how to tell which insurance company is the best for you.