Unveiling Health Insurance Rates: What the Average Canadian Really Pays for Care

Posted on December 21, 2018

Recent polls say more than 30 percent of Canadians feel the public health care system is a point of national pride. The sentiment was most common among Canadians under the age of 45.

The health care system is also a point of national contention. While Canadians boast about "free health care," they also spend time wondering how to fix it.

You see, Canada's health care isn't actually free. Most Canadians can visit the doctor without worrying about the bill. This leads to the idea that health care in Canada is "free."

Don't be fooled though; someone still has to pay.

To access the Canadian health care system, you'll likely need a health card. This card allows you to use the health insurance program in the province or territory where you live.

That's right! The Canadian public system is a form of insurance. As you might imagine, that means that there are premiums to be paid.

So how much are Canadian health insurance rates, and who actually pays for them?

Canada Spends Billions on Health Care

How much does Canada spend on health care? The answer is fairly easy to find, provided you know how to read government budgets.

In 2018, Canada was poised to spend over $253 billion on the public health care system. While this may seem like an astronomical sum, it amounts to about 11 percent of the country's total income.

Nonetheless, health care is still the largest line on the federal and provincial budgets.

The Taxpayer Burden

Even though many people believe health care in Canada is free, you're still paying for it. Canadian taxpayers fund the system. If you pay taxes in Canada, you're paying for health insurance.

On average, Canadians pay almost $7,000 per person in taxes for the public healthcare system.

This number increases and decreases according to income. Those who make more money end up paying more in taxes. The Fraser Institute estimates the Canadians who make the most pay around $40,000.

This leads to considerable grumbling among those who pay the most. Those who don't use the system much feel they're bearing more than their fair share of the health care burden.

After all, would you pay $40,000 per year to insure your family? You'd have difficulty finding a policy that cost that much.

The result is some Canadians overpay while others underpay. Those who are paying the most are paying for others.

Health Insurance Rates Don't Pay for Everything

One of the other issues with Canadian health care costs is the fact the system doesn't cover everything.

Imagine paying $7,000 per year for an insurance policy, then being told it would only cover the basics.

You don't get dental coverage. Unless you're under 18 or over 65, you also don't have vision coverage. Finally, this $7,000 policy doesn't cover prescription medications.

You might be shopping for another policy. This is exactly what many Canadians do when they realize there are so many gaps in their coverage.

Unfortunately, they can't get out of paying at least something into the public system. Unless you decide not to pay your taxes at all, some of what you pay will end up in the public health care system.

Private Insurance and Out-of-Pocket Costs

Many Canadians turn to private health insurance plans to fill the gaps in the public system. Others will end up paying out-of-pocket for dental care and prescription medications.

These costs are on top of the $7,000 public health insurance plan Canadians pay for with their taxes.

In recent years, out-of-pocket costs have been increasing. Private health insurance rates have also been climbing. Private health care spending makes up about 30 percent of all health care spending in Canada.

That's almost $76 billion more to tack on to the $253-billion bill for the public system.

Just how much do Canadians pay for health care then? Given the current population, that's more than an average of $2,000 on top of what you pay for public health care.

Canadians, then, are looking at an annual bill of somewhere around $9,000 to $10,000 per person. For some people, this cost might be much higher.

Health Care Spending is Growing

Another problem these numbers point to is the rapid growth of health insurance rates in Canada. In 2016, Canada spent about $228 billion on public health care. Just two years later, the bill had grown by another $25 billion.

This says nothing about private health insurance and out-of-pocket spending. These costs have also been growing.

Prescription medications are one of the reasons for increasing health care costs. It's one of the reasons the debate about a national pharmacare program has been reignited. By some estimates, such a program could save the Canadian health care system billions.

There are other inefficiencies and inequities in the public system as well. It costs more to deliver public health care to people living in Canada's Far North than to those living in Alberta.

Will Governments Shift the Burden?

With health insurance rates climbing, governments are looking for ways to curb costs. One way they might do it is by cutting services.

This would shift the health care burden back to individual Canadians. With less coverage, Canadians would be forced to pay for more health services. They might also need to increase their supplemental health insurance.

In short, you might end up paying more out of pocket in the near future.

Keeping Health Care Costs under Control

You may not feel you have much control over what you pay in health insurance rates in Canada. So much of it goes to the public system through taxes. You can look for ways to decrease how much tax you pay.

If you pay out of pocket or buy supplemental health insurance, be sure to take advantage of tax credits. They can help you offset the costs.

If you need help finding an affordable plan, talk to us. We can help you find a plan to fit your budget and your needs.

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