True cost of health care to average family is $11K per year: report
Emily Chan, CTVNews.ca
Published Thursday, August 20, 2015 5:48AM EDT
Last Updated Thursday, August 20, 2015 5:31PM EDT
While many Canadians proudly boast about our country’s "free" health care, a new study has broken down exactly how much money in many tax dollars go into the system each year.
According to a new report by the right-leaning Fraser Institute, the average Canadian family will contribute $11,735 in taxes for public health insurance in 2015.
Many Canadians underestimate the cost of health care for a number of reasons, says study co-author Bacchus Barua, a senior economist with the Fraser Institute’s Centre for Health Policy Studies.
First, people may wrongly assume health care is free because they are not charged directly when they visit the hospital or see a doctor.
“Unlike many other universal health care countries, there is absolutely no form of deductibles or co-payments or co-insurance when we receive health care, so we don’t get an idea of treatment costs when we receive them,” he told CTV News Channel Thursday.
Secondly, people may not realize how much of their taxes go into health care because there isn’t a single, collective health care tax. Instead, funding for the system comes from multiple sources, including income taxes, the Canadian Pension Plan, and Employment Insurance. This combination "blurs the true dollar cost of the service," the study authors argue.
Lastly, Canadians may be confused about costs because spending is often shown in aggregate sums, resulting in numbers "so large they are almost meaningless." When Canadians hear a total of $141 billion was spent in health care last year, for example, it may be difficult to see how that affects individuals, the study says.
"This situation leads many people to grossly underestimate the true cost of health care," the report says.
To reach their estimates on the cost of health care, the report’s authors broke down the total cost of the Canadian health care system in 2014.
According to Statistics Canada, Canadians spent a total of $141 billion on health care that year. The authors divided that number by the Canadian population, concluding that, on average, each Canadian contributes $3,961 for health care each year.
However, as the report notes, not every Canadian pays an equal amount in taxes. Dependents and children are not responsible for paying taxes, while high-income earners must pay more than low-income earners.
To account for this, the study broke average Canadian families down into 10 income groups, concluding that Canada’s poorest families pay $477 a year for health care, while the wealthiest earners pay $59,666 a year.
The report also found that the cost of health care is on the rise, increasing 1.6 times faster than the average income.
Barua says that increase should tell Canadians something about the sustainability of the system, “and reminds us we need to be vigilant about how these increases are trending up.”
Barua and the study’s co-authors say they hope their findings will help Canadians "more clearly understand just how much they pay for public health care."
"With a more precise estimate," they write, "Canadians will be in a better position to decide whether they are getting a good return on the money they spend."
The Fraser Institute, which has published multiple studies and commentaries critiquing the Canadian health care system, describes itself as an independent and non-partisan research organization.