The cost of public healthcare
Back in the day when I was having children, I received a bill from the hospital each time I used birthing services -- between $800 and $1,500.
We have no idea how much we would pay today because we’re no longer billed directly – we pay for it through the tax system. But because there is no “dedicated” health insurance tax, we can’t distinguish how much we pay for public healthcare and how much we pay for other publicly supplied services. This leaves us guessing at the true cost of physician and hospital services that are covered by tax-funded health care insurance and are free to us at the “point of use.”
The Canadian Institute for Health Information (CIHI) says that last year total health spending was $264.4 billion or $7,068 if each and every Canadian paid into a health insurance plan. In real life It’s much more complicated. First, the services that are “free” to us at point of use represent only 70 per cent of total health spending – we pay for the rest out of pocket. Second, each and every Canadian doesn’t pay taxes – children don’t and neither do dependents. We pay according to our income earned, with high-income earners paying proportionately more. Third, none of this accounts for the various tax credits and exemptions in our system. Fourth, there’s no way to monetize costs we each bear individually, such as wait times for access to care.
Despite this, it would be good to know how much we pay, simply because knowing gives us insight into how we behave. Isn’t that the purpose of budgeting? To give us the tools to reach our long-term objectives and to help us change bad spending decisions? If we knew, for example, that healthcare costs could go down instead of up each year by adopting more digital services, we might be inclined to tell our government representatives to get off their butts and give us the
internet services they keep promising but which the telcos are unlikely to deliver any time soon. And arrange to pay the service providers for all virtual services. And make sure that electronic platforms can talk to each other so that our medical files are accessible to all our healthcare providers.
For their own reasons, the Fraser Institute has attempted to figure out how much we actually pay. They note that their numbers are just estimates, but they present a much more relatable picture than the per capita estimates that are available elsewhere.
The authors of the Report have sliced and diced the numbers in other ways, for example, if your family consists of just yourself and you had a 38% tax rate, you would have paid about $4,700 for healthcare insurance. If your family consisted of 2 parents and two children, 35 per cent tax rate, you’d have paid about $14,000 for healthcare insurance. Here’s the link if you want to read the whole report.
https://www.fraserinstitute.org/sites/ default/ files/ price- of- public- healthcare-insurance-2020.pdf
I chose to write about this topic for several reasons.
First, to call to your attention the fact that “free”, when it comes to healthcare, is not free.
Second, the estimates above include only the 70 per cent of healthcare costs that accrue to the public part of the system – you’re paying extra privately for services not covered by the public system.
Third, to highlight the fact that healthcare costs are rising – Canada’s healthcare spending is lower than that of Americans but among the highest internationally.
Fourth, to caution you that both income and total taxes for 2020 have been affected by the economic ‘lockdown’ in response to COVID-19. Estimates for the tax burden on families in future years don’t yet account for deficits which will have to be paid for by taxes on future generations. Nor do we know how COVID-19 has affected our healthcare system – official estimates of healthcare spending will come in 2021 and later.
Fifth, to suggest that you ask your government representatives to give us better information so that we can judge for ourselves how we wish to relate our healthcare spending to our lifestyle choices.