Canadians should know how much we pay for health care

Due to the COVID pandemic and recession, there’s now heightened interest in transparent reporting of health and economic indicators. Information on the number of COVID cases is being widely disseminated, provincial governments routinely provide updates on surgical backlogs, and individuals and households are closely monitoring their finances to make sure they can weather this unpredictable economic climate. However, one number remains elusive—the amount Canadian families pay for health care every year.

Notwithstanding the “free” moniker, many Canadians know they pay a substantial amount of money for health care through Canada’s tax system. However, it’s unlikely that many can tell you exactly how much. We never receive bills for medical services and we don’t see anything like a dedicated “health-care tax” on our T4 slips. Things get even more confusing when we add in health-care premiums in provinces that impose them, which only cover a fraction of the true cost of health care.

In fact, general government revenues—a combination of taxes including personal income taxes and sales taxes—fund our health-care system. So while $172 billion of our collective tax dollars were spent on publicly-funded health care in 2019, the average family would be hard-pressed to figure out how much of that bill they paid.

Fortunately, our new study helps break the data down for a variety of families. For example, the study estimates that a typical Canadian family (two parents and two children) with an average household income of $142,449 will pay $14,474 for public health care this year through various taxes. The average individual can expect to pay $4,894.

Of course, due to the progressive nature of Canada’s tax system, the amounts families pay for health care depends on their incomes. Specifically, the bottom 10 per cent of income-earners will only pay $471 dollars for health care while the top 10 per cent will pay almost $40,000.

Of course, these are preliminary estimates based on historical trends of health-care spending and the most recent economic forecasts. The COVID crisis has significantly disrupted surgical schedules and government finances. It will be months before we have a true estimate of how much provinces ultimately spent on health care this year, and how much revenue was ultimately collected to fund these treatments (not to mention other social programs).

But according to early economic forecasts, even if health-care spending simply grows according to historical trends (say 3.5 per cent based on the last five years), it will consume a much larger portion of government revenues, increasing from 23.5 per cent to almost 29 per cent of tax revenues. This is largely due to unfavourable estimates of government tax revenue over the coming year. What this means, though, is that there will likely be less money for other social programs. Or the government will have to take on significantly more debt to keep its social programs afloat.

Clearly, our health-care professionals are doing an incredible job to get us through this difficult time. Canadians. But as we become more aware of a vast array of health-care performance indicators, we should pay better attention to annual health-care spending so we can we can better gauge how that money is spent in the future and better understand the performance and resources we receive in return.