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How Much "Free" Health Care Really Costs Canadians

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"Don't touch my free health care," is a common refrain from defenders of the status quo whenever anyone broaches the topic of reforming Canada's health-care system.

While politicians and interest groups no doubt share a portion of the blame for perpetuating the myth of a $0 price tag for health care in Canada, their ability to carry public opinion with them stems from the murky manner in which health care is funded.

Individuals and families never see a bill for medical services, are not subject to any level of cost-sharing, and only pay a small so-called "premium" for health insurance (in provinces that impose them) that in no way represent the true cost.

The truth of the matter is that Canadians actually pay a substantial amount for health care through their taxes. But no one really knows how much.

And that is the key to the illusion.

Instead of using a dedicated health insurance tax that earmarks tax money for the specific purpose of funding health care, the government funds it through general tax revenue -- taking a few dollars from here and there so that it's impossible for families to add up the number for themselves.

This is a serious problem; any discussion about the quality and efficiency of our health care system requires participants to have intimate knowledge about how much they personally contribute to the system.

In order to fill this information gap, we conducted a study to estimate the price tag of public health insurance for different types of families.

We found the average single individual earning $42,163 can expect to pay $4,381 for public health care insurance in 2014. Meanwhile, the average Canadian family of four (two parents, two children) earning $101,724 will pay $11,786.

There are also differences in the amounts families earning different levels of income pay. For example, the 10 per cent of Canadian families with the lowest incomes will pay an average of $523 for public health care, while the top 10 per cent will pay $37,239.

The data also show that the health care tax bill has grown faster than the cost of other basic necessities (food, clothing, and shelter) -- as well as growing one and a half times faster than average incomes during the previous decade. This is clearly an unsustainable trend that will only be exacerbated by the ageing baby boomers in the future.

Unfortunately, for all the money spent, international statistics suggest that Canadians are not receiving commensurate value in return. But the comparison of such broad aggregated data is another story for another time.

It ultimately comes down to Canadian individuals and families to assess whether they receive good value for their money based on their own personal experiences and bank accounts. But first they must know how much their "free" health care really costs them.

This piece was co-written by Milagros Palacios, Senior Research Economist, Fraser Institute.

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