'Free' Health Care in Canada Costs More Than It's Worth

08/09/2013 05:32 EDT | Updated 10/09/2013 05:12 EDT

Many Canadians and commentators in other countries lauding Canada's government-dominated approach to health care refer to Canadian health care as "free." If health care actually were free, the relatively poor performance of the health care system might not seem all that bad. But the reality is that the Canadian health care system is not free -- in fact, Canadian families pay heavily for healthcare through the tax system. That high price paints the long wait times and lack of medical technologies in Canada in a very different light.

In 2013, a typical Canadian family of four can expect to pay $11,320 for public health care insurance. For the average family of two parents with one child that bill will be $10,989, and for the average family of two adults (without children) the bill comes to $11,381. As a result of lower average incomes and differences in taxation, the bills are smaller for the average unattached individual ($3,780), for the average one-parent-one-child family ($3,905), and the average one-parent two-child family ($3,387). But no matter the family type, the bill is not small, much less free.

And the bill is getting bigger over time. Before inflation, the cost of public health care insurance went up by 53.3 per cent over the last decade. That's more than 1.5 times faster than the cost of shelter (34.2 per cent) and clothing (32.4 per cent), and more than twice as fast as the cost of food (23.4 per cent). It's also nearly 1.5 times faster than the growth in average income over the decade (36.3 per cent).

And what did these substantial funds buy?

Despite talk of wait times reduction initiatives (backed with substantial funding), Canadians face longer wait times than their counterparts in other developed nations for emergency care, primary care, specialist consultations, and elective surgery. Access to physicians and medical technologies in Canada lags behind many other developed nations. And things have improved little since 2003. For example, the total wait time in 2012 (17.7 weeks from GP to treatment) is every bit as long it was back then.

Don't be fooled by claims that health spending isn't high enough or that transfers for health care to the provinces have been insufficient. Canada's health care system is the developed world's most expensive universal-access health care program after adjusting for the age of the population (older people require more care).

Canadians aren't suffering from health care underfunding; they're suffering from health care underperformance.

And it gets worse. Changing demographics mean Canada's health care system has a funding gap of $537 billion. While health care is costly and underperforming today, in the absence of reform the future will either hold large increases in taxes, further reductions in the availability of medical services, further erosion of non-health care government services, or all of the above.

But the worst part is that things don't have to be this way. While Canadians are getting a raw deal for their health care dollars, patients in Belgium, France, Germany, Japan, Luxembourg, the Netherlands, and Switzerland receive universal access to health care without lengthy queues. Patients in Australia, Japan, Sweden, Switzerland, and France enjoy better outcomes from the health care process than Canadians from their universal access health care systems. And vitally, payers in these countries all face a smaller bill for health care than Canadians.

That combination of superior performance for less cost comes from more pragmatic approaches to health care policy. Each of these nations' universal access health care systems -- every one of them -- has a larger role for the private sector in financing and delivery than Canada with cost sharing, private competition in the delivery of health care services, and private parallel health care and health care insurance.

Contrary to claims made by Canadian fear-mongers, none of these nations has abandoned universality or suffered poorer health system performance and higher cost as a result. Rather, these nations all manage to deliver on the noble goal of universal access to high quality care in a time frame that provides comfort and peace of mind. That's something Canada's provinces, with their government-dominated monopolistic approach, fail to accomplish.

Canadians pay a substantial amount of money for their universal health care system each year through the tax system but get a fairly poor deal in return. Reforming Canadian health care based on lessons from other, more successful, universal access health care systems is the key to solving that problem.

This piece was co-written by Milagros Palacios (@MPalaciosI), Fraser Institute economist.

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