Canadian Healthcare Funding

The U.S. Supreme Court is set to rule yet again on the Affordable Care Act in June. Their large ruling thus far declared Obamacare legal because it is a tax. This next ruling regarding the legality of federal subsidies is also poised to send shockwaves throughout the country. Discussions about healthcare reform in the United States often contain references to Canada, but many of those references are inaccurate. The intent here is not to discuss healthcare reform in the U.S. nor other healthcare systems (socialized or otherwise). Rather, this is a clarification on what occurs in Canada. This will be a brief (short and to the point like all my posts) three-part summation. Last week we took a brief look at the Canadian physicians. Next, let’s take a look at how healthcare in Canada is funded.

In 1966, Canada enacted their single payer system (akin to Medicare in the U.S.) and in 1984, the Canada Health Act passed. The government funding accounts for about 70% of national healthcare expenditures, with the remaining 30% being covered by private insurance (usually supplemental-type insurance). Some items that generally are not covered by the government include:

  • Dental care
  • Eyeglasses
  • Prescription drugs (Canada is reportedly the only country with a universal healthcare system that does not cover prescription medication.)
  • Assisted living and caregivers
  • Hearing aids

There are other healthcare services that are also not fully covered by the government because they are not deemed “essential”.   Some examples include infertility treatments, cosmetic surgery, and some forms of elective surgery. All of these items I have just listed can be paid out-of-pocket or through private insurers. It is important to note that each province in Canada does have the ability to partially cover some of these expenses. Because of this, there are considerable differences across the country with respect to what services are covered in some fashion.

Family doctors receive a fee per visit. This fee is negotiated annually between the province and the medical society. Physicians are not allowed to charge a user fee to patients for services which are covered by the government.

The percentage of GNP in Canada used on medical care is approximately 4% less than in the United States. In 2000, the World Health Organization ranked the Canadian healthcare system 30th in the world and ranked the United States 37th. There is much talk in Canada these days about the future of its healthcare system as they are currently experiencing a funding gap of approximately $537 billion. Much of the dialog is made up of what one would expect: reform, increase taxes, further reduce services, or all of the above.

Next Monday is our final chapter in this three-part series and we will take a brief look into the structure of the healthcare system.


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