The Price of Public Health Care Insurance: 2012 Edition
Nadeem Esmail and Milagros Palacios, The Fraser Institute September 20, 2012
The intent of the Fraser Institute report is fairly transparent. It promotes privatisation of Canadian health care insurance by presenting the current publicly-funded system as unaffordable, its rising costs unsustainable. That costs are rising is a fact, although the rate of increase declined in recent years (exception 2008-2010). The real issue is what the alternative is to the current Canadian health insurance system. If the Fraser Institute is prescribing a privatised health insurance system like that of the United States, well, it doesn’t take too much digging into the OECD report to see that prescription would be harmful to Canadians’ health.
The Fraser Institute points to the fact Canadian health care expenditure accounted for 11.4% of GDP in 2009 and 2010, that it is among the highest in the OECD. What it doesn’t say is that health care expenditures in 12 of the 34 countries included in the report exceed 10% of their respective GDPs. The highest? The United States, where its private health care system accounts for a staggering 17.6% of GDP. The countries that had total health care expenditures well below 10% of GDP? Mexico, Estonia, Poland, Czech Republic, Turkey and Korea. No comment.
Health care expenditure per capita? Canada: $4,445 United States: $8,233. The per capita expenditure figures in the OECD report are based on USD purchasing power parity (US$ PPP). Given Canada’s volume of trade with and size relative to the US economy rendering it the price-taker, such a disparity in relative health care cost is all the more notable.
The Fraser Institute focuses on the growth rate of Canadian health care expenditure over the previous decade. The OECD report shows it was largely due to two periods of exceptional growth, 2000-2001 and 2008-2010. For the remainder of the 2000′s, the annual growth rate of total expenditure on health varied between 2.9% and 4.3%.
Other interesting facts about Canada’s health care expenditure found in the OECD stats: Out-of-pocket payments (OPP) as a percentage of total health expenditure were lower over the last decade than throughout the 1990′s. Public expenditure as a percentage of total health expenditure remained fairly stable (~70%) since the mid-90′s. Pharmaceutical expenses per capita rose slightly since the mid-90′s then started to decline in recent years. These costs are projected to decline further as widely-prescribed drugs’ patents (e.g. Lipitor, Plavix, Crestor, Advair, Symbicort) expire and others are set to expire in the near future.
The referenced mid-90’s spike and subsequent decline in out-of-pocket payments and pharmaceutical expenses coincided with the introduction / expansion of provincial prescription drug programs, like Quebec’s Prescription Drug Insurance Plan. As the OECD historical data suggests, such programs have helped control costs in the long-run.
While the Fraser Institute purports to alert Canadians to trouble ahead if they insist on maintaining their publicly-funded health insurance system, this appears to be a false alarm.
The abstract for this report by the Fraser Institute notes
The 10 percent of Canadian families with the lowest incomes will pay an average of about $487 for public health care insurance in 2012. The 10 percent of Canadian families who earn an average income of $55,271 will pay an average of $5,285 for public health care insurance, and the families among the top 10 percent of income earners in Canada will pay $32,628.
It seems The Fraser Institute takes issue not only with Canada’s publicly-funded health insurance system, but with its progressive income tax system as well.