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Publicly funded health care is financed with general revenue raised through federal, provincial and territorial taxation, such as personal and corporate taxes, sales taxes, and payroll levies. Provinces may also charge a health premium on their residents to help pay for publicly funded health care services. However, non-payment must not limit access to the medically necessary health services defined by the CHA.
Image from Effective Public Healthcare Panacea Project
The federal government funds health care in the provinces and territories through block cash and tax transfers like the Canada Health Transfer. However, they can receive additional support through other fiscal transfers. Additional health services, such as prescription drugs, dental, and vision, are primarily financed privately. As a result, every province and territory strongly recommends supplemental insurance coverage, as those without often have to pay out of pocket. In general, approximately 70% of healthcare funding comes from the public sector, leaving the remaining 30% to the private sector and other sources.
Image from Effective Public Healthcare Panacea Project (2018)
Image from the Effective Public Healthcare Panacea Project
FIGURE ONE: Total health expenditure per capita by health spending category, Canada, 2019 (dollars and percentage share). Graph from Canadian Institute for Health Information: National Health Expenditures, 2020.
Due to variation in demography and provided services, health expenditures differ across the provinces and territories. However, on a general level, health care spending in 2019 (newer data has been delayed due to the challenges presented by COVID -19) was anticipated to reach $265.5 billion or $7064 per person. This figure represents about 11.5% of Canada's gross domestic product.
Hospitals represent the largest share of health costs, followed by drug spending and physician services. That said, as less complex needs are increasingly accommodated through out-patient services rather than in hospitals, community-based care is seeing an increase in funding. Figure one illustrates the spending breakdown.
It is worth noting that health spending has changed significantly over the past four decades. Compared to the contemporary values of 11.5% of the GDP going to health care and 26.4% of the cost being accrued by hospital services, health spending was 7% of Canada's GDP, with hospitals having a 45% share of expenditures in 1975. Due to the challenges posed by COVID-19 in public health and the economy more broadly, it remains to be seen how spending will change in the next few years. Figure two provides an annual growth projection of health expenditures and GDP in response to COVID-19 based on a historical pattern of responses to a fluctuating economy.
FIGURE TWO: total health expenditure, and nominal GDP and projection, annual growth, Canada. Graph from Canadian Institute for Health Information: National Health Expenditures, 2020.
The following table breaks down health expenditures by province in 2019. It includes public and private sector spending in millions of dollars.
Expenditures in millions of dollars in 2019