Canada Health Insurance

Funding for Medicare is generated through general revenues from the ten Canadian provinces and three territories, aided by the federal government via The Canada Health Transfer plan, which provides supplemental transfer payments. As it stands, patients are at no cost when obtaining core medical services, treatments, and hospital care.

The provinces of Ontario, Alberta and British Columbia do charge health premiums to offset the cost of health care funding, but these are actually in the form of taxes, being as they are not linked to medical care services, or to provincial costs for such services.

The Canadian Medicare system is classified by the Organization for Economic Co-operation and Development (OECD) as tax-supported, unlike the social insurance methods used in several countries within Europe. Governing boards for each province and territory determine the cost upon which the federal government issues reimbursement.

Although governments do provide the lion’s share of Medicare funding for most services, private funding also has a key secondary part to play in financing health care.

Public-Funded Medicare
Medicare funding in Canada is realized by both provincial and federal levels of government. Public sources account for approximately 70% of all health care costs in Canada. The federal government helps to support health care by supplying cash and tax transfers to the underlying provinces and territories through the Canada Health Transfer plan. Transfer payments are the incorporation of cash contributions and tax transfers. The measure of provincial and territorial funding received can be quite staggering, with amounts having reached over $35 billion in 2002-2003 alone. Equalization payments are also provided by government to help less prospering provinces and territories with financial costs for their publicly funded health care.

The Canada Health Act requires physician services and hospital care deemed medically necessary to have mandatory public insurance coverage so that federal transfer payments can be issued. Such coverage can vary, since Medicare is under each province or territory’s own jurisdiction. For example, Ontario offers more public benefits for homecare services than New Brunswick.

Financing of health care is also acquired through personal and corporate income taxation. Federal Insurance Contributions Act (FICA) taxes are deductible from payroll. FICA consists of both Social Security and Medicare taxes. The tax rate is 2.9 percent for Medicare.

Some provinces will provide additional Medicare funding by piping into other sources such as sales tax and proceeds from lottery gaming.

Private Medicare Funding
Although the Canadian Medicare system is largely publicly funded, many services and treatments are acquired in private medical offices. Most physicians and medical specialists are not paid by an annual salary, but instead receive a patient’s fee for each visit or treatment. The term “private funding” can be described as payments made out-of-pocket by the patient, as well as services covered by a private insurance company.

Roughly 30% of Canadian health care costs are financed through the private sector. Private insurance companies assist in areas of public health services only moderately covered, or offering no coverage whatsoever. In Canada, such areas generally include a large portion, if not all out-patient prescription medications, vision care, and dental procedures.

Today, there are some 75% of Canadian citizens supplementing their Medicare benefits with some form of private health insurance policy in order to fill in the gaps in their provincial health plan, many obtaining the additional coverage through their workplace. Keep in mind that private insurance companies offer varying degrees of what they will and will not cover.