Preliminary estimates by public policy think-tank project increased costs in 2020 due to COVID-19
Canada’s public health system is one of many points of national pride among Canadians. But because it’s financed through general government revenues and hospital services covered by the public healthcare system are free at the point of service, many don’t know exactly how much it costs them.
This year, the math has become even more complicated thanks to the impact of the COVID-19 outbreak. But that hasn’t stopped the Fraser Institute from continuing its annual study on the price of public healthcare insurance.
Drawing from its most recent Canadian Tax Simulator data, the institute’s preliminary estimates that typically, unattached individuals will pay $4,894 in healthcare insurance this year. Two parents with no children will pay $13,745; those raising one child will pay $13,262, while those with two children will pay $14,474. For a solo parent with one child, that cost is estimated at $4,301, just slightly higher than the $4,190 for a single parent with two children.
The institute estimated that in the 2020/21 fiscal year, 28.8% of tax revenues from income will be spent on healthcare. Assuming further that the family’s total tax bill dedicated to healthcare insurance is proportionately equal to the amount of tax revenue spent by the government on healthcare, the think-tank estimated that the cost of public healthcare insurance for Canadian households will rise by anywhere from 0.9% (in the case of two-parent, one-child families) to 7.6% (for solo parents with just one child).
Looking at healthcare costs by income group, the report estimated that healthcare insurance will cost $471 for individuals in the lowest income decile (with an average income of $14,168) in 2020, while their income tax rate was pegged at 11.5%. Meanwhile, those in the highest decile (average income of $281,988) will pay an estimated $39,731, whereas their estimated tax rate was 48.9%
“[H]igher-income earners bear a greater proportion of the tax burden than lower-income earners and thus contribute proportionally more to our public health care system,” the institute said.
The report clarified that its estimates of the total tax bill for families in 2020 are based on preliminary estimates from an earlier study, which said “[e]stimates of both income and total taxes for 2020 have been significantly affected by the economic ‘shutdown’ in response to COVID-19.”
It also stressed the need to account for deficits, which “will have to be paid for by taxes on future generations.”
