“The principal source of health system finance is taxation by the provincial, territorial and federal governments: general taxation provides well over two thirds of all financing for health (Table 3.2). Since medicare services (hospital, diagnostic, medical care, designated surgical-dental services and inpatient drug therapies) are free at the point of use, they are entirely financed by government revenues mainly at the provincial level. In 2018, national estimates suggest public finance made up 90% of hospital spending, and over 98% of physician spending (CIHI, 2019a). The sources of funding for other health goods and services are derived from a combination of taxation, OOP [Out Of Pocket] payments and private health insurance. Compulsory (or social) insurance forms the smallest portion of health funding and is largely used for health benefits for workplace injuries or ailments available under workers’ compensation schemes in PTs (see section 3.3.2).

“Drawing on national estimates from CIHI [Canadian Institute for Health Information], we can see that nearly 55% of public spending on health was on hospital and physician services, with the remaining 45% of public spending on the following functions: public health (7.7% of total public spending), publicly funded or subsidized nonmedicare services such as other institutions (the majority of which are LTC [Long Term Care] facilities) (11.1%), and prescription drugs (8.1%), as well as health infrastructure, administration, and research (CIHI, 2019a). Private spending (which makes up about 30% of total spending), was for prescription drugs (25%), dental care (20.1% of total private spending), vision care (6.5%), other health professionals (6%), non-hospital institutions, most of which are LTC facilities (10.5%) and over-the-counter pharmaceuticals and personal health supplies (8.1%).”

Source: Marchildon G.P., Allin S., Merkur S. Canada: Health system review. Health Systems in Transition, 2020; 22(3): i–194.

“There are two levels of statutory or compulsory funding and coverage for health services. The first is universal medicare, which includes medically necessary hospital, diagnostic, medical care, designated surgical-dental services and inpatient drug therapies that are provided free at the point of use and prepaid through general taxation. Medicare is protected by federal legislation, and serves as a floor for PT UHC [Provincial and Territorial Universal Health Coverage] programmes. Specifically, as described in Chapter 2, the Canada Health Act (CHA) establishes criteria and conditions related to the insured health services that PTs must fulfil to receive the full federal cash contribution under the Canada Health Transfer. The second level is non-medicare goods and services, often referred to as extended benefits, which are legislated provincially (with the exception of some targeted federal programmes; see section 3.3.1). Coverage of nonmedicare goods and services varies considerably across the country, and there are different approaches to covering different types of goods and services within PTs.”

Source: Marchildon G.P., Allin S., Merkur S. Canada: Health system review. Health Systems in Transition, 2020; 22(3): i–194.

“While the PTs [Provincial and Territorial governments] are most directly responsible for raising the majority of financing for publicly funded health care, the federal government contributes funding through transfers to these governments. Federal transfers through the Canada Health Transfer are conditional on the PTs meeting the five criteria under the CHA [Canada Health Act] (see Table 2.2). At the same time, the provinces receive additional funds in the form of unconditional transfers from the federal government through what is called Equalization, while the territories receive unconditional transfers through Territorial Formula Financing. The specific purpose of equalization is to ensure that Canadians, wherever they live, “have access to reasonably comparable services at reasonably comparable levels of taxation”, a purpose that is stated and protected in the Canadian constitution (Expert Panel on Equalization and Territorial Formula Financing 2006, p. 18). In 2019–2020, five provinces received equalization payments (estimated $ 19.8 billion in total, € 13.2 billion): Prince Edward Island, Nova Scotia, New Brunswick, Quebec and Manitoba (Canada, 2019b). These unconditional payments combined with per capita funding through the Canada Health Transfer are essential to the ability of lower-income provinces in particular to provide medicare coverage that is roughly equivalent to the UHC of wealthier provinces (Béland et al., 2017).”

Source: Marchildon G.P., Allin S., Merkur S. Canada: Health system review. Health Systems in Transition, 2020; 22(3): i–194.

“Health care in Canada is predominantly publicly financed (Table 4.1). In 2014, 71% of health care was financed publicly, a level that is a bit lower than the peak of 77% in 1976 but which has remained relatively constant since the late 1990s. The Canada Health Act’s focus on physician and hospital services, however, leads to a unique pattern of public financing across health care sectors. Public financing for physician and hospital services, commonly referred to as Canada’s Medicare programme, constituted 99% and 91% of spending in these sectors in 2013. Outside these two sectors the role of public insurance is markedly smaller and more variable. Public finance is next most important for other institutions, such as long-term care facilities, and least important for dental care (for which the only universally publicly insured dental care is inpatient oral surgery and the public sector finances about 6% of all services). In between is the drug sector, for which the public sector financed 36% of all drugs (and 43% of prescription drugs) in 2013. De facto, therefore, Canada’s “single-payer, universal” system of public finance accurately applies only to physician and hospital services. Unsurprisingly, Canada has one of the lowest levels of public spending on pharmaceuticals among OECD countries (OECD, 2017).”

Source: Jeremia Hurley and G. Emmanuel Guindon. “Private health insurance in Canada.” In Private health insurance : history, politics and performance. Thomson, S., Sagan, A., & Mossialos, E., Eds. (2020). Cambridge: Cambridge University Press.

“The public insurance programmes are financed primarily through personal income and consumption taxes levied by both the federal and provincial governments. Two provinces – British Columbia and Ontario – retain national health care premiums for the core Medicare services. The premiums vary according to income in both of these provinces and in addition by household composition in British Columbia; none of the provinces risk-adjust the premiums. An individual cannot be denied service for failure to pay the premium, so they are, de facto, simply taxes.⁴ Three provinces (Québec, Alberta and Nova Scotia) charge premiums to some beneficiaries of their public drug insurance programmes. The premiums depend on income and beneficiary status: Québec and Nova Scotia exempt those on social assistance; Alberta exempts seniors and those on social assistance (Canadian Institute for Health Information, 2012). Four provinces (Newfoundland, Québec, Ontario and Manitoba) collect a health-specific payroll tax (rates up to 4% depending on the size of a firm’s payroll), but in general, neither local taxes nor payroll taxes contribute meaningfully to health care finance.”

Source: Jeremia Hurley and G. Emmanuel Guindon. “Private health insurance in Canada.” In Private health insurance : history, politics and performance. Thomson, S., Sagan, A., & Mossialos, E., Eds. (2020). Cambridge: Cambridge University Press.

“Private finance encompasses a mixture of direct, out-of-pocket payments for care (48%), private insurance coverage (41%) and “nonconsumption” spending (11%), which includes non-patient revenue to hospitals (ancillary operations, donations and investment income), spending on research and capital expenditure in the private sector (Table 4.2).5 Overall, private out-of-pocket spending is a larger source of finance than is private insurance, though again, this varies by sector. Private insurance plays an important role only outside the physician and hospital sectors. In 2012, for instance, although 12% of health care was financed through private insurance, this proportion ranged from a low of effectively 0% for physician services and 2.6% for hospital care to over 56% for dental services (Table 4.2). Dental care is the only sector for which private insurance finances a majority of care. Private insurance is next most important for drugs, for which it finances about 30% of spending. Insurance for dental care and drugs are the largest sources of revenue for the private insurance industry: private insurers derived 40% of premium revenue from drug insurance and 28% from dental insurance in 2012 (Canadian Institute for Health Information 2014).”

Source: Jeremia Hurley and G. Emmanuel Guindon. “Private health insurance in Canada.” In Private health insurance : history, politics and performance. Thomson, S., Sagan, A., & Mossialos, E., Eds. (2020). Cambridge: Cambridge University Press.

Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems in the US and several other nations.

Page last updated Sept. 21, 2021 by Doug McVay, Editor.