Lifetime Distributional Effects of Publicly Financed Health Care in Canada

May 14, 2013—Public funding of health care has a redistributive effect on the incomes of Canadians, but this is reduced when a life course perspective is considered, according to a new report from the Canadian Institute for Health Information (CIHI).

Lifetime Distributional Effects of Publicly Financed Health Care in Canada looks at estimated lifetime per capita health care costs in the public sector—including doctors, hospitals and some drugs—as well as the portion of household taxes that would be required to pay for these services.

The analysis found that average lifetime health care costs are $237,500 for Canadians in the lowest-income group and $206,000 for Canadians with the highest incomes. However, the difference is much larger when looking at only a single year (2011).

Similarly, while tax payments to finance health care are higher for more-affluent Canadians, differences between income groups are muted when examining costs over a lifetime, rather than in one specific year. The most-affluent Canadians contribute the equivalent of 8% of their average annual income toward publicly funded health care, and the least-affluent contribute 6% of theirs.

The report provides insight into what affluence and poverty would look like in Canada without the existence of publicly financed health care. For example, health care costs for members of the highest-income group are equivalent to 3% of their average income; however, costs for those in the lowest-income group are equivalent to 24% of their average income.

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Figure 1

Lifetime Annual Average Publicly Financed Health Care Costs and Corresponding Tax Payments in Relation to Income, by Income Group (Figure 2 in the overview)