Private Health Insurance: How Many Canadians Opt For It?

Canada's healthcare system is a publicly funded, universal system, known as Medicare. However, private health insurance also plays a significant role, especially for services not covered by public healthcare, such as prescription drugs, dental services and eye care. About 60% of Canadians have private health insurance, typically obtained through their employer. In 2010, private insurers' expenditures totalled $22.7 billion, accounting for 11.7% of healthcare spending.

Private health insurance covers prescription drugs, dental services, and eye care

Private health insurance is an important component of the Canadian healthcare system, with about 60% of Canadians covered by it, often as an employment benefit. It covers areas such as prescription drugs, dental services, and eye care, which are not adequately covered by the provincial healthcare system.

Prescription Drugs

Private health insurance plays a significant role in providing coverage for prescription drugs. While prescription drugs administered in Canadian hospitals are provided free of charge, outside of the hospital setting, Canadians rely on a mix of public and private insurance plans for coverage. The federal, provincial, and territorial governments offer varying levels of coverage based on age, income, and medical condition. Private insurance plans fill in the gaps left by public plans, ensuring that individuals and their families have access to necessary medications.

Dental Services

Dental services are another area where private health insurance provides valuable coverage for Canadians. While some basic dental care may be covered by provincial healthcare plans, particularly for children, adolescents, and seniors, more comprehensive dental services are often covered by private insurance plans. This includes routine dental services such as check-ups, fillings, and other dental procedures.

Eye Care

Eye care is also an important component of private health insurance in Canada. While provincial healthcare plans may cover eye examinations for those under 18 or over 65, as well as in certain medical cases, private insurance plans offer more comprehensive coverage. This includes coverage for prescription eyeglasses, contact lenses, and corrective laser surgery, ensuring that Canadians can maintain and improve their eyesight.

Private health insurance in Canada, therefore, plays a crucial role in ensuring that Canadians have access to essential healthcare services that may not be fully covered by the provincial system. By providing coverage for prescription drugs, dental services, and eye care, private insurance helps to fill in the gaps and ensure that individuals and their families can maintain their health and well-being.

About 60% of Canadians have private health insurance

Private health insurance in Canada is mainly provided through employers. In 2015, approximately 90% of premiums for private health plans were paid through employers, unions, or other organizations. Private health insurance is also available for purchase by individuals.

Private health insurance plays a major supporting role in the Canadian healthcare system, particularly for services not covered by public health care. In 2010, expenditures from private insurers totalled $22.7 billion, accounting for 11.7% of healthcare spending. This places Canada second among nations in the Organisation for Economic Co-operation and Development in terms of per capita private health insurance expenditures.

The use of private health insurance in Canada has been a topic of debate. Some have argued for a greater role for private funding in the healthcare system, while others have supported the current public healthcare system. In 2008, the Ontario Medical Association and the Ontario government agreed to a four-year contract with a 12.25% doctors' pay raise, expected to cost Ontarians an extra $1 billion.

The use of private health insurance in Canada has also been a topic of research. A study by the University of British Columbia and the University of Toronto found that spending by Canadians on private health insurance more than doubled over the past 20 years, while insurers paid out a decreasing proportion as benefits. The study also found that Canadians paid a rapidly increasing gap between what insurers take in and what they pay out, with Canadians paying $6.8 billion more in premiums than they received in benefits in 2011.

The authors of the study call for greater transparency from private insurers and new regulations from the federal government. They note that similar regulations in the United States resulted in $1.1 billion being returned to policyholders in 2012.

Private health insurance is mainly provided through employers

Private health insurance plays a major supporting role in Canada's healthcare system, particularly for services such as prescription drugs, dental services, and eye care. While most healthcare in Canada is publicly funded, private insurance is an important supplement, accounting for 11.7% of healthcare spending in 2010. This places Canada second among nations in the Organisation for Economic Co-operation and Development in terms of per capita private health insurance expenditure.

For-profit firms dominate the private health insurance market in Canada, representing about 80% of the market. However, there has been limited assessment of the performance of private health insurance in the country. While private insurance provides coverage for important services, there are concerns about the efficiency of private insurers. Administrative expenses tend to be higher in private insurance firms compared to the public sector, and these expenses have been increasing over time.

The role of private health insurance in Canada is significant, and it is mostly provided through employers. However, there are questions about the efficiency and regulation of private insurers, which may impact the value and affordability of private health insurance for Canadians.

Private health insurance is inefficient, with high administrative costs

Private health insurance firms' profits and administration expenses have sparked debate and policy change in other countries, notably the United States. For instance, the US Medicare program now requires insurers to spend the majority of premium revenue on medical care, with 80% for small-group plans and 85% for large-group plans. If a greater proportion of premium revenue goes toward administration and profits, the excess must be returned to plan members as rebates.

Canada, on the other hand, does not have similar requirements for all private insurers. Data shows that private insurers in Canada have overhead expenses ten times higher than those in the public sector. These figures also exclude the administrative costs incurred by providers, such as pharmacies and dental offices, when dealing with multiple insurers.

The available evidence suggests that Canadians are not getting the best value for their money when it comes to private health insurance. The increasing administrative costs of private health insurance in Canada have resulted in higher total expenditures, which are ultimately passed on to individual Canadians.

Private health insurance premiums have more than doubled over the past 20 years

In Canada, private health insurance plays a significant role in supporting the public healthcare system, especially in areas such as prescription drugs, dental services, and eye care. About 60% of Canadians are covered by private health insurance, usually obtained through their employer. While the public healthcare system covers medically necessary hospital and physician services, private insurance helps fill the gaps for other essential services.

The efficiency of private health insurance has been a topic of debate, with some arguing that administrative costs and profits of private insurance companies drive up premiums. Data suggests that the administrative expenses of private insurers in Canada are higher than those in the public sector and have increased over the past two decades. This means that a larger portion of premium income is spent on administration and profits rather than on benefits for the insured.

The rise in healthcare costs is not unique to Canada. In the United States, for example, the average annual premium for employer-sponsored family health coverage reached $23,968 in 2023, representing a 20% increase since 2018 and a 43% increase since 2013.

The aging population and the increasing prevalence of chronic health conditions are also contributing factors to the rise in insurance premiums. Older adults are more likely to suffer from chronic conditions, and managing these conditions requires lengthy treatment periods and increases the demand for healthcare services.

Additionally, technological advances in healthcare can result in more expensive procedures. While these innovations can lead to better patient outcomes, they can also contribute to higher costs for both patients and insurance companies.

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