An Analysis of Canada’s Healthcare Model in Relation to Socioeconomic Status

Winnie Fu

April 2017

Canada’s publicly funded healthcare system is widely recognized as an example of the country’s progressive nature. Universal healthcare in Canada is undeniably a mark of advancement; however, the provision of healthcare in each province is markedly different and creates circumstances in which health inequity arises. Many services are delegated as non-essential and excluded from the benefits of healthcare. As a result, out-of-pocket expenditures are required for services not covered by the national healthcare program. This is directly related to socioeconomic status and generates pronounced disparities between Canadians from different household income quintiles. Generally speaking, out-of-pocket expenditures have been steadily increasing for all household income quintiles, as reported from a continuous study conducted from 1997 to 2009 by Statistics Canada. The greatest observed increase was from the lowest household income quintile group, with a growth of 63.2% between 1997 and 2009. Regardless of this significant growth, households in the highest quintile continued to spend the most, with an average of $2964 per household in 2009 (which is almost three times the amount spent by those in the lowest quintile; $1030). Unfortunately, despite those in the lower quintiles spending the least on healthcare, their expenses relative to their income remain the highest. That is to say, their out-of-pocket expenses represent a larger percentage of their after tax income compared to those in the highest quintile.

Specific to the 1997 to 2009 study, the three categories to which most of the out-of-pocket health care expenses were allocated were prescription medicine, dental services, and insurance premiums. Drug expenditure represents the largest share of private-sector spending, with a cost of $21 billion in 2012. While other countries with universal healthcare systems include a universal pharmaceutical system, Canada’s healthcare system only designates hospital

inpatient drugs as essential. As a result, other pharmaceutical drugs are considered non-essential and not covered by the healthcare system. Although provincial plans may cover pharmaceutical drugs, the specifications vary by province across age groups and partial subsidies. Canadians may opt to pay for a premium insurance that will guarantee drug insurance, but for lower income families, this option may be weighed against paying for drugs as they are needed and deemed too costly. Private health insurance expenditure per capita has had a 7% annual growth from 1988 to 2012. However, those in the lower quintiles spend the least amount in this category, with the lowest quintile spending only an average of $222 per household in 2009. Conversely, those in the second-lowest quintile spent the most on prescription drugs in 2009 out of all the quintiles, demonstrating that lower quintile households opt to spend money directly on drugs instead of paying for a premium insurance. Simply put, insurance add-ons are a luxury that most lower income households cannot afford.

Similar to prescription medicine, dental care is defined as non-essential by the federal healthcare program. In the 1997 to 2009 study, a similar trend to the pharmaceutical drug category was observed between lower and higher household quintiles, with those in the highest quintiles spending the most on dental care and those in lower quintiles relegating oral hygiene to their own list of “non-essential” items.

As each province operates under separate programs, eligibility for health services is decided upon by the provincial government and affects how much Canadians spend on out-of-pocket health services. For those higher household income quintiles, this is not a problem; all health services are viewed as essential and effectively covered without significant impact to their incomes. Unfortunately, the same cannot be said for those in lower household income quintiles because, while all health services are equal in importance, some health services become

prioritized over others in certain situations. This creates an uneven terrain for Canadians from different socioeconomic backgrounds; the disparity between Canadians from different income quintiles becomes pronounced not just through financial security, but also with regards to health.

Health inequity interacts with socioeconomic status in a variety of contexts and creates distinct disadvantages in the lives of many Canadians. While immutable factors like genetics may adversely impact an individual’s health, health inequity is avoidable; socioeconomic differences in access to healthcare can be removed. While the Canadian healthcare system is widely lauded as a success on a number of indicators, its structure and distribution can continue to be improved as we move towards creating a more equitable and inclusive system.

References

Frohlich, K., Ross, N., & Richmond, C. (2007, January). Health disparities in Canada today: Some evidence and a theoretical framework. Retrieved November 6, 2016, from https://www.researchgate.net/profile/Chantelle_Richmond/publication/7258047_Health_Disparities_in_Canada_Today_Some_Evidence_and_Theoretical_Framework/links/5523e5fd0cf2c815e0736539.pdf

Sanmartin, C., Hennessy, D., Lu, Y., & Law, M. (2015, November 27). Trends in out-of-pocket health care expenditures in Canada, by household income, 1997 to 2009. Retrieved November 6, 2016, from http://www.statcan.gc.ca/pub/82-003-x/2014004/article/11924-eng.htm

Trends in Income-Related Health Inequalities in Canada. (2015, November). Retrieved November 6, 2016, from https://www.cihi.ca/en/summary_report_inequalities_2015_en.pdf

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