Healthcare is financed by government for reasons of both efficiency and
equity. The efficiency argument is much the same as for basic education—
a healthy population is as important to the smooth functioning of a
democratic country as is an educated one. The equity argument is even
more powerful: Most people believe that basic healthcare is so important
that denying it to people who cannot afford it would be unacceptable. But
even when this equity argument is generally accepted, there is still a
decision as to what and how much to provide for free.
Cost Containment
Taking federal and provincial payments into account, Canada’s public
healthcare system is the country’s single most expensive social program.
In 2017, government expenditure on healthcare was $169 billion, almost
20 percent of total government expenditure and 8 percent of GDP. Private
spending on healthcare brought total spending up to over 11 percent of
GDP. In other words, more than one out of every nine dollars in income
produced in the Canadian economy is spent on healthcare. This ratio is
expected to rise as the baby-boom generation continues to age and
increases the average age and healthcare needs in the Canadian
population.
“Cost containment” in the healthcare sector has become a priority for
most provincial governments and there is active debate over what
reforms would be effective and acceptable. Most observers agree that
some type of expenditure-controlling reform is urgently needed.
Unfortunately, agreement stops there.