Canadians spend more on private health insurance for smaller payouts

Spending by Canadians on private health insurance has more than doubled over the past 20 years, but insurers paid out a rapidly decreasing proportion as benefits, according to a study published today in the CMAJ (Canadian Medical Association Journal).

The study, by University of British Columbia and University of Toronto researchers, shows that overall Canadians paid $6.8 billion more in premiums than they received in benefits in 2011.

Approximately 60 per cent of Canadians have private health insurance. Typically obtained as a benefit of employment or purchased by individuals, private health insurance usually covers prescription drugs, dental services and eye care costs not paid by public health care.

Over the past two decades, the gap between what insurers take in and what they pay out has increased threefold. While private insurers paid out 92 per cent of group plan insurance premiums as benefits in 1991, they paid only 74 per cent in 2011. Canadians who purchased individual plans fared even worse, with just 38 per cent of their premiums returned as benefits in 2011.

"Small businesses and individual entrepreneurs are the hardest hit – they end up paying far more for private health coverage," says study lead author Michael Law, an assistant professor in UBC's Centre for Health Services and Policy Research, "It's essentially an extra health tax on one of our main economic drivers.

"Our findings suggest that private insurers are likely making greater profits, paying higher wages to their executives and employees, or spending more on marketing," Law adds.

The authors call for greater transparency from private insurers and for the federal government to introduce new regulations. "Obamacare requires insurers to pay out 80 to 85 per cent of their premium income as benefits, which resulted in $1.1 billion being returned to policyholders in 2012," says Law. "Our numbers suggest that Canadians are getting a worse deal than Americans."

add to favorites email to friend print save as pdf

Related Stories

Does ObamaCare cause psychological distress among US adults?

Jan 09, 2014

The Affordable Care Act, dubbed 'ObamaCare', has proven to be one of the most controversial legislative acts of the Obama presidency. New research, published in Stress & Health explores the psychological relationship betwee ...

Poll: Health law seen as eroding coverage

Dec 15, 2013

A poll finds that Americans who already have health insurance are blaming President Barack Obama's health care law for their rising premiums and deductibles.

Administration: 'Obamacare' to offer more choices

May 30, 2013

(AP)—The White House says insurance companies are showing interest in providing coverage under the new health care law, a development likely to increase market competition and give uninsured people more choices than they ...

Study shows rise in teachers' health insurance costs

Feb 15, 2013

A new study by a University of Arkansas professor and doctoral student found that school district costs for teachers' health insurance in 2012 were, on average, 26 percent higher than those for private-sector professional ...

Recommended for you

Endocrine disruptors cause fatty liver

2 hours ago

Exposure to low doses of hormone-disrupting chemicals early in life can alter gene expression in the liver as well as liver function, increasing the susceptibility to obesity and other metabolic diseases in adulthood, a new ...

Extended pre-cessation bupropion helps smokers quit

6 hours ago

(HealthDay)—Extended pre-quit bupropion is associated with reduced smoking behavior during the pre-quit period and improved short-term abstinence rates, according to a study published online Jan. 14 in ...

Medical device surveillance on the horizon

7 hours ago

Thousands of people around the world have been exposed to toxic chemicals generated by their metal hip implants. Similarly, many patients have contracted infections from pieces of implanted mesh used in hernia-repair surgery, ...

User comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.