Health care in Canada is financed primarily through taxation, both provincial and federal,
personal and corporate income taxes. Federal funding is transferred to the provinces as a
combination of cash contributions and tax points (taxing power). To receive federal funds,
however, provincial insurance programmes must adhere to the principles in the Canada Health
Act. Public sector funding represents about 72% of total health expenditure. The remaining 28%
is financed privately through supplementary insurance, employer-sponsored benefits or directly
out-of-pocket.
Most public sector funding comes from central revenue streams. Some provinces use ancillary
funding methods which are nominally targeted for health care, such as sales taxes, payroll levies
and lottery proceeds.
These funds, however, are not earmarked specifically for health, are added
to the central revenue stream, and play a relatively minor role in health care financing. Two
provinces utilize health care premiums. The premiums are not rated by risk in either province and
prior payment of a premium is not a pre-condition for treatment. Premium assistance is offered to
low income individuals and families. Health care premiums also accrue to provincial central
revenues and are considered an alternative form of taxation.
All eligible residents are covered by their provincial health insurance plans, which require that
residents register with the plan. The universality principle of the Canada Health Act requires that
provincial plans cover 100% of eligible residents for medically necessary hospital and medical
care. Eligible residents exclude those who are covered by the federal government through separate
agreements and, in some cases, a separate infrastructure.
