News Release

The increasing inefficiency of private health insurance in Canada

Peer-Reviewed Publication

Canadian Medical Association Journal

The gap between private health insurance premiums and payouts in Canada has widened markedly over the past 20 years, with a gap of $6.8 billion in 2011. In an analysis in CMAJ, Michael Law and coauthors examine why this has happened and how the private insurance industry might be better regulated for the benefit of those insured.

"Around 60% of Canadians have private health insurance coverage, and it's important they realize that the gap between what insurers collect in premiums and what they pay out in benefits is essentially their money," states Michael Law, assistant professor with the Centre for Health Services and Policy Research, School of Population and Public Health, The University of British Columbia (UBC), Vancouver. "People are either directly paying higher premiums or receiving reduced wages from their employers who have to pay for these changes."

Canada ranks second among OECD nations in terms of per-capita private health insurance expenditures.

"Canadians are not getting as much as they could for each dollar spent on for-profit private health insurance," conclude the authors. "Governments could take one of two approaches to improving the situation: replace private insurance with more efficient public alternatives or impose new regulations on the private insurance sector."


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