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July 09, 2014
Poorest groups pay more out-of-pocket for health care, StatsCan says

Canadians are spending an increasing percentage of their household income on health care, Statistics Canada reports.

In its report entitled Trends in out-of-pocket health care expenditures in Canada, by household income, 1997-2009, the government agency reports Canadians are spending more money in both absolute terms and as a percentage of income on out-of-pocket health care expenses.

According to its bi-annual survey of household spending patterns, Statistics Canada says that out-of-pocket health care expenses increased an average of 36 to 63 per cent from 1997 to 2009, depending on income quintile.  (A quintile is any one of five equal groups into which a population can be divided.)

Hardest hit were the lowest 20 per cent of income earners.  Out-of-pocket expenses for members of that group jumped from $631 per person annually in 1997 to $1,030 in 2009, a 63 per cent increase.

While those in the highest income quintile paid more in absolute terms, their out-of-pocket expenses grew at a strong, but still more modest, 48 per cent, from $2,007 per person annually in 1997 to $2,964 in 2009.

The results by income quintile were as follows:

While the Statistics Canada report says that health care expenditures consume an average of 5.7 per cent of household income, the percentage of households reporting that health care expenses now account for more than five per cent of  their income has increased across all income categories.  Again, however, the highest increases were seen among lower income groups.  

In other words, since 1997, the country’s lowest income earners faced the sharpest increases in out-of-pocket health care costs and are spending a greater percentage of their income on health care.  This is seen below:

These patterns changed markedly when it came to prescription drugs, according to the agency report.  While the lowest income group continued to report the highest cost increases since 1997, those in the second lowest income quintile spent more on prescription drugs in absolute dollars than the other groups.  In general, the two lowest income groups faced the highest drug cost increases and paid more proportionally for drugs than the other groups.  Paradoxically, the highest income earners paid less for their medications in both absolute terms and proportionally.

The same overall pattern held when it came to dental expenses:  the lowest income groups faced the highest cost increases from 1997.  However, the highest income group followed closely behind while middle income groups faced the lowest out-of-pocket cost increases.

The biggest disparity among the lower and higher income quintiles could be seen in insurance premiums paid by the various income groups.  Again, the lowest income groups faced the steepest increases in health care insurance premiums in the 1997-2009 period.

Conclusions

“The results of this study demonstrate that while out-of-pocket health care spending among households in all income quintiles rose between 1997 and 2009, the increase was greater in lower income households,” the Statistics Canada report says.

For plan sponsors, the report could serve as a warning that cost increases associated with the provision of group health care and dental benefits will most likely occur among lower income workers.   That could result in higher wage demands among those groups.

In addition, the disparity in relative out-of-pocket health care expenses could result in erratic or inefficient use of health care plans, the report suggests.

“Lack of insurance and the burden of out-of-pocket expenditures have been associated with inequitable use of dental care and prescription medications,” the Statistics Canada report notes.  “Recent evidence suggests that almost 10 per cent of individuals who received a prescription in the previous year experienced cost-related non-adherence (did something to make a prescription last longer, did not fill a prescription or did not renew a prescription.)  The recent trend may result in great inequities of these types in the future.”

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