Our Health Cost Savings

Sep 15, 2014 by

calculatorI thought I’d devote energy today to irritating my more conservative American friends by publishing how much money I estimate we’ve saved on health insurance and care since embracing Canada’s “socialist” system five years ago.

Background (for American Readers)

What many Americans think they know about Canadian healthcare is only what they’ve gleaned from television commercials and lobbyists sponsored by folks who have a financial stake in maintaining the status quo in the U.S. (which Obamacare has changed little, relative to a Canadian-style system). Becoming truly educated is hard, it seems. Willful ignorance, on the other hand, is easy. So allow me first to provide some background facts.

  • Health systems (by which I mean both care and insurance) in Canada are run by the individual provinces and so differ markedly among the provinces. My only experience is in British Columbia, so everything I write here is about B.C., not Canada.
  • Health insurance is not free here. Our current premium for Ms. Money Counselor and myself is $125.50 per month for B.C.’s Medical Services Plan (MSP). We have no deductible and no co-pay. MSP does not cover every possible need (air ambulance, for example, is not covered), so many Canadians have supplemental policies. Our supplemental policy costs about $1,500 per year. Also, since the MSP may not cover us adequately outside of Canada—particularly in places where health care is very expensive, like the U.S.—we buy travel health insurance at a cost of about $300 per year.
  • MSP includes medication coverage, but only after an income-adjusted annual deductible. Our current deductible is $1,700. Our supplemental plan, however, covers our medication costs with no annual deductible.
  • Here’s one I bet you didn’t know: Canada spends roughly one-half of what the U.S. spends on health care, per capita. Nevertheless, by every broad measure of healthfulness, Canadians are healthier than Americans.
  • My Canadian doctors almost never check with government bureaucrats or bean counters before recommending tests or treatment. 🙂

Comparison of Our Health INSURANCE Costs for the Past 5 Years

As I outlined in Our 3 Best Money Choices—#2, our private health insurance premium for the last year we lived in the U.S. was $6,000 per year, and that hefty price tag still corresponded with a $6,000 annual deductible. Our insurance provider had raised our premium an average of 19% per year over the four years leading up to our relocation. Being generous and assuming that rate of increase would have tempered to 10% per year for the past five years, here are what our annual premiums would have been had we remained living in the U.S.:

Year 1: $6,600
Year 2: $7,260
Year 3: $7,900
Year 4: $8,785
Year 5: $9,665

The first three years we lived in Canada, my employer paid for our health insurance. To make an apples-to-apples comparison, I’ve estimated below what our health insurance costs would have been in Years 1, 2, and 3 had we both been self-employed, as we were in the U.S.

Year 1: $2,750
Year 2: $3,010
Year 3: $3,120
Year 4: $3,185
Year 5: $3,300


Comparison of Our Health CARE Costs for the Past 5 Years

So far we’re only talking about insurance. Turns out we actually needed health care during the past five years too. And in my case, I needed a lot more care than we’d ever anticipated! :-0

I’ll spare you the details, but during 2012 I underwent very significant medical testing and treatment. (And I missed only two weeks of Money Counselor posts as a result! Did you notice? 🙂 ) After consulting with a couple of U.S. doctors, my best estimate of the cost of the process I went through had it happened in the U.S. is $250,000 – $500,000. Let’s go with the mid-point: $375,000.

Let’s also guess generously that our U.S. insurance would have covered 80% of this cost. That would have left Ms. Money Counselor and I with a medical bill of $75,000. Ms. Money Counselor may have gone in search of a hit man to rid herself of her costly spouse.

Aside from this unwelcome 2012 “incident,” let’s say we’ve consumed over the past five years another $10,000 worth of medical care, based on U.S. prices, and let’s say that under our U.S. insurance plan half of this—$5,000—would have been within our deductible, plus we would have had to “co-pay” 20% of the post-deductible half, for a total hit of $6,000.

Estimated 5-year health care costs had we stayed in the U.S.: $81,000


Our actual 5-year health care costs in Canada: $23

That’s right, $23. Ms. Money Counselor fractured her ankle and insisted on a fancy walking cast because she thought she was going to get on a plane to Chicago the next day. (She didn’t.) We had to pay the $23 incremental cost of the cast because its fancy aspects weren’t “medically necessary.” In other words, the taxpayers understandably declined to subsidize Ms. Money Counselor’s travel ambitions.

With respect to the significant medical process I experienced in 2012: we weren’t billed one dime, and the question of insurance and “how will you be paying for this?” never came up. Further, our MSP insurance premium has been completely unaffected.

Comparing the numbers above for our health care costs in Canada versus my guess of what they would have been had we been living in the U.S., I conclude:


The Bottom Line

Some of the numbers above are speculative, but I feel confident in asserting we’ve saved at least $100,000 on health insurance + health care expense since we moved to Canada. That’s $20,000 per year, or about one-third more than the pre-tax income earned annually by a full-time worker being paid the U.S. federal minimum wage.

But This is Only the Money Part. What About the Quality of Healthcare in Canada vs. the U.S.?

Comparing quality is of course far more complex than comparing my costs. Besides mentioning again that Canadians are, by every measure, healthier than Americans, I can only speak about my own experience.

I got intimately involved with the Canadian healthcare system in 2012, and I would rate my treatment top-notch. The one significant difference I did note: I had to wait days and weeks for some tests and treatments that likely would have been available nearly immediately in the U.S. No Canadian or U.S. doctor I asked at the time about these waits believed they jeopardized my health. Still, when you’re ill, naturally you like to be treated sooner rather than later. As an American, waiting for treatment is a psychological adjustment I’ve had to make in Canada, but waiting has not hurt me medically. And I would be opposed to, say, doubling the cost of Canada’s system (so that per capita costs are on par with the U.S.) to add human and physical capacity just to eliminate wait times. I trust and believe that when I urgently need treatment, I’ll get it, immediately.

But You’re Paying Through the Nose for Taxes!

A fair comparison of the cost of our health insurance + care in the U.S. vs. Canada must include the portion of our taxes that goes toward financing the healthcare system. Candidly, I don’t know that piece of the calculation nor how to estimate it. I do know that our total tax bill since moving to British Columbia is not noticeably different from our total tax bill the last year we lived in Minnesota. Some taxes are higher where we live now (sales tax, for example), and some are lower (property tax).

With that said, I remain very comfortable asserting that we’re saving many thousands of dollars annually on health insurance and health care. The longer we live in Canada, and the more healthcare we need, the greater our savings will be. If we live here the rest of our lives, I expect our savings to be very deep into six figures. In my frugal pea brain, that translates to retiring several years earlier than otherwise.

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