Sunday, January 21st, 2018

Funding for Health Care

Canadian health care is funded through the general revenues of the federal and provincial and territorial governments. The largest portions of general revenue come from income taxes and consumption taxes. 

The provinces and territories must administer their publicly funded health care insurance plan in accordance with the Canada Health Act in order to receive health care funding from the federal government. 

Federal funding is provided to each of the provinces/territories in the form of block funding consisting of cash and tax credits. Some provinces also receive equalization payments to assist them in providing similar public services at similar tax rates. The territories also receive funding through a financing formula that compensates their ability to raise funds through the taxation of their residents.

Most of the provincial/territorial funding for health care comes from general tax revenues. Block funding is provided to regional or other types of health authorities or networks responsible for delivering health services within the province/territory. This type of funding is based on the previous year’s budget usually with some adjustments for inflation. The provinces and territories can also use other sources of funding for their health care. Premiums can be used as long as the failure to pay them does not prevent individuals from receiving publicly funded health care insurance. Many hospitals are associated with non-profit charitable organizations or foundations that raise additional funds.

The health authorities or networks are responsible for allocating their funds for the planning and delivery of publicly insured health care services through hospitals and other facilities.

Each province/territory negotiates with their respective medical and dental associations regarding compensation for medical practitioners and dentists providing publicly funded health care services. Methods of payment can include fee-for-service, salary, capitation, contract (service agreements) and other alternative payment or blended funding programs. For nurses and most other health care providers compensation is negotiated through collective bargaining with various labour unions.

The Patented Medicine Prices Review Board is the federal government agency responsible for price controls on manufacturers’ prices of all patented medicines sold in Canada.

Each province/territory decides which drugs will be included in its publicly funded health care insurance plan or any other special funding programs. The decision to fund a drug is usually based on its medical benefits versus its cost. The funding of any new drug is considered in relation to the medical benefits of other funded drugs.



Canada health act annual report 2007-2008

Health Canada website

Patented Medicine Prices Review Board

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