BC: changes to health premiums
In the 2016 budget, the British Columbia government announced the following changes to health premiums for the Medical Services Plan (MSP), effective January 1, 2017:
- The number of children in a family will no longer be considered in the calculation of MSP premiums. Currently, different premium levels apply for families of one, two, and three or more. Beginning in 2017, premiums will be based on whether there are one or two adults in the household, regardless of the number of children.
- Premiums for couples will increase to twice the single premium.
- The income thresholds at which a household will receive full premium assistance and not have to pay any MSP will increase by $2,000 over 2016 levels. The income threshold at which household will qualify for partial premium assistance will increase by $12,000.
- MSP premiums will increase by 4% ($3 per month, per adult), which is consistent with the rate of change over the past several years.
- These changes redistribute the burden of health care premiums to different types of households. Those with children, particularly single parent households, will pay significantly less.
Many employers pay part or all of MSP premiums on behalf of their BC employees. Similar to the price escalation of group benefit plans, MSP premiums have risen above the rate of inflation for many years now. Given the increase in the thresholds at which individuals may qualify for premium assistance, employers paying MSP premiums on employees’ behalf may look to encourage employees to investigate whether they qualify, as this may reduce employers’ costs.
Before the budget was released, the prospect of changing MSP to more closely align premiums with income received media attention. BC is one of only three provinces that require health care premium payments from individuals and the only one of those three not to collect premiums through income tax. MSP premiums have been criticized as regressive, and by comparison, Ontario and Quebec’s premiums are more closely tied to income and are generally less costly than British Columbia’s. In 2015, the previous Alberta government announced the introduction of a health care premium, but the new provincial government cancelled the implementation.
Four other provinces (Manitoba, Ontario, Quebec, and Newfoundland & Labrador) require employer health care premiums in the form of payroll taxes. The remaining provinces and territories fund health care from general revenue instead of specific premiums. The table above summarizes the arrangement in each province.