MSP

On January 1, 2016, BC Medical Services Plan (MSP) Premiums are going up again.

Is this something that you should question?

Recently, a socially and politically aware friend, Simran Walia forwarded me a petition to sign. This petition is to put a question mark on the revenue management around the tax collections from the residents to fund Medical Services Plan (MSP) of British Columbia.

Lead by my habit, I started researching for the facts relating to this petition. For the benefit of my friends, I am sharing some of the pertinent details to this topic that I found on the net. Please analyze and decide if we should consider directing our representatives (MLAs) to make some smart changes to the current system.

History:

After the World War II, when Canada was reconstructing on various levels along with recovering from the deep stains of the Great Depression, there was a huge role that was left for the government to play. Government had to heal and reward the public through social welfare programs, for the sacrifices they had made for the country during this war. Medical care was one of those areas that public needed help.

Unfortunately leadership of that time could not reach consensus and overcome provincial opposition to federally lead a medical system to cover all citizens under one plan.

In such a situation, visionary leader Tommy Douglas, of the Co-operative Commonwealth Federation (CCF) which later shaped itself to be NDP of our times, decided to go alone and brought about Canada’s first publically funded hospital insurance plan in Saskatewan. Various other provinces later replicated this plan. Mr. Douglas’s model finally shaped the medical act under which today each province receives medical transfer payments to provide medical care to its residents.

The Canada Health Act (CHA) CHA that we have in practice today came about in 1966 and after few changes was fully adopted in1984. Liberal party played a key role of meeting the expectation of the Canadians who had spoken through Tommy Douglas in shaping this as a national act.

The Act states, "The primary objective of Canadian health care policy is to protect, promote and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers.”

Comparison between provinces:

To compare our system with others, I reviewed a few provincial and national sites. Following details are quoted out of the Ontario’s Ministry of Health and Long Term Care website:

“If you live in Ontario, many of the health care services you need are publicly funded. This means that the government pays all or part of the cost for you. Services include:

• Visits to your family doctor and specialists • Most basic and emergency health care services, including surgery and hospital stays.

To pay for these services, Ontario has set up the Ontario Health Insurance Plan (OHIP). When Ontarians pay taxes, some of the money goes into this plan to pay for their health services.”

British Columbia

Now lets talk facts about our province. First of all, people need to know that medical care is NOT FREE for British Columbians. We all pay premiums, either directly or our employers pay for us. Only a small number of BC residents are getting a free or a subsidized coverage.

In BC, there is a regressive taxation on Medical Service Plan (MSP) premiums. I could not find any justification as to why this system was in place. In addition, premiums are going up more often than we are realizing and will be going up AGAIN on Jan 1, 2016.

Here are the details as per the Province of British Columbia website:

Effective January 1, 2016 (premiums increased from last year)

Adjusted Net Income One Person Family of Two Family of Three or More $0 - $22,000 $0.00 $0.00 $0.00 $22,001 - $24,000 $12.80 $23.20 $25.60 $24,001 - $26,000 $25.60 $46.40 $51.20 $26,001 - $28,000 $38.40 $69.60 $76.80 $28,001 - $30,000 $51.20 $92.80 $102.40 Over $30,000 $75.00 $136.00 $150.00

So any income over $30, 000 pays the same premium regardless if they make $31k or $3 million in BC.

Is it wise to ask as to how is this justified in the world of proportionate and progressive taxation?

As the option of adding this revenue was shifted from federal to provincial government, provincial government should still follow the progressive taxation system to collect the $2 million plus that they collect through premiums now. Higher income earners should be paying higher and lower income earners should be paying lower. In Canada such expenses should be based on the ability to pay and not the other way around.

One important side note is that a part of the population that is working for the government (municipal, provincial or federal) along with big companies, their medical premiums are either subsidized or paid in full by their employers. However, there is a large number of our population that is not part of this institutional coverage. While these people (mostly representing visible minority, women, disables or aboriginals) who are already fighting for their survival in the highly competitive workforce, might already be unfairly served by a non-union, instable and possibly unhealthy workplace to make their living, and to top that they are unfairly taxed for medical coverage by the provincial government.

Political positioning:

Federal awareness: In the Oct 2015 federal elections, liberal party very much recognizes the importance of the middle class. During these elections they promised reduced income tax to the middle class. It has only been just two months, and they have already implemented cut to the middle income tax bracket to 20.5 percent from 22 percent – a 7 percent reduction. Canadians with taxable annual income between $44,700 and $89,401 will see their income tax rate fall.

If our federal government was summoned to focus on the middle class to win the elections, should the provincial government also not focus on the economic realities of the middle class?

Provincial truth: Available research sources on the net, informs that the currently ruling party, Liberal party of BC has consistently increased premiums over the last two terms. Next increase will go on January 1, 2016.

NDP while recognized that something should be done but no clear answers were provided during the last election campaign as to how would they tackle it.

In nutshell, the future looks no different unless one of the two influential parties would take a bold step. One option can be increasing corporate taxes to balance the budget. This option is highly unlikely. Second easy step can be to not reinvent the wheel and simply follow Ontario or Quebec, where health premiums are paid just as personal income tax. The premiums rise with the income (progressive taxing) and is not charged as a flat feet (Regressive taxing).

Solution is sorted when the problem is established. I ask that you think about it and share your opinions here or with your MLA.

Regards,

Meera Gill