How to pay for national pharmacare

Article Figures & Tables

Table 1:

Financing of prescription drugs with and without universal pharmacare in 2020^*

Total expenditure	Without pharmacare, $ billions	With pharmacare, $ billions	Change
Drugs on the national formulary
Paid through taxes	13.5	23.2	9.7
Paid directly and through private insurance premiums	14.3	0.5	−13.9
Subtotal: drugs on national formulary	27.9	23.7	−4.2
Drugs not on the national formulary
Paid through taxes	1.4	1.4	0.0
Paid directly and through private insurance premiums	3.2	3.2	0.0
Subtotal: drugs not on national formulary	4.6	4.6	0.0
Grand total	32.5	28.3	−4.2

↵* Authors’ calculations based on estimates of the Parliamentary Budget Officer.12

Table 2:

Major options for generating public funding needed to implement pharmacare in 2020^*

Revenue source	Total revenues expected in 2020, without pharmacare, $ billions	Estimated amount of funding raised by a 1 percentage point increase in tax rate, $ billions	Pros and cons of tax instrument
Personal income taxes	175.2	7.7	Pros: large revenue base; progressive Cons: collects from households only
General and small business corporate income taxes	49.4	2.5	Pros: collects from corporations that will benefit from pharmacare; likely progressive Cons: potential issues with tax avoidance; strong business opposition
GST	40.6	7.9	Pros: simple to administer Cons: collects from households only; regressive; politically unpopular
Premiums	–	–	Pros: transparent Cons: collects from households only; regressive

Note: GST = Goods and Services Tax.
↵* Authors’ calculations based on federal budget estimates and Parliamentary Budget Officer tools, including using the Social Policy Simulation Database and Model.1,21