Economist Jon Kesselman has two things to tell British Columbians about the six-percent increase to their Medical Services Plan premiums in 2010.
“British Columbia is just about the last province to continue charging this flat rate,” Kesselman, a professor in SFU’s graduate public-policy program, told the Georgia Straight in a phone interview.
He also said he couldn’t think of a more regressive tax than MSP premiums. Kesselman described these payments as a “head tax” since they must be paid regardless of income, with only those in the lower income brackets receiving partial or full relief.
“In the [net] mid $20,000 [per-year income], the lower $30,000, they phase out this premium assistance,” Kesselman explained. “Above the $30,000 range, it is a head tax.”
The increase to MSP payments—which takes effect January 1—was laid out in the budget update delivered by Finance Minister Colin Hansen on September 1, 2009, about three months after the last provincial election.
Under the new rate system, a single individual earning more than $30,000 will pay $684 per year. A family of two with the same income will be charged $1,224, while a family of three or more will have to pay $1,368.
This won’t be the end of it, according to Maureen Bader. The B.C. director of the Canadian Taxpayers Federation pointed out that the provincial government is tying future MSP rates to increases in the health-care budget. In his budget update, Hansen projected that the 2011 health budget will increase by another six percent. “If the premium goes up by six percent over the next 10 years, this poll tax will double,” she told the Straight by phone.
Bader suggested that health budgets are likely to continue to increase in the future, and cited one area that’s putting pressure on costs. “About 14 percent of B.C.’s population is 65 or older now,” she said. “By 2032, say 25 percent of the population will be over 65. Right now, people over 65 account for 44 percent of the health-care spending. Without reforms, health-care costs will continue to accelerate, and so will the health tax.”
Bader also noted that many people incorrectly believe MSP premiums are insurance premiums that pay for the health-care system. “It goes directly into general revenue,” she said.
Health economist David Schreck recalled that Alberta used to have a similar system, which it eliminated effective January 1, 2009. The former NDP MLA explained that in 2002, Premier Gordon Campbell’s government jacked up MSP rates by 50 percent. “It is one more step in a long series of steps of the Campbell government shifting the tax burden from the top to the bottom,” Schreck told the Straight by phone in reference to this year’s increase.
MSP payments amount to about $1.5 billion a year. According to Schreck, MSP premiums cannot be eliminated suddenly, but it could be done in steps, beginning with freezing rates and increasing premium subsidies over the course of five or six years.