Canada vs. US Healthcare: Which is Best for Business?

It’s an age-old question in both Canada and the United States: is a private healthcare system or a public healthcare system better? 

The reality is that it’s such a complicated question that the answer is also complicated. It requires, at the least, a second question: better for who? For an individual, the answer is further muddled. A private system might be better if you’re wealthy, it might be a wash if you’re middle class and, if you don’t have insurance in the United States, you might wish you were in Canada. 

Either way, for businesses, we’re pretty sure we know the right answer: it’s better to be in Canada. It’s a big claim, but we have the receipts to back it up. 

Canadian healthcare can lower your business costs

This is the headline because it’s probably where perception and reality are farthest apart. The Canadian health care system can lower your business expenses. 

According to KFF (formerly the Kaiser Family Foundation), the average annual family premium for employer-sponsored health coverage was $26,993 USD in 2025, with approximately $20,000 of that being paid by the business. But it isn’t just private plan costs that are higher in the United States – health-related taxes are higher, too. For example, the employer-paid federal Medicare contribution is 1.45% of all wages, which is much higher than the 0.98% Employer Health Tax you’d pay in Waterloo.  

The fact of the matter is that employers simply don’t pay health insurance premiums in Canada, which accounts for the biggest health-related expense. Instead, in Canada, healthcare is funded primarily through general taxation. And those taxes aren’t hidden in other payroll taxes or corporate income taxes, which are both lower in Canada than they are in the United States. 

One final point on cost – the Canadian healthcare system removes a ton of wasted effort around administration of healthcare insurance. American businesses spend significant time and money selecting plans, negotiating with insurers, administering enrollment, handling COBRA compliance and managing plan disputes. Canadian businesses don’t have to worry about any of this. 

Canadian healthcare removes business cost uncertainty

The promise of a free market is that competition will drive down the price of products or services, which doesn’t appear to be the case in American healthcare. Privatized healthcare products face the same risk as everything else in a free market – potential volatility due to the broader environment. 

If inflation is driving up costs, it’ll be reflected in your premium increases. In fact, the KFF notes that annual increases often outpace inflation. This has become the expectation – in 2024, the Society for Human Resource Management reported that employers expected health care costs to rise as much as 8-9% in 2025. This wasn’t based on guesswork, either, as according to an article from the National Institutes for Health (NIH) national health expenditures grew 8.2% in 2024.  

Canadian businesses face more stable tax-based costs that are less exposed to market volatility or the need to increase profits. This stability aids long-term planning by essentially removing one of the most volatile human resources costs from the ledger books. 

Canadian healthcare levels the playing field for businesses of all sizes

If you’re running a small company – a startup or a scaleup just entering growth mode – what are your top priorities? Our bet: attracting top talent, developing your product and getting it to market. Sifting through various healthcare insurance plan types, providers and costs probably aren’t top-of-mind, and ideally you don’t want them to be. 

But the problem is that in the United States your company’s health insurance offering must be a priority. Health insurance – the quality of the coverage, the savings it presents employees, etc. – is a key part of talent attraction. Your bigger competitors – the established multinationals seeking the same talent – all have programs in place. They also have the money available to ensure their health insurance packages are a competitive advantage when attracting talent. You’ll either have to rely on hiring employees who don’t need health coverage, or you’ll have to spend precious time setting up and managing your own plan and precious funding to support it. 

This simply isn’t a problem in Canada. Basic healthcare isn’t an employer-provided perk. It doesn’t matter whether you work in a startup or a major multinational – if you break your leg you have the exact same ability to get treatment. That means health coverage is just one less thing for your growing company to worry about when you’re in Canada, and it’s just one fewer advantage that large employers might have over your business. 

Canadian healthcare means a healthier, happier workforce

Imagine not having to worry about health insurance. Never worrying about whether you’ll have coverage for your children. Not having to budget an average out-of-pocket cost of $2,850 because you’re having a baby (or $18,865 if you don’t have coverage!). Knowing that “getting something checked” – ie. preventative action – isn’t going to cost you money. 

Those are all benefits of the Canadian healthcare system. 

Canadian workers also have a higher degree of mobility. They can move across the country and change jobs without fearing a major change in their access to healthcare. The same workers can also take greater risks, choosing to work in less stable employment situations – like at a startup or scale-up – because they know that there’s no way they lose their health coverage.  

In the US private system, a paper from the NIH examined “job lock” among workers – basically, the inability to leave their position for fear of losing health coverage – and found it linked to poorer mental health.  

There is some nuance needed in the healthcare debate

There are some factors that could change the balance of this conversation.  

For example, Canadian healthcare doesn’t cover everything, and most companies do provide supplementary coverage that includes dental, vision and prescription drugs. These additional costs should be considered because they are often carried primarily by the employer. That said, our calculations using the Tech Talent Calculator suggest that lumping in all payroll taxes and insurance costs in Waterloo wouldn’t cost as much as just the health insurance premiums for a similar role in Boston.  

There are also some drawbacks for employees. For example, those with coverage in the United States are likely to experience shorter wait times for both urgent medical assistance and non-emergency procedures. Additionally, part of the reason business taxes are low is because personal taxes are higher, which means employees are paying a larger percentage of the taxes that lead to Canadian health services. 

However, from the business perspective, Canadian healthcare brings substantial benefits that are hard to refute: lower costs, less risk, a level playing field and healthier, happier employees.