Differences in USD and CAD prices, and healthcare again
Over at one of the discussion forums I visit there was a heated debate about the reason for the higher prices of goods in Canada, despite the fact that the Canadian dollar has hit parity with that of the Americans. The debate spilled over into other various fun topics, including taxes and healthcare.
One person commented that taxes have little to do with price differences, "The fact that anyone thinks that stuff like health care and taxes have
anything to do with price difference, they deff need to go back to
school. You don't add taxes to the price of a car until after you buy
it. So this argument about health care and taxes is totally irrelevant
to this thread."
I decided to respond to that comment, and to then turn my response into a full-blown post. If this was only about the exchange rate difference, that comment would be correct.
If you take this debate to be more all-encompassing, the cost of doing business has to be considered as well.
Remember that you're not only dealing with sales taxes: income taxes affect businesses too - their overhead/profit margin depends on how much they pay in taxes and health insurance for their employees.
In theory (if everything was working 'perfectly'), it wouldn't matter whether you have government-provided health care as you do in Canada, or the "employer/employee" pays model the US uses. This theory would rely on a world where the cost of administering health care is identical in either system, so the cost to a business would be identical in both countries.
In reality, this is of course hardly the case. Not only is health care just one of many costs, there are many different ways of delivering health care, which can place or greater and lesser burdens on employers.
One of the big arguments from the movie Sicko and other pundits is that the US system is dysfunctional because there is a plethora of private insurance companies who spend too much of their money on administration, and not enough on patient care.
Supporters of the US system counter that governments are inherently wasteful, so having a single government-administered system will be more wasteful than the deadweight loss incurred by all the insurance companies in the USA. The stats I've heard seem to destroy the US system's supporters point, but that's as far as feel like taking this today.