Faster Processing, Not Co-payments, Needed to Put a Lid on Refugee Healthcare Costs

To: Immigration and healthcare watchers

From: Tingting Zhang

Date: August 10, 2026

Re: Faster Processing, Not Co-payments, Needed to Put a Lid on Refugee Healthcare Costs

The public cost of providing health coverage for asylum seekers and refugees has more than quadrupled over the past five years. The Interim Federal Health Program (IFHP) will spend nearly $1 billion this fiscal year, and $1.5 billion in 2029-30 (compared to $211 million in 2020-21), according to the Parliamentary Budget Office.

To reduce costs, Ottawa introduced a co-payment model this May, requiring asylum seekers and refugees to pay $4 per prescription and 30 percent of the cost of other supplemental health services. Last week, Ottawa reversed the cuts for a specific group of services and supplies, a change expected to affect only a small share of current IFHP beneficiaries. The PBO estimates the co-payment model will save about $162 million in 2026-27. That sounds significant until you consider what is actually driving the spending.

Rapidly increasing costs are the result of growing processing timelines, not generous individual benefits. IFHP coverage runs for the full duration of the refugee determination process, including appeals. The PBO estimates that a single additional month of processing time adds up to $72 million in annual costs under the co-payment model at current claim volumes. That means just over two months of additional processing delays wipe out the entire year’s savings.

Ottawa is mopping the floor while the tap runs.

Canada’s asylum system is among the most generous and procedurally complex in the world, with layered review mechanisms that can include an Immigration and Refugee Board (IRB) decision, a Refugee Appeal Division appeal in many cases, and judicial review by the Federal Court. That complexity, combined with chronic undercapacity, has created a massive backlog.

As of December 2025, more than 300,000 refugee claimants were waiting for adjudication at the IRB. In 2024–25, the average duration of IFHP coverage was about four years.

The scale of the mismatch is staggering. In 2024-25, the IRB received more than 173,000 new refugee claim referrals, while its funding allowed it to process 60,000 claims. Adjudicators finalized roughly 78,700 cases that year, exceeding their target but still falling short of intake by a factor of more than two to one. At the current rate, the increase in the waitlist from a single year alone would take an additional 14 months to clear. No amount of co-payment revenue can close a gap that wide. The tap is running.

The problem extends beyond active claims. The PBO found that nearly 74,000 failed asylum claimants – people whose cases were denied – remain eligible for coverage while their cases go through appeals or while they await departure. Nearly half of the claimants who received a negative decision from the IRB in 2019 were still in the system more than three years later. Between January 2016 and December 2025, approximately one-third of claims were rejected. But roughly 79 percent of those rejected filed at least one appeal. Applying those ratios to the current backlog suggests 92,600 claims could ultimately be rejected, with 73,000 likely being appealed.

A case that is appealed take six to 12 months longer to finalize. Coverage for this group alone costs an estimated $146.5 million annually, including $79.4 million for supplemental health benefits like dental and vision care.

Further savings could be achieved by reducing non-urgent coverage for failed asylum claimants. This may increase administrative costs. However, the surge in claims from individuals already in Canada on temporary visas, study permits and work permits – roughly a 600-percent increase between 2016 and 2025 compared to 144 percent for those without prior authorization – suggests that some claimants are using the asylum system strategically after their temporary status expires, rather than out of genuine need for protection. Legitimate applicants who ultimately get  protected person status should not face copayment; cost-sharing needs to preserve the integrity of protection for those who need it most.

Britain offers a useful comparison. Refused asylum seekers can still register with an NHS general practitioner and access free emergency hospital treatment, routine check-ups, and maternal care. But they face charges for non-urgent secondary care as well as medication, dental services, and eyecare, unless they qualify for a low-income exemption.

Canada should adopt a similar approach for failed claimants still in the system. Essential medications and urgent care should remain fully covered. But supplemental benefits for people who may linger in the system for years after their claims are denied should be scaled back and means-tested. This would ensure coverage adhered to the program’s original purpose: essential, temporary health-care coverage until vulnerable migrants become eligible for public health insurance.

Most importantly, Ottawa must treat the backlog as the fiscal emergency it is. Streamlining adjudication, investing in IRB capacity, and setting binding timelines for claim resolution would do more to control IFHP spending than any co-payment scheme. Every month the backlog persists, taxpayers fund $72 million in avoidable costs. The co-payment model asks genuine asylum seekers and refugees to pay for delays they didn’t cause. That is not fiscal discipline. It is cost-shifting dressed up as reform.

Tingting Zhang is a Policy Analyst at the C.D. Howe Institute.

To send a comment or leave feedback, email us at blog@cdhowe.org.

The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.

A version of this Memo first appeared in the Financial Post.