Income-tested and in-kind: The material wellbeing effects of the Canadian Dental Care Plan

Abstract

Rich countries increasingly rely on income-testing and their income-tax system to deliver both cash and in-kind transfers to recipients. This research measures the material wellbeing effects of the in 2023 introduced Canadian Dental Care Plan (CDCP). Using four measures of material deprivation, it reveals material wellbeing effects that are either missed entirely or are misestimated by income (poverty) measures. It further demonstrates three new Cost-Effectiveness Ratios (CER) that further contribute to filling current evidence gaps. The CDCP is income-tested and covers dental care costs of households with an income below $90,000 who do not have a dental plan. Using microdata from 2023 and 2025, the research uses the staggered introduction of the CDCP and the doubly robust difference-in-difference estimator to estimate the impact of the CDCP on seniors. The research estimates that the CDCP reduced the incidence of dental care deprivation among seniors by 8.7 percentage points, which amounts to a 62 percent decline compared to the 2023 baseline. Further estimates indicate, among others, that the CDCP averted close to 700 thousand cases of dental care deprivation at a cost of about 50 million dollar per percentage point reduction in dental care deprivation. This suggests that the CDCP made a substantive contribution toward addressing the specific barrier it was designed to reduce. More broadly, this research shows that outcome-based measures of material wellbeing, such as dental care deprivation, provide unique insights on the material wellbeing effects of social and health programs and thereby also offer novel opportunities for assessing their cost-effectiveness.