The Canadian Institute for Health Information has released the latest version of its annual report on public and private health expenditure at both the provincial and federal levels. As always, the CIHI provides a wealth of health data and information resources and its site is an enormous asset to health researchers, health care administrators and policy makers across the country.*
National Health Expenditure Trends, 1975 to 2016 forecasts total health spending in Canada to reach $228 billion or $6,299 per Canadian in 2016. As a share of GDP, health expenditure will represent 11.1% of Canada’s GDP in 2016, a share that is below its 2010 peak as illustrated in the accompanying figure. The accompanying figures from the report provide quick snapshots of historical trends.
We are essentially in a period of moderation in health expenditure growth - something that has not occurred for such an extended length of time since the mid-1990s. That period was marked by explicit federal transfer cuts as a result of the federal fiscal crisis while the current one appears to be rooted in slower economic growth (and its effects on government budgets) and more explicit attempts by the provinces to control costs (see Ontario for example). Yet, as has been remarked in at least one study one should hold the applause given potential rebounds that may occur in spending whether due to costs of dying, future drug expenditures or other demand factors. Another factor affecting future growth is what exactly the growth rate for federal transfers will be.
This report is particularly interesting coming in the midst of federal provincial discussions as to what future federal health transfer growth rates should be. I have been continually surprised by public utterances calling the planned reduction in the annual growth rate of federal health transfers from 6 percent to 3 percent a “cut” in health transfers. Even at 3 percent, federal health transfers will continue to grow – just at a slower rate - and fortunately some media has picked up on this. Ontario already has announced what it thinks the growth rate should be and it is pretty close to 6 percent. Other provinces also have announced their desire for more money.
Of course, the provinces and the federal government are talking about health given the commitment to sunny ways, so one expects we will not see a repeat of Christmas 2011 but the only way that can be avoided is if the federal government essentially gives the provinces exactly what they want. We shall see what agreement the federal government and the provinces come to in the week before Christmas.
Some other key findings:
Since 2010, the rate of growth in health spending has barely kept pace with the rates of inflation and population growth combined
- Since 2010, health spending per capita has decreased in real terms by an average of 0.1% per year, similar to the rate experienced during the mid-1990s. It reflects, in large part, Canada’s modest economic growth and fiscal restraint as governments focus on balancing budgetary deficits.
Provincial/territorial per capita health expenditures vary
- In 2016, total health expenditure per capita is expected to range from $7,256 in Newfoundland and Labrador and $7,120 in Manitoba to $6,144 in Ontario and $5,822 in Quebec.
Canada’s per capita health care spending among the highest internationally
- Among 35 countries in the Organisation for Economic Co-operation and Development (OECD) in 2014, the latest year for which comparable data is available, spending per person on health care remained highest in the United States (CA$11,126). Canada’s per capita spending on health care was among the highest internationally, at CA$5,543 — less than the Netherlands’ (CA$6,505) and more than France’s (CA$5,384), Australia’s (CA$5,187) and the United Kingdom’s (CA$4,896).
Hospitals, drugs and physicians are the 3 largest categories of spending
- Hospitals (29.5%), drugs (16.0%) and physician services (15.3%) continued to account for the largest shares of health dollars (more than 60% of total health spending) in 2014, the latest year of actual expenditure data available. Although spending continued to grow in all 3 categories, the pace has slowed in recent years across provinces and territories.
- Since 2005, physician spending as a share of total health care spending has increased. The share in 2014 (15.3%) had recovered to levels comparable to those in the late 1980s.
* I wish to note that I am a member of the CIHI National Health Expenditure Advisory Group.