Canada curbs health spending as expenditures reach $211B

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Canada curbs health spending as expenditures reach $211B

The Canadian Institute for Health Information recently released its latest health spending report and the numbers continue to grow—albeit at a slower pace.

CIHI’s report National Health Expenditure Trends, 1975 to 2013 is Canada’s most complete source of information on how dollars are spent on health care. The report answers several key questions:

  • How much are we spending?
  • What are the trends?
  • Where does the money come from?
  • What and whom do we spend it on?
  • How do we compare internationally?

So what does this year’s report reveal? Here are a few of the more interesting tidbits:

  • While spending continues to grow, the rate of growth has slowed.
  • The proportions of total health care spending covered by the private sector and public sector have remained unchanged over the last decade.
  • Spending varies widely by jurisdiction and age.
  • Hospitals, drugs and physician services account for the largest share of health care dollars.

“The report is an important one because it allows decision-makers to understand the big picture of health spending in Canada,” explains Chris Kuchciak, CIHI’s Manager of Health Expenditures. “It looks at trends in spending, how spending differs from province to province, where the money is coming from and how we fare internationally.”

And what does this year’s report reveal about those key questions. Here is a snapshot.

How much are we spending? Health spending is projected to reach $211 billion in 2013—about $6,000 per Canadian. This represents about 11.2% of the gross domestic product (GDP), a share that has gradually decreased in the past few years. The rate of growth has decreased as well. The report found that the rate of growth—about 2.6%--is less than inflation and population growth.

What are the trends? After adjusting for inflation and population growth, health spending has in fact decreased in the last few years by an average of 0.2% annually. After nearly 15 years of increasing on health spending, this downward trend reflects Canada’s modest economic growth and the focus on balancing government budgets.

Where does the money come from? The public/private split in health spending has remained relatively unchanged since the late 1990s. Currently, 65% comes from provincial/territorial governments, 5% from federal/municipal governments and social security funds, and 30% from private sources.

What and whom are we spending it on? About 60% of health dollars are spent on hospitals, drugs and physicians. Hospitals account for 30% and drugs accounts for 16%. Physician spending is one of the fastest growing health categories in recent years, up from 13% in the early 2000s to the current 15%.

How do we compare internationally? Canada is one of the biggest spenders in the OECD—among the five countries with the highest proportion of GDP spending on health and well above the OECD average in terms of health spending per person.

The report also tackles the factors driving health spending.

One of the biggest influences is compensation of health care providers. Physician spending is one of the fastest growing categories in recent years. While hospitals account for 30 percent of spending—60% of that is spent on compensation—and compensation for hospital workers has grown faster than compensation in non-health sectors.

Canadians are using more health services, including receiving more medical procedures and drugs, which increases total health care costs. Newer and more costly drugs, diagnostic tests and surgical procedures also contribute to growing expenses.

Health spending per person increases with age. The increase is especially pronounced in seniors ages 80 and older. Spending for this group is three times higher than for younger seniors.

You can find the full report as well as other information about health spending in Canada at www.cihi.ca/nhex.