National health expenditure trends, 2022 — Snapshot

• Total health spending in Canada is expected to reach $331 billion in 2022, or $8,563 per Canadian.Footnotei This follows a surge in spending due to the COVID-19 pandemic, particularly in 2020.
• In 2020, federal, provincial and territorial governments (combined) spent $770 per person on health-specific funding to deal with COVID-19. Pandemic response funding is projected to decline to $376 per person in 2022. 
• Total health expenditure in 2022 is expected to rise by 0.8%, following high growth of 13.2% in 2020 and 7.6% in 2021. Prior to the pandemic, from 2015 to 2019, growth in health spending averaged 4% per year. It is anticipated that overall health expenditure will represent 12.2% of Canada’s gross domestic product (GDP) in 2022, following a high of 13.8% in 2020.
• Continued growth in spending is expected in 2022 as care that was deferred during the pandemic returns, resulting in an increase in the number of health care services provided compared with pre-pandemic years. In addition, demographic factors such as population aging and population growth will continue to contribute to spending growth.

• The following 3 health spending categories continued to account for the largest shares of health dollars (over half of total health spending) in 2022: Hospitals (24.34%), Physicians (13.60%) and Drugs (13.58%). 
• Hospitals spending. To limit the spread of disease and create additional inpatient capacity and staffing for COVID-19 treatment, some hospitals closed outpatient departments and/or reduced elective visits and procedures. As a result, in 2020, hospital spending grew modestly, at 2.2%.Footnoteii Efforts to reduce backlogs and wait times, along with delayed demand for hospital services, contributed to a rebound in spending growth. Hospitals spending grew by 3.7% in 2021 and is projected to accelerate by 5.6% in 2022. 
• Physicians spending declined by 3.6% in 2020 as a result of the pandemic.Footnoteiii This was due in large part to deferral of care, such as delaying routine visits for chronic illnesses, laboratory tests and screenings. As services gradually resumed, growth in Physicians expenditures bounced back in both 2021 (10.7%) and 2022 (6.5%). Therefore, Physicians spending now accounts for the second-largest share of total health spending, whereas in previous years it was the third-largest share.
• Drugs spending grew at 1.6% in 2020 and is projected to increase 4.1% in 2021 and 5.4% in 2022 due to continued growth in claims associated with specialty drugs and to higher costs per claimant for chronic maintenance users.
• Spending related to COVID-19 has continued in 2022. Governments spent $29.3 billion in 2020, budgeted slightly higher in 2021 ($32.5 billion) and tapered it off in 2022 ($14.5 billion). COVID-19 Response FundingFootnoteiii makes up 4% of total health spending, which includes federal direct and provincial/territorial government–sector spending. This is budgeted funding for health-related activities associated with the time-limited emergency response to the COVID-19 pandemic. This spending category includes several broad areas such as treatment costs (34%), testing and contact tracing (16%), vaccination (20%), medical goods (19%) and other related expenses (11%).

Historically, Canada — like other Organisation for Economic Co-operation and Development (OECD) countries — has seen health spending grow similarly to, and at times faster than, the overall economy. In 2020, health spending growth spiked at 13.2% due to additional funding to scale up health system capacity, testing, vaccinations and other responses to the pandemic. At the same time, measures related to containing the spread of the virus (e.g., travel restrictions, lockdowns, closure of non-essential businesses) negatively affected the economy, resulting in a 4.5% drop in the GDP growth rate. Looking forward, Canada’s economy is expected to grow. 

However, governments’ fiscal position may influence health spending trends. Prior to the pandemic, federal and provincial/territorial governments were running budget deficits, which constrained health spending growth. Fiscal measures in response to the pandemic have caused government deficits to reach record highs. The anticipated need for fiscal restraint in the future could have a dampening effect on health spending.

Canada is above the OECD average in terms of per-person spending on health care. Among 38 countries in the OECD in 2020 (the latest year for which comparable data is available), spending per person on health care remained highest in the United States (CA$15,275). Canada’s per capita spending on health care was among the highest internationally, at CA$7,507 — less than in Germany (CA$8,938) and the Netherlands (CA$7,973), and more than in Sweden (CA$7,416) and Australia (CA$7,248).

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