Health spending in Canada forecast to hit $242 billion this year: report

A new report is projecting that health spending will reach $6,604 per capita by the end of 2017 following a boost in economic conditions across the country.

Thestar.com
Nov. 7, 2017
By Nichelle Mcquigge

A boost in economic conditions across the country has contributed to a slight uptick in health spending across Canada, according to a new report released Tuesday.

Figures from the Canadian Institute for Health Information (CIHI) projected that health spending would reach $6,604 per capita by the end of 2017, representing an increase of $200 per person over 2016 levels.

Health care costs have been rising at an annual average pace of 3.2 per cent since 2010, and CIHI said the projected 2017 spike of nearly four per cent may be signalling an era of increased government spending on all areas from hospitals to prescription drugs.

Chris Kuchciak, manager of the CIHI's Health Expenditures Department, said the growth rates Canada witnessed in recent years had marked a return to relative austerity compared to the previous decade when spending rates were rising between six and seven per cent each year. And that period had come after a period of fiscal restraint in the mid 1990s, he said.

Kuchciak said the 2017 increase may mark the beginning of a fresh cycle.

"What we'll be monitoring in the future is are we going to see now more sustained, higher rates of growth," he said. "Will history be repeating itself?"

Kuchciak said some of the previous modest increases were barely able to keep pace with rising inflation and population numbers.

In 2017, however, total health spending across Canada is forecast to rise to $242 billion and equal 11.5 per cent of Canada's gross domestic product, the report said.

Alberta and Newfoundland and Labrador are projected to lead the way with provincial per-capita expenses totalling $7,378 and $7,329 respectively.

Kuchciak said Atlantic provinces typically have higher populations of seniors, which tend to drive up overall spending. He attributed Alberta's rates to years of economic prosperity in which the province was able to sustain high wages for its doctors.

On the other end of the spectrum are Ontario, with expected per-capita rates of $6,367, and British Columbia, with an estimated $6,321 per capita.

The 2017 forecast said the breakdown of how health-care dollars will be spent has not changed much over the past 20 years.

Hospitals once again are expected to consume 28.3 per cent of health budgets across the country, followed by drugs at 16.4 per cent and physician services at 15.4 per cent. Kuchciak said these three areas have not shifted significantly since 1997.

All three, however, have experienced growth since 2016. Drug spending is expected to rise the fastest by an estimated 5.2 per cent this year.

The report, which did not include the cost of drugs dispensed in hospitals or funded through cancer agencies, found that those with drug costs of $10,000 or more accounted for about a third of overall drug spending last year despite only making up two per cent of the population.

Physician spending growth is forecast to increase 4.4 per cent in 2017 and spending on hospitals is estimated to rise by 2.9 per cent.

On an international basis, the report found Canada's health spending has historically been on par with several other comparable countries.

Kuchciak conceded that Canada's 2015 health costs of $5,681 per person was well above the Organization for Economic Co-Operation and Development average of $4,826 that year. He said, however, that Canada was on par with some other providers of universal health care at that time. France spent just four dollars less than Canada per capita that year, while Australia's health budget was just $50 less than Canada's per capita. No comparative data more recent than 2015 was available.

At that time, Kuchciak said health care costs in the U.S. were nearly double those in Canada at $11,916.

Jason Sutherland, an associate professor with the University of British Columbia's Centre for Health Services and Policy Research, said the CIHI's latest numbers clearly demonstrate that faults in Canada's health system are unlikely to be caused by lack of funding.

He said Canada's spending levels consistently rank between third and sixth place among OECD countries excluding the "outlier" of the U.S.

"We are not cheapskates in terms of our spending. We are among the most profligate spenders on health care there are," Sutherland said. "I think the question is what value we wring out of that spending."

Sutherland said costs will inevitably rise given the increasing price of new drug therapies as well as the growing demands of an aging population. The focus for health-care providers and policy-makers, he said, should be on cutting back on elective procedures or treatments with little to no known benefits.

Earlier this year, the CIHI teamed up with a coalition of clinicians to push back on that phenomenon.

The "Choosing Wisely" campaign is fuelled by a CIHI report that estimated up to 30 per cent of low-risk patients are undergoing needless medical tests. The campaign urges patients to reconsider the old adage that early testing is always best and to think more critically about what could actually make a difference to a treatment regime.