Health-care spending growth slows, but reaches $6,105 per Canadian

Health spending in Canada is expected to reach $219.1 billion this year, or more than $6,100 per person, according to a new 40-year report.

Out-of-pocket health expenditure per person increased from $278 in 1988 to $844 in 2013

Growth of physician expenditures in Canada has outpaced that of hospitals or drugs since 2007. (Damian Dovarganes/Associated Press)

Health spending in Canada is expected to reach $219.1 billion this year, according to a new 40-year report.

This amounts to $6,105 per person, the Canadian Institute for Health Information said Thursday in its report on national health expenditure trends from 1975 to 2015.

But the pattern of growth in expenditures is expected to continue to slow.

"A new period has emerged, with health-spending growth not keeping pace with inflation and population growth [combined]," the report's authors said.

"It reflects, in large part, Canada's modest economic growth and fiscal restraint as governments focus on balancing budgetary deficits."

Out-of-pocket health expenditure per person increased from $278 in 1988 to $844 in 2013.

Private health insurance expenditure per person increased from $139 to $720 over the same period.

The largest shares of health dollars were for:

  • Hospitals (29.5 per cent forecast for 2015, compared with 32.6 per cent in 1995.)
  • Drugs (15.7 per cent now, compared with 13.7 per cent in 1995).
  • Physician services (15.5 per cent now, compared with 14.3 per cent in 1995.)

The pace of spending growth in all three categories has slowed.

Growth of physician expenditures has outpaced that of hospitals or drugs since 2007, as the supply of physicians and number of fees both increased.

Over the past 40 years, there have been four distinct periods of growth in health spending. These roughly correspond to periods of recession:

  • Between 1975 and 1991, when the average annual growth rate was 2.7 per cent, after accounting for inflation and population growth.
  • During the mid-1990s, a period of fiscal restraint, growth in health spending declined at an average of 0.5 per cent per year.
  • The late 1990s to 2010 was a period of reinvestment, with an average rate of growth of 3.3 per cent per year, after accounting for inflation and population growth.
  • From 2011 to present, growth in health spending declined at an average 0.6 per cent per year, after accounting for inflation and population growth.

In 2015, total health expenditure is projected to be $219 billion, a 1.6 per cent increase (not adjusted for inflation and population growth) from the year before.

While spending is highest on seniors, the report's authors called population aging "a modest cost driver." 

They also pointed to other issues to monitor, including weaker prospects for economic growth, changes in the growth of the Canada Health Transfer, health-specific price inflation, increases in service and use and innovation.

Health-care spending is linked with economic growth across industrialized nations. 

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