Health care spending in Canada is expected to outpace inflation to reach $171.9 billion in 2008, up more $10.3 billion from last year's estimate, according to a report released Thursday.

The spending works out to $5,170 per person, with expenditures reaching a record 10.7 per cent of the gross domestic product, the Canadian Institute for Health Information said in its report, National Health Expenditure Trends, 1975 to 2008.

This rate has climbed gradually since 2002, from 10.0 per cent that year.

"Health care spending is expected to grow faster than Canada's economy, outpacing inflation and population growth," said Glenda Yeates, the president and CEO of the institute.

"In the context of recent changes in the economy, it is important to keep monitoring these trends in order to better understand how our dollars are being spent and how we compare to other countries."

Canada was in the top fifth of countries in the Organization for Economic Co-operation and Development in terms of per person spending on health in 2006, spending $3,678 US per person — a similar amount to France, Germany, the Netherlands and Austria.

Spending per person on health care remained highest in the United States at $6,714 US, followed by Norway ($4,520 US), Switzerland ($4,311 US) and Luxembourg ($4,303 US).

After adjusting for inflation and population growth, spending is expected to grow by 3.4 per cent in 2008, compared with an estimated 2.8 per cent for last year and 3.7 per cent in 2006.

Hospitals still account for most of this country's health care spending, but their share of total health expenditures has steadily declined. Spending on drugs is expected to grow at a faster rate in 2008, 8.3 per cent, than spending on hospitals, 5.8 per cent, or physicians, 6.2 per cent, the report's authors said.

In 2008, hospitals are expected to account for 28.0 per cent or $48.1 billion of total health care spending, down from 30.7 per cent in 1998.

This year, spending on drugs is expected to account for 17.4 per cent of health care spending at $29.8 billion, up from 15 per cent a decade ago and 8.8 per cent in 1975.