Last updated on April 17, 2014 at 15:58 EDT

Canada’s health care spending growth slows

October 30, 2012

Provincial and territorial government health expenditure expected to
grow 3.1%, lowest since 1997

OTTAWA, Oct. 30, 2012 /CNW/ – Total health care spending in Canada is
expected to reach $207 billion in 2012, averaging $5,948 per person.
Figures in National Health Expenditure Trends, 1975 to 2012, released today by the Canadian Institute for Health Information (CIHI), show that the pace of growth is slowing.

Modest economic growth and budgetary deficits are having a moderating
effect. For the third straight year, growth in health care spending
will be less than that in the overall economy. The proportion of
Canada’s gross domestic product (GDP) spent on health care will reach
11.6% this year–down from 11.7% in 2011 and the all-time high of 11.9%
in 2010.

“Provincial and territorial governments today are focused on controlling
health care costs,” explains CIHI’s President and CEO, John Wright.
“Unlike in the past, they’re not cutting programs as much as looking at
improving productivity, reducing overhead, controlling compensation and
seeking value-for-money initiatives.”

Slower growth in hospital, drug and physician spending

Hospitals (29.2%), drugs (15.9%) and physician services (14.4%) continue
to account for the largest shares of health dollars.

Compensation paid to health care providers has been one of the most
significant cost drivers of hospital and physician spending. Increases
in compensation due to higher demand as well as to

growth in the number of hospital workers and physicians have contributed
to higher spending during the last decade. Controlling the cost of
health professional services and changing scopes of practice have been
priorities for jurisdictions. In 2012, hospital spending will grow by
3.1%, while payments to physicians will increase by 3.6%. These will be
the lowest rates of growth since the late 1990s.

The growth rate for drug spending will fall to 3.3% in 2012, down from
4% last year. Drug spending growth rates have trended downward over the
last 10 years. This decline is likely due to fewer drugs coming on the
market in the last decade, many blockbuster drugs coming off patent and
jurisdictions introducing generic pricing controls.

“Compensation is one area of focus for some jurisdictions as they
wrestle with controlling their health spending,” explains Jean-Marie
Berthelot, Vice President of Programs at CIHI. “Other initiatives, such
as Lean projects to improve efficiencies in delivering care and
changing generic drug pricing policies, are key to managing costs.”

Variations in provincial/territorial government spending on health

Provincial and territorial governments are forecast to spend $135
billion in 2012, accounting for 65% of total health expenditure in the
country. Provincial and territorial government health care spending
continues to vary by province, with spending per person expected to be
highest in Newfoundland and Labrador and Alberta, at $5,190 and $4,606,
respectively. Quebec and British Columbia are expected to have the
lowest health expenditure per capita, at $3,513 and $3,690,

“Provincial spending can be affected by differences in population health
care needs, health system structure and health personnel compensation,”
says Mr. Berthelot.

While population aging has been a modest cost driver overall, accounting
for 0.9% of average annual growth in health care spending from 2000 to
2010, the impact varied by province. It was more significant in the
Atlantic provinces and Quebec than in Ontario and the west.

In 2011, the latest year for which data is available, health care was
estimated to account for about 38% of provincial/territorial government
spending; this share has been relatively stable for more than five
years. However, it varied among the provinces in 2011, from 30.1% in
Quebec and 35.8% in Saskatchewan to 44.3% in Manitoba and 47.9% in Nova

During the past decade, provincial and territorial government per capita
health spending increased by an average 5% per year. In 2012,
provincial growth rates will range from 4.9% in Prince Edward Island
and 4.1% in Newfoundland and Labrador to 0.7% in New Brunswick and 1.2%
in Ontario.

Other highlights

        --  Health system decision-makers will face the challenge of
            finding appropriate care for older Canadians that balances
            access, quality and appropriateness of care on the one hand and
            cost on the other. In 2010, the latest available year for data
            broken down by age group, per person spending for seniors
            increased with age: $6,223 for those age 65 to 69, $8,721 for
            those 70 to 74, $12,050 for those 75 to 79 and $20,113 for
            those 80 and older.
        --  For more than a decade, the public sector has accounted for
            about 70% of the total health care bill and the private sector
            for 30%.
        --  Among 30 countries in the Organisation for Economic
            Co-operation and Development (OECD) that had comparable
            accounting systems in 2010, the latest year for which data is
            available, spending per person on health care remained highest
            in the United States (US$8,233). Canada was in the top quartile
            of countries in terms of per person spending on health,
            spending US$4,445; this amount was similar to those for several
            other OECD countries, including Denmark (US$4,464), Austria
            (US$4,395) and Germany (US$4,338).

The report and the following figures are available from CIHI’s website,
at www.cihi.ca.

Figure 1: Total Health Expenditure, Canada, 1975 to 2012 (Figure 1 in
the report)

Figure 2: Total Health Expenditure, Annual Growth Rates in Constant 1997
Dollars, Canada, 1976 to 2012 (Figure 2 in the report)

Figure 3: Total Health Expenditure per Capita, Canada, 1975 to 2012
(Figure 5 in the report)

Figure 4: Total Health Expenditure as a Percentage of Gross Domestic
Product, Canada, 1975 to 2012 (Figure 7 in the report)

Figure 5: Total Health Expenditure per Capita, U.S. Dollars, 30 Selected
Countries, 2010 (Figure 44 in the report)


Source: PR Newswire