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Canada's health-care spending is expected to reach its highest level ever - $171.9-billion this year, or $5,170 per person - growing faster than the economy and outpacing inflation and population growth, new figures show.

The Canadian Institute for Health Information study, released yesterday, found health spending is expected to reach 10.7 per cent of the country's gross domestic product, attaining highest-ever status in that category and leaving the country's beloved medicare vulnerable to cuts at a time of economic turmoil.

"It is going to raise questions for Canada and other countries as to how much do we really want to spend on health care," said Glenda Yeates, president and chief executive officer of the Canadian Institute for Health Information.

Canada's spending on health care, as reflected by a percentage of the GDP, has had year-over-year double-digit status since 2002.

The first time it reached 10 per cent was in 1992, during a recession. After that, provinces went into cost-containment mode. Nurses were laid off; medical schools were closed, as were some hospitals. Provincial governments managed to squeeze the system, dropping health-care spending to 8.9 per cent of the GDP in the years 1996 and 1997.

But that fiscal prudence came at a cost. Waiting times grew, many Canadians could not - and still cannot - find a family physician due to decreased medical-school enrolment, and nurses were run off their feet as the system starved itself of their services.

Less talked about are the positive effects of that fiscal tightening: Hospitals were forced to become more efficient, which they did in spades by greatly reducing how long patients stayed in their institutions.

The lingering sentiment, however, is that Canada's health-care system, while deeply cherished, carries a high price tag.

In actuality, when figures are adjusted for inflation and population growth, spending is expected to grow by 3.4 per cent in 2008 - similar to annual growth rates in recent years.

And when Canada is compared to the rest of the world, it is hardly a big spender.

No one pays more for health care than the United States, a country that spent $6,714 (U.S.) per person, according to 2006 Organisation for Economic Co-operation and Development figures, the latest available.

Following the U.S. were Norway ($4,520 U.S.), Switzerland, ($4,311 U.S.) and Luxembourg ($4,303 U.S.). Canada was in fifth place, spending $3,678 (U.S.) per person in 2006 - similar to the amounts seen in Austria, Belgium, France and Germany.

"It's clear there's no one magic solution no one country has found," Ms. Yeates said. "I think all countries will be looking for new ways to provide care that meets their values in a way they can afford."

Erin Strumpf, a professor of health economics at McGill University, said the numbers are not alarming; in fact, they fall in line with a trend seen in other countries.

"Why are we spending so much and why are costs going up faster than the general economy?" Dr. Strumpf asked rhetorically in a telephone interview from Montreal. "It's innovation and medical care, things that expand the capabilities of medicine that are primarily driving growth in health-care costs."

Whether Canada should spend a lower share of GDP on health, she said, is a question about how we value improvement in health care compared to spending in other areas. What Canadians should focus more on, Dr. Strumpf said, is what medical treatments are most effective to ensure "we get the most bang for our buck."

Health-care spending can be neatly divided into three categories: hospitals, drugs and physicians.

Hospitals make up the largest component of spending, comprising 28 per cent and projected to tally $48.1-billion this year.

After that is pharmaceuticals, which include prescribed and non-prescribed drugs, accounting for 17.4 per cent of health-care spending, or $29.8-billion.

Payments to physicians represent Canada's third-largest share of health spending, projected to make up 13.4 per cent of total spending, or $23-billion this year - a share that has remained relatively stable since 1999.

Pharmaceuticals have grown faster (8.3 per cent) than spending on hospitals (5.8 per cent) and physicians (6.2 per cent) this year.

Robert Evans, professor of economics at the University of British Columbia, said the figures show the need for a single-payer drug plan. (Some drugs are covered through public plans, others through private insurance or paid for out of pocket.)

"Yet again, drug expenditures were significantly faster than everything else," Dr. Evans, a health economist, said in a telephone interview from Vancouver. "We do not have a universal public plan; we've got no mechanism for containing costs."

The big story on health-care spending, Dr. Evans said, is likely to come next year, when the economy slows and health-care spending remains stable or increases, potentially representing an even higher share of the GDP.

Brian Day, past president of the Canadian Medical Association, said the figures raise the question of future sustainability of the health-care system, particularly against the backdrop of the current economic crisis.

The orthopedic surgeon has been a big proponent of patient-focused funding, where hospitals are paid for each patient they treat rather than getting a fixed sum of money, as a way to make the system more efficient.

He has also called for a reduction in long waiting times for care, arguing that they cost the health-care system more - not less - as patients become sicker in the queue.

"We know as doctors, delays in treatment cost more," Dr. Day said from Vancouver.

As well, baby boomers are becoming seniors and the system is headed for a "demographic blowout," he said - all the more reason to make medicare as efficient as possible.

"Governments only have so much money," Dr. Day said. "And now they have less."

Read the study.

A SPREADING CONDITION

Per capita health-care spending in Canada this year could propel the country into the second most expensive for such care worldwide.

TOTAL HEALTH EXPENDITURE PER CAPITA IN $U.S. (2006)*

United States	$6,714
Norway	$4,520
Switzerland	$4,311
Canada	$3,678
Austria	$3,606
France	$3,449
Germany	$3,371
Sweden	$3,202
Netherlands	$3,156
Australia	$3,141
Japan	$2,578
Spain	$2,458
Czech Republic	$1,509
Korea	$1,464
Mexico	$794

*Selected countries

TRISH McALASTER / THE GLOBE AND MAIL // SOURCE: CIHI.COM

The price of private

Private clinics have been popping up across Canada, offering quicker access to magnetic resonance imaging machines and some surgical procedures - for a price.

But despite their growth, they haven't enlarged the private slice of the overall health-care pie.

Figures released yesterday by the Canadian Institute for Health Information show that private-sector spending - including that paid by private insurance and out of pocket - has remained relatively stable since 1997, accounting for 30-per-cent of the health-care bill, or $51.6-billion this year.

The rest of the health-care bill, 70 per cent, is funded through governments, via the taxpayer, and is expected to reach $120.3-billion this year.

The largest share of private health-care spending comes from prescribed drugs and dental care. As for public-health spending, the biggest share is due to money spent on hospitals and payments to physicians.

Lisa Priest

How much do you cost?

Just how much do you cost the health-care system? That

depends on where you live and how old you are.

Alberta and Manitoba spend the most on health care, per person, paying $5,730 and $5,555 respectively. Quebec at $4,653 and British Columbia at $5,093 spend the least.

Canadians cost the most to the health-care system at the very beginning of their lives - and at the very end.

Infants younger than one year old cost $7,891 each, according to 2006 figures, while people aged 85 to 89 cost the system $21,209 each. Younger seniors, 65 to 69, cost $5,369 a person.

Canadians aged 1 to 64 are the least costly, with average spending projected at $1,832 a person.

Lisa Priest

Source: Canadian Institute

for Health Information