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Health spending rises at lowest rate in 15 years: study

The year-over-year increase in Canadian health spending has hit its lowest rate in 15 years, newly released data reveal.

While health spending continues to increase relentlessly, additional monies for hospitals, physician services and drugs are forecast to increase only slightly in 2012, the smallest hikes since the 1990s.

"Provincial and territorial governments today are focused on controlling health care costs," said John Wright, president and chief executive officer of the Canadian Institute for Health Information, which published its annual spending estimates on Monday.

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He said the economic slowdown, coupled with swelling deficits, have prompted governments to pay a lot more attention to their single biggest budgetary line item, health care. But, unlike the past, they have not simply instituted reactive across-the-board cuts but been more strategic.

"They're not cutting programs as much as looking at improving productivity, reducing overhead, controlling compensation and seeking value-for-money initiatives," Wright said.

Despite efforts to rein in spending, however, the impact on the bottom line has been modest. Provincial and territorial health expenditures are expected to grow by 3.1 per cent in 2012. That is still well above the current inflation rate of 1.2 per cent.

Over all, health spending will hit $207.4-billion in 2012, according to CIHI. That includes $144.6-billion in public spending and $62.8-billion in private spending (including private insurance and out-of-pocket payments). The balance of spending is for public health, capital spending, administration and miscellaneous initiatives.

Total health spending was 11.6 per cent of gross domestic product, meaning that, nationally, one in every six dollars spent in the Canadian economy is spent on health.

There are, however, large provincial variations, ranging from 8.6 per cent of GDP in Alberta to 17.4 per cent in Prince Edward Island.

Health-care spending has grown more slowly than the economy for three years running.

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Spending falls into a handful of large categories, including:

Hospitals: $60.5-billion, or 29.2 per cent of the total

Drugs: $33-billion, or 15.9 per cent

Physician services: $30-billion or 14.4 per cent

Other health professionals (such as dentists and physiotherapists): $22-billion, or 10.6 per cent

Other institutions (nursing homes and long-term care): $21.6-billion, or 10.4 per cent.

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Jean-Marie Berthelot, vice-president of programs at CIHI, said increasing compensation paid to health-care providers has been one of the most significant cost drivers of hospital and physician spending in recent years, but that has slowed. Drug spending has also slowed thanks to blockbuster drugs coming off patent and jurisdictions introducing generic pricing controls.

In 2010, the most recent year for which detailed data are available, per capita spending on health care was $5,614. But that figure varied a lot by age:

Younger than age 1: per capita costs were $9,264

Age 1 to 14: $1,341 per capita

Age 15-64: $2,479 per capita

Age 65-69: $6,223 per capita

Age 70-74: $8,721 per capita

Age 75-79: $12,050 per capita

Age 80 and older: $20,113 per capita.

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About the Author
Public health reporter

André Picard is a health reporter and columnist at The Globe and Mail, where he has been a staff writer since 1987. He is also the author of three bestselling books.André has received much acclaim for his writing. More


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