The pace of health-care spending in Canada is expected to rise more slowly this year, a sign that governments are managing to curb costs, at least in the short term.
The country’s total health-care bill is forecast to top $219-billion this year, a 1.6-per-cent increase from 2014, according to annual numbers released Thursday by the Canadian Institute for Health Information.
While the dollar figure continues to climb, the rate of increase is actually falling when adjusted for inflation and population growth – continuing a trend that began in 2011, when provinces reacted to the economic slowdown by checking spending.
Getting a handle on health-care costs is key for provinces as they look to reduce budget deficits and look ahead to respond to the needs of an aging population. Health care accounts for between roughly one-third and one-half of spending, depending on the province. But past experience shows that austerity measures introduced during periods of slow growth, such as now, have been short term when the economy rebounds.
“We have seen this movie before – and we know how it ended,” said Don Drummond, a former bank economist who is the Stauffer-Dunning Fellow at Queen’s University. “The big question is: Is the second part of that movie going to repeat itself?”
Mr. Drummond, who is set to take part in a discussion in Ottawa on Thursday on these latest numbers, noted that a similar slowing of health-spending rates in the mid-1990s was followed by years of climbing costs.
Sustained changes in spending rates require fundamental reforms, he said. Otherwise, the savings realized will likely be erased once workers negotiate new contracts or budgets squeezed for several years require an infusion of cash to maintain service and quality.
Dr. David Naylor, a former president of the University of Toronto and head of a recent federal panel on health-care innovation, said governments need to get on with the business of fixing the health-care system and move away from the cycles of boom and bust.
While much is made of the need to move more care out of hospitals and into the community and the home, Dr. Naylor noted that two of the three top costs remain hospitals and doctors.
“The structure of the system has evolved very little over the last 20 years,” he said. “Unless that structure is changed pretty fundamentally, not only are we setting ourselves up for rapid expenditure growth when the economy picks up, but continue to put off the necessary renovation of the health-care system. And we will pay a price for that delay in terms of quality of care and efficiency in the decades ahead.”
In addition to the snapshot of annual spending, the latest report looks at spending trends over the four decades since the CIHI began collecting data. The report finds health-care spending has ebbed and flowed over that time in response to economic conditions.
The report groups health-care spending into four periods: 1975-91, when annual increases averaged 2.7 per cent; the mid-1990s, when they fell to 0.5 per cent; the late 1990s to 2010, when major investments were made; and 2011-15 when increases fell back to mid-1990s levels.
“When economic times were good, we spent a lot on health care,” said Michael Hunt, the CIHI’s director of health spending and strategic initiatives. “The question is: Have we changed anything to really maintain where we are at now? We don’t know that.”
Other key findings:
- Health-care spending in 2015 works out to $6,105 for every Canadian, a $35 increase.
- Differences among provinces mean there is wide variation in per-capita spending, from $7,036 in Newfoundland and Labrador to $5,665 in Quebec.
- The percentage of provincial budgets spent on health care ranges from 46 per cent in Nova Scotia to 30 per cent in Quebec.
- The greatest portion of health-care dollars goes to hospitals (29 per cent), followed by drugs (15.7 per cent) and physicians (15.5 per cent).
- While the top three spending categories have been the same for several years, the share of spending going to physicians has been increasing at a faster rate than the other two.
- Seventy-one per cent of health-care costs are paid for with public funds, with the remainder coming from such sources as private insurance and individuals’ own pockets, a ratio that has stayed constant for several years.Report Typo/Error