Health care spending to reach $192 billion this year

Growth slows to lowest rate since 1997;
share of spending on seniors stable

OTTAWA, October 28, 2010 /Canada NewsWire/ - Total spending on health care in Canada is expected to reach $191.6 billion this year, growing an estimated $9.5 billion, or 5.2%, since 2009, according to new figures released today by the Canadian Institute for Health Information (CIHI). This represents an increase of $216 per Canadian, bringing total health expenditure per capita to an estimated $5,614. After removing the effects of inflation and population growth, health care spending per person is expected to increase by 1.4% in 2010, the lowest annual growth rate seen in 13 years.

When examined as a share of Canada's overall economy, health care spending is expected to reach 11.7% of the gross domestic product (GDP) in 2010, a decline from the estimated share of 11.9% in 2009, but still higher than it was in 2008, at 10.7%. The figures released today are from CIHI's annual report, National Health Expenditure Trends, 1975 to 2010, Canada's most up-to-date and comprehensive source of information tracking how dollars are spent on health care in this country.

"Jurisdictions have been working to control rising costs, and the slowdown in the growth in health care spending may be, in part, a reflection of that," says John Wright, CIHI's President and CEO. "However, health care remains a priority for Canadians, and we continue to see investment in the system, with health spending growing at a faster rate than population growth. It also continues to represent an important share of our overall economic activity."

In 2010, government spending on health care is expected to reach $135.1 billion, while private-sector spending, which includes both private insurance and out-of-pocket expenses, will reach an estimated $56.6 billion. For more than a decade, public- and private-sector health spending in Canada has been growing at about the same rate, with the public sector accounting for about 70% of the total health care bill and the private sector for 30%.

Spending highest on seniors, but impact of population aging minimal over time

While Canadians older than age 65 account for less than 14% of the Canadian population, they consume nearly 44% of all health care dollars spent by provincial and territorial governments. In 2008, the latest available year for data broken down by age group, provincial and territorial governments spent an average of $10,742 per Canadian age 65 and older, compared to $2,097 on those between age 1 and 64. Within the senior population, spending varies widely by age group, with health care expenditure on seniors age 80 and older, at an average of $18,160 per capita, more than three times higher than for seniors younger than age 70 ($5,828 per person on average).

However, CIHI figures show that the share spent on Canadian seniors has not changed significantly over the past decade—from 43.6% in 1998 to 43.8% in 2008.

"While it is true that care is costlier for people who are 65 and older, we have not seen a rise in the proportion we spend on seniors," says Jean-Marie Berthelot, Vice President, Programs, at CIHI. "An aging population may have an impact on health care spending, but so far the average expenditure on seniors has not risen faster than for younger Canadians."

Variations in provincial/territorial spending on health

Total health care spending continues to vary by province, with spending per person expected to be highest in Alberta and Manitoba at $6,266 and $6,249, respectively. British Columbia and Quebec are forecast to have the lowest health expenditure per capita at $5,355 and $5,096, respectively.

Health care continues to represent one of the most important budget items for provinces and territories, representing an average of 39.2% of total provincial and territorial government program spending in 2009, the latest data available. Ontario and Manitoba spent the highest proportion of their budgets on health in 2009 (45.7% and 43.7%, respectively) while Newfoundland and Labrador and Quebec spent the lowest (33.8% and 33.1%, respectively). While health care spending as a share of total program spending grew across Canada between 2000 and 2004, it has remained stable on average for the past four years.

"Health care remains the single largest program administered by provincial and territorial governments," explains Wright. "Although health care spending has been on the rise for the past ten years, the share of government budgets devoted to health care appears to have stabilized overall, though the situation may vary by province."

Physicians account for rising share of health dollars

Hospitals, drugs and physician services, in that order, continue to account for the largest share of health dollars. In 2010, spending on hospitals is expected to reach $55.3 billion, spending on drugs will grow to an estimated $31.1 billion and spending on physicians is forecast at $26.3 billion. For the past two decades, there has been an increase in the share of spending on drugs and a decrease in the share of spending on hospitals. However, more recent trends show spending patterns may be shifting.

For the fourth year in a row, growth in physician spending has outpaced growth in hospital and drug spending; it is expected to grow by an estimated 6.9% this year. Spending on hospitals in 2010 is estimated to grow by 6.2%, while drug spending growth is forecast at 4.8%. As a result, the share of total health dollars spent on physicians is forecast to increase this year (up 1.5%) while the share spent on drugs is expected to decrease (down 0.4% this year).

International comparisons

In 2008, the latest year for which data is available, per capita spending on health care remained highest in the United States (US$7,538), when comparing 26 countries with similar accounting systems in the Organisation for Economic Co-operation and Development (OECD). The U.S. was followed by Norway (US$5,003), Switzerland (US$4,627) and Luxembourg (US$4,210). At around US$4,079 per capita, Canada was in the top fifth, with spending similar to several other OECD countries, including the Netherlands (US$4,063), Austria (US$3,970), Germany (US$3,737) and France (US$3,696).

Quick facts on spending

....Canada is expected to spend $191.6 billion on health care in 2010, up from an estimated $182.1 billion in 2009 and $171.8 billion in 2008.

...Health care spending is forecast to reach $5,614 per Canadian in 2010, up from an estimated $5,397 in 2009 and $5,154 in 2008.

...Spending on health care is expected to account for 11.7% of Canada's gross domestic product (GDP) in 2010, a slight decline from the estimated share of 11.9% in 2009.

...Since 1997, the public/private split of total health expenditure has remained stable, with governments spending 70% of the total health care bill and the private sector spending 30%.

...Total health care spending continues to vary by province, with spending per person expected to be highest in Alberta and Manitoba at $6,266 and $6,249, respectively. British Columbia and Quebec are forecast to have the lowest health expenditure per capita at $5,355 and $5,096, respectively.

...Spending on seniors has remained relatively stable for the last decade, accounting for 44% of all provincial and territorial government health care spending.

The report and the following figures and tables are available from CIHI's website, at