Health spending in Canada is projected to post its slowest growth rate since 1997, a trend that has emerged over the last four years, according to data released by the Canadian Institute for Health Information (CIHI). While expenditures are increasing annually, the rate of spending is at 2.1%—a record low over the last 17 years.
“A 2.1% increase translates to $4.5 billion. In terms of total health spending, the country is expected to spend $214.9 billion in 2014,” says David O’Toole, president and CEO of CIHI. “That’s $6,045 per Canadian, only about $61 more per person than last year.”
Drugs, hospitals and physician compensation have traditionally represented the top three cost drivers in the health system, calling for continuous focus on and innovative resource management of these line items.
“Drug expenditures are slowing down. With a 0.8% increase, they will reach $33.9 billion in 2014,” says Brent Diverty, CIHI’s vice-president of programs. “With generic pricing control policies for the pharmaceutical industry, the expiration of patents on prevalent medications and fewer new drugs entering the market, we are seeing what amounts to flattened growth.”
With 2.1% projected growth, hospital spending will reach $63.5 billion in 2014. About 60% of these hospital costs relate to worker remuneration, particularly for nurses. Inflation and compensation have been major factors in the growth of hospital costs, as have the costs of new and emerging technology and the expansion of hospital services.
Growth in physician spending is the highest of the three cost drivers, at 4.5%, but is slowing as well because provincial health ministries have negotiated minimal pay increases over recent contract periods. Physician spending is estimated to reach $33.3 billion in 2014.
Population aging is estimated to increase healthcare costs by only 0.9% per year. And CIHI expects this trend to change incrementally over the next 20 years.
“While concerns regarding demographics are understandable—Canadians over the age of 65 account for less than 15% of the population but consume more than 45% of provinces’ and territories’ healthcare dollars—the share of public sector health dollars spent on Canadian seniors has not changed significantly over the past decade,” says Diverty.
However, the Canadian Medical Association (CMA) says the numbers aren’t as good as they seem.
“On CIHI’s finding that the aging population is only increasing healthcare spending by 0.9% a year, that is because many of the services that should be available to seniors just aren’t,” says CMA president Chris Simpson. “Long-term care facilities aren’t being built, adequate home and community support isn’t being funded, and hospitals are filled with older Canadians who should be elsewhere but have no place to go.”
CIHI says spending on seniors healthcare will only increase incrementally over the next 20 years. But he notes that CIHI’s own figures also show per capita health spending increases dramatically as people age. Per capita costs for the 65 to 69 age group were $6,368 in 2012 but rise to $8,545 for those 70 to 79, $11,692 for 75 to 79, and $21,054 for 80 and older.
Simpson also says that the overwhelming majority of healthcare spending for older Canadians is for chronic care, and the population of those 65 and older will almost double over 20 years.
“I would urge Canadians not to take CIHI’s numbers out of context,” Simpson says. “Canadians should not be lulled into a false sense of security.”