Health expenditure as a proportion of GDP grows to an estimated 10.7%
November 13, 2008 – Canada’s health care spending is expected to reach $171.9 billion in 2008, or $5,170 per person, according to new figures released today by the Canadian Institute for Health Information (CIHI). This represents an increase of $10.3 billion over estimated expenditures for 2007, or a growth of 6.4%. These figures are featured in National Health Expenditure Trends, 1975 to 2008, Canada’s most comprehensive source of information tracking how dollars are spent on health care in this country.
When looking at health care spending as a proportion of Canada’s overall economy, health expenditure is expected to reach 10.7% of the gross domestic product (GDP), the highest share ever recorded. This rate has climbed gradually, from 10.0% in 2002, to an estimated 10.6% last year.
“Health care spending is expected to grow faster than Canada’s economy, outpacing inflation and population growth,” says Glenda Yeates, President and CEO of CIHI. “In the context of recent changes in the economy, it is important to keep monitoring these trends in order to better understand how our dollars are being spent and how we compare with other countries.”
After adjusting for inflation and population growth, spending is expected to grow by 3.4% in 2008, which is similar to adjusted annual growth rates of recent years: 2.8% in 2007 (estimated), 3.7% in 2006 and 2.8% in 2005.
Spending on drugs growing faster than spending on hospitals or physicians
Hospitals continue to make up the largest component of Canada’s health care spending; however, their share of total health expenditure has steadily declined. In 2008, hospitals are expected to account for 28.0% ($48.1 billion) of total health care spending, down from 30.7% in 1998 and 44.7% in 1975.
Since 1997, pharmaceuticals have consumed the second-largest share of health dollars. In 2008, spending on drugs (including both prescribed and non-prescribed medications) is expected to account for 17.4% of health care spending ($29.8 billion), up from 15.0% a decade ago and 8.8% in 1975. Payments to physicians represent Canada’s third-largest share of health expenditure, accounting for an estimated 13.4% of total spending in 2008 ($23 billion), a share that has remained relatively stable since 1999. This year spending on drugs is expected to grow faster (8.3%) than spending on hospitals (5.8%) or physicians (6.2%).
Public- and private-sector spending shares remain unchanged
Since 1997, the public- and private-sector shares of total health expenditure have remained relatively stable, with governments accounting for 70% of total spending and the private sector (including privately insured and out-of-pocket expenses) for 30%. In 2008, public-sector health care spending is expected to reach $120.3 billion (70.0% of total spending), compared to $51.6 billion spent by the private sector (30.0% of total spending).
Prescribed drugs and dental care account for the largest shares of private health care spending, while hospitals and physicians represent the largest shares for the public sector.
In 2006, the latest year of available data, out-of-pocket expenses by individual Canadians represented 15% of total health expenditure, or $22.1 billion. Private insurance accounted for 12%, or $18.2 billion.
Spending on health varies from province to province
Total (public and private) health spending varies across Canada. Spending per person is expected to be highest in Alberta and Manitoba, at $5,730 and $5,555, respectively, and lowest in Quebec ($4,653) and British Columbia ($5,093).
Provincial and territorial government health expenditures will account for just over 64% of total health expenditures in Canada in 2008. Provincial and territorial government spending per person ranges from lows of $3,006 in Quebec, $3,270 in Ontario and $3,300 in Prince Edward Island to highs of $3,962 in Newfoundland and Labrador and $3,817 in Alberta.
“Each province has its own unique environment that will influence decisions around health spending,” says Francine Anne Roy, Director, Health Services Information at CIHI. “Variations in models of care, salary and benefit levels, health needs and the geographic distribution of a province’s population are all factors that can affect health system expenditures.” Total provincial health expenditure as a percent of provincial GDP ranges from 6.9% in Alberta and 8.8% in Newfoundland and Labrador to 14.6% in Nova Scotia and 15.3% in P.E.I. in 2008.
Spending highest on infants and seniors
In 2006, the latest year available for age-specific data, per capita health care spending by provincial and territorial governments was highest for infants younger than 1 ($7,891) and people 65 and older ($9,967). In contrast, health care spending on Canadians between the ages of 1 and 64 averaged $1,832 per person.
Among seniors, there was also great variation. For those age 65 to 69, the average per capita spending was $5,369 in 2006. For those age 85 to 89, per person spending reached an average of $21,209.
CIHI’s figures show that Canadians age 65 and older accounted for an estimated 44% of total provincial and territorial government health care spending in 2006, a proportion that has not changed significantly since 1998, when national data broken down by age group first became available. Infants (younger than 1 year) account for about 3%.
Among 25 countries that have comparable accounting systems in the Organisation for Economic Co-operation and Development (OECD) in 2006, the latest year for which data are available, spending per person on health care remained highest in the United States (US$6,714). The U.S. was followed by Norway (US$4,520), Switzerland (US$4,311) and Luxembourg (US$4,303). Canada was in the top fifth of countries in terms of per person spending on health, spending US$3,678 per person, which was similar to seven other OECD countries, including France, Germany, the Netherlands and Austria. The lowest per capita expenditures were seen in Turkey (US$591) and Mexico (US$794).
National Health Expenditure Database
The data released today are from CIHI’s latest report, National Health Expenditure Trends, 1975 to 2008, which provides an overview of health care spending trends from 1975 to 2006, as well as forecasts for 2007 and 2008. The report draws upon data compiled from CIHI’s National Health Expenditure Database, Canada’s most comprehensive source of information on health care spending. Where appropriate, National Health Expenditure Trends, 1975 to 2008 provides data in both current and constant dollars. Current dollars measure actual expenditure in a given year. Constant dollars remove the effects of inflation to measure expenditure based on price levels prevailing in a base year. In this report, the term “constant dollars” refers to amounts in 1997 prices. Real growth rates measure annual changes of data reported in constant dollars.
The Canadian Institute for Health Information (CIHI) collects and analyzes information on health and health care in Canada and makes it publicly available. Canada’s federal, provincial and territorial governments created CIHI as a not-for-profit, independent organization dedicated to forging a common approach to Canadian health information. CIHI’s goal: to provide timely, accurate and comparable information. CIHI’s data and reports inform health policies, support the effective delivery of health services and raise awareness among Canadians of the factors that contribute to good health.www.cihi.ca