The Canadian Institute for Health Information (CIHI) has released the 28th edition of its National Health Expenditure Trends which provides detailed data on Canadian and provincial health expenditures. The 2024 edition finds that total health-care spending in Canada is expected to reach $372 billion in 2024, or $9,054 per Canadian, and will represent 12.4 percent of Canada’s gross domestic product (GDP) in 2024. Excluding the 2020 and 2021 pandemic period, this is the highest ratio ever reached.
The report paints a picture of rising health spending. Total health-care spending in Canada is expected to increase by 5.7 percent in 2024, after rising 4.5 percent in 2023 and only 1.7 percent in 2022 coming on the heels of the pandemic.
Hospital spending is expected to increase by 6.3 percent in 2023 and 6.1 percent in 2024 while physician spending is projected to increase by 7.5 percent in 2023 and 4.4 percent in 2024. Meanwhile, total drug expenditures are projected to increase by 5.6 percent in 2023 and 3.8 percent in 2024.
However, a more nuanced look at the data considering both population growth and inflation paints a somewhat more restrained picture. Figure 1 presents per capita total health spending in Canada both in nominal and real terms (deflated using the CIHI Total Health Care Implicit Price Index). Until the pandemic, there was a slowdown in real per capita health spending that started in the wake of the 2008-09 recession and financial crisis period.
From 2010 to 2019, nominal per capita health spending went from $5,676 to $7,175—an increase of 26 percent while after inflation and population the increase was only 9 percent. While nominal per capita health spending over this period grew at an annual average of 3 percent, real spending per capita only grew 1 percent annually representing a significant slowdown from 2000 to 2010 when it grew at an annual average of nearly 4 percent.
The pandemic saw health spending rocket upwards. From 2019 to 2021, real per capita spending grew 7.2 percent annually, but the post pandemic period has seen a sharp retrenchment in growth especially once population and rising inflation are factored in.
From 2021 to 2024, real per capita total health expenditure in 2010 dollars has declined from $7,075 to $6,662 for a decline of 5.8 percent. Spending in 2024 is still 8 percent higher than 2019, but when one looks at the entire 2010 to 2024 period, real per capita total health spending has only increased by about 1 percent annually.
Of course, Canada is a federation, and these numbers are for total health spending. The question that arises is how do these numbers vary across the provinces when it comes to provincial government health spending? Figure 2 plots the percentage change in real per capita provincial government health spending from 2019 to 2024.
All the provinces collectively saw an increase of 8.3 percent which represents an increase of about 1.7 percent a year. However, this performance varies considerably across the provinces with British Columbia and Prince Edward Island seeing the largest increases at 17 and 16 percent respectively (those provinces likewise saw that period’s greatest increase in public sector employment) while at the bottom are Manitoba and Nova Scotia, which over the five years have seen their per capita provincial government health spending stay essentially flat.
And, in the face of a persistent shortage of physicians, another interesting question is how has real per capita provincial government physician spending been performing? Figure 3 plots this for the entire 1975 to 2024 period and the results since 2015 are disheartening for anyone still looking for a family physician.
Real per capita physician spending today is no higher than a decade ago and has yet to recover to its pre-pandemic level. By 2019, real per capita provincial government physician spending (in 2010 dollars) had reached a peak of $875 and as of 2024 it is estimated to be at $852—a drop of 2.7 percent. However, like all things in the Canadian federation, the performance of real per capita provincial government physician spending varies across the provinces.
Figure 4 plots the percent change in real per capita physician spending for each province from 2019 to 2024. Since 2019, Manitoba, Newfoundland and Labrador, Ontario, New Brunswick, and Quebec have seen declines ranging from 1.8 to 10.4 percent in real per capita provincial government physician spending.
Nova Scotia is flat. Alberta, Prince Edward Island, British Columbia, and Saskatchewan have seen increases since 2019 ranging from 0.7 percent to 22 percent. It is an amazingly variable performance.
For some provinces, this is an entirely new twist on the spend more and get less phenomenon that often seems to affect health care in Canada. For example, Ontario since 2019 sees a 6.8 percent increase in real per capita provincial government health spending but over the same period real per capita provincial government physician expenditures are down 5.8 percent.
Saskatchewan since 2019 sees a 6.2 percent increase in real per capita provincial government health spending and a 22 percent increase in real per capita provincial government physician spending.
In the end, one supposes it is all about government health priorities and choices. One suspects that some provinces are going to see a lot of unhappy people as the disconnect between overall increases in provincial government health spending accompanied by fewer physician services per capita becomes apparent.
Livio Di Matteo is a contributor to The Hub, Professor of Economics at Lakehead University, and a Member of the Canadian Institute for Health Information National Health Expenditure Advisory Group.
