Health spend stagnating

by 02 Nov 2015
Health spending has essentially stagnated in Canada but group benefits advisors be warned: that might not last.
 
“Across industrialized nations, health care spending is linked with economic growth, and periods of low or no growth in spending are generally followed by times of rapid increases — that will be something for Canada to potentially prepare for in coming years,” said Brent Diverty, the Canadian Institute for Health Information’s vice president of Programs.
 
Spending is projected to grow by $3.4 billion this year to reach $219.1 billion in 2015. This amounts to $6,105 per Canadian, about $35 more per person than last year.
 
"A new period has emerged, with health-spending growth not keeping pace with inflation and population growth [combined]," the report's authors said.
 
"It reflects, in large part, Canada's modest economic growth and fiscal restraint as governments focus on balancing budgetary deficits."
 
But while public health spending has stagnated, private health insurance expenditure per person increased from $139 to $720 over the same period.

The largest shares of health dollars overall were for:
  • Hospitals (29.5% forecast for 2015, compared with 32.6% in 1995.)
  • Drugs (15.7% now, compared with 13.7% in 1995).
  • Physician services (15.5% now, compared with 14.3% in 1995.)
Looking at the top 3 cost drivers for health spending (hospitals, drugs and physicians), hospital spending is at the lowest rate of growth since the late 1990s and drug expenditures have slowed, largely due to generic pricing control policies, expiring patents on medications and fewer new drugs emerging on the market. But expirations have a one-time impact and expensive new drugs will start to appear.

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