Health Care Spending to Reach $200 Billion in 2011
Nov 10, 2011
Health care costs in Canada doubled over the past decade and will cross the $200 billion threshold for the first time this year, a report released last week reveals.
In “National Health Expenditure Trends, 1975-2011,” The Canadian Institute For Health Information (CIHI) shows that total health spending in Canada is expected to grow by more than $7 billion this year to reach a forecast $200.5 billion in 2011.
Although still on the rise, the report also shows that the rate of growth is slowing. While rising faster than inflation and population growth, health care spending is expected to grow more slowly than the overall economy this year. In fact, the four percent increase this year will be the lowest increase in the past 15 years.
Another CIHI report that was released at the same time, “Health Care Cost Drivers: The Facts,” examines the key factors that contributed to the $200 billion milestone. It focuses on public-sector health care spending between 1998 and 2008 – a boom period when annual health expenditure in Canada more than doubled – and identifies issues to monitor in the future.
This study shows that the major cost drivers of public-sector health care spending in the past decade were compensation of health care providers, increased use of services and an evolution in the types of services provided and used.
A key driver of the rising costs is what the system spends on doctors, which rose by an average of 6.8 percent a year from 1998 to 2008. Of that, 3.6 percent was attributable to increases in the fees paid to physicians. The rest related to increased usage of health care, in part due to population growth and aging.
Aside from demographic considerations, Canadians tend to be using more health care in some areas, such as prescription drugs. They are also seeing their doctors more often and getting more medical procedures. And changes in the type of health services used by Canadians – such as the emergence of new drugs and new diagnostic and surgical tools – has also contributed to the growth in health care costs.
Interestingly, the report also demonstrates that population aging is a cost driver of modest importance relative to other factors, accounting for less than one percent of average annual growth in health care spending. However, it is also noted that the impact of aging on health care spending varies considerably by province.
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