Health care spending slows

The pace of health care spending in Canada continues to slow, according to a new report.

The Canadian Institute for Health Information released its report on health expenditures on Tuesday, saying it is expected to reach $207 billion in 2012.

Health care spending as a share of the economy and of provincial government spending has fallen, said Dr. Michael Rachlis, a health policy consultant in Toronto commenting on the report.

"The current perceived wisdom is that health care costs are just rising inexorably out of control. So that's why a data release that's saying something moderate about moderating spending data is of news."

The proportion of Canada's gross domestic product or GDP spent on health care is expected to reach 11.6 per cent this year compared with an all-time high of 11.9 per cent in 2010, the institute said, as provincial and territorial governments focus on controlling health care costs.

"Weaker prospects for economic growth combined with fiscal deficits and fewer savings from debt service charges could have a dampening effect on the future growth of public-sector health spending," the report's authors concluded.

"Managing health-specific price inflation for core medicare goods and services, including doctors, nurses, other health care professionals and advanced diagnostics, will be a challenge."

The growth of spending on physicians, 14.4 per cent, hospitals, 29.2 per cent, and drugs, 15.9 per cent, all slowed but continued to account for the largest share of health dollars.

In 2012, hospital spending will grow by 3.1 per cent and physicians by 3.6 per cent — the lowest rates of growth since the late 1990s, CIHI said.

The growth rate of drug spending will fall to 3.3 per cent this year down from four per cent last year, continuing a downward trend over the last decade. The decline is likely due to fewer drugs coming on the market, blockbuster drugs coming off patent and provinces introducing generic price controls.

Aging like a glacier

The report's authors called population aging a "modest cost driver overall," that accounted for 0.9 per cent of average annual growth in spending from 2000 to 2010. It was more significant in the Maritimes and Quebec than in Ontario and the West, they said.

"Aging is like a glacier not a tsunami," Rachlis said. "We have lots of time to prepare and adapt our health system."

Today's elderly are also healthier with longer life expectancies and less disability thanks to better diets and less smoking, he added.

Spending for seniors does increase with age, from $6,223 for those aged 65 to 69 to $20,113 for those aged 80 and older, the report noted.

In terms of international comparisons, Canada was in the top quartile for spending per person on health at $4,445 US, which was similar to other OECD countries in 2010.