The Canadian Institute for Health Information (CIHI) release
of the National
Health Expenditure Trends 2021 provides a much awaited first macro snapshot
of what happened to Canadian health spending during the COVID-19 pandemic. Canada is expected to spend a new record of
$308 billion on health care in 2021 — $8,019 per Canadian. It is also anticipated
that health expenditure will represent 12.7% of Canada’s gross domestic product
(GDP) in 2021, following a high of 13.7% in 2020. A new feature of the numbers this year is the
government COVID-19 response funding which in 2021 constitutes 7% of total
health spending. The COVID-19 response
funding includes money for treatment costs, testing and contact tracing,
vaccination, medical goods, and other related expenses and is a separate
category from the standard ones used.
Once one starts to
examine and analyze spending both including and excluding the COVID-19
response spending provided, as well as adjusting for inflation and population
growth, the picture looks more variable depending on the categories examined, the
financing sector considered, and the province involved. For example, private sector health spending
was hit quite hard and categories such as other professionals and hospital
spending also saw declines in real per capita spending.
When provincial-territorial government health spending is
examined, their real per capita total health spending in 2020 rose 8.1 percent
but once the COVID-19 response is factored out their spending declined by about
one percent though it is also expected to rebound in 2021. Hardest hit in provincial-territorial health
spending in 2020 in terms of percentage declines in real per capita spending: physicians
(-5.8) other professionals (-6.1), drugs (-2.3) and hospitals (-0.5). Meanwhile, public health grew 4.1 percent,
other institutions (including long-term care) grew 1.2 percent while capital
spending grew 10 percent.
These results are not unexpected given the decline in
surgeries and physician visits brough about by the pandemic. The closing of
outpatient departments and postponing of medical visits and procedures during
the height of the pandemic meant a reduction in some aspects of health service
provision and health spending. According to CIHI’s own
analysis of COVID-19’s effect on hospital care services, from March to
December 2020, overall surgery numbers fell 22% compared with the same period
in 2019, a drop of 413,000 surgeries.
Moreover, real per capita spending growth net of the COVID response
funding also varied across provinces in 2020 (See Figure 1). While Newfoundland and Labrador, Prince
Edward Island, New Brunswick, Quebec, Manitoba, Saskatchewan, and Alberta saw a
decline in real per capita spending net of COVID-19 response funding, Ontario,
British Columbia, and Nova Scotia saw small increases with Ontario the largest
at 1.2 percent. New Brunswick, Quebec and Alberta saw the biggest declines in
real per capita health spending at -3.3, -3.5 and -3.6 percent respectively. This demonstrates that during the health
system disruption of the pandemic, the decline in service provision at least as
measured by real per capita spending, was greater in some provinces relative to
others.
In 2019, Ontario’s total provincial government health
spending was $63.1 billion and in 2020 including the COVID-19 response funding
it soared to $72 billion. In 2021 it is
expected to reach $75.2 billion including the COVID funding response. Even when
the COVID-19 response is removed, Ontario still saw increases in health
spending with provincial government health spending net of COVID forecasted at $67.4
billion in 2020 and $71.7 billion in 2021.
Moreover, these increases continue once adjustments are made for
population and inflation.
Figure 2 plots real per capita provincial government health
spending in Ontario in $2020 from 1975 to 2021 calculated from the CIHI data. Spending growth moderated substantially after
2010. Whereas the average annual growth
rate of real per capita provincial government health spending from 2000 to 2009
averaged 3.1 percent, for the period 2010 to 2019 it grew below 1 percent.
However, when COVID-19 spending is factored in, real per capita provincial
government spending grew 8.1 percent in 2020 and 2 percent in 2021. When you factor out the COVID-19 response,
the growth rates are 1.2 percent and 3.9 percent respectively.
Finally, Figure 3 looks at real per capita provincial government
health spending growth by major categories.
Hospitals declined in 2019 by 1.2 percent but then grew at 2.1 percent
in 2020 and can be expected to grow 1 percent in 2021. Other institutions (including long-term care)
also shrank half a percent in 2019 but then grew 4.4 percent in 2020 and is
expected to grow 18.6 percent in 2021.
Physician spending grew 1.8 percent in 2019, then shrank by half a
percent in 202 and is expected to rise 1.7 percent in 2021. Other professionals (e.g., provincially
funded dental and optometry) fell 2 percent in 2020 but can be expected to grow
6 percent in 2020. Provincial government drug spending in real per capita terms
fell in both 2019 and 2020 but is expected to grow 9 percent in 2021. Public health saw increases close to 10
percent in each of the three years reported in this chart. Administration on the hand has shrunk in each
year including an 18 percent drop in 2020.
So, the impact of the pandemic on provincial government
health spending in Ontario after the COVID-19 response has been factored out
appears to be a renewed focus on making health a priority at least for the
immediate future. Whereas pre pandemic
the focus appears to have been on restraining expenditure growth, the stops are
off for the time being. Whereas real per
capita spending growth was under one percent for the 2010s, there is a reversal
underway with major increases in other institutions (mainly long-term care), other
professionals and drugs.
