Rising health expenditure and aging populations are linked
in policy discussions of health spending. With the health expenditure to GDP
ratio in Canada now
up to 12.7 percent and per capita health care costs rising with age, the
conventional wisdom is that the sustainability of provincial government health
care systems is under threat from a grey tsunami as the last few cohorts of
the baby boom generation turn 65. While
aging is a key factor in rising health care costs, it only accounts for about half
of the increase over time with factors such as wage/cost inflation and
rising utilization rates being other important factors in the growth. More importantly, when it comes to aging, it
is a little observed fact that per capita health expenditures in the over 75 age
categories have been seeing moderation and declines.
Figure 1 plots real per capita provincial/territorial government
health spending by age for three years – 1998, 2011 and 2023 using data from
the CIHI National Health Expenditures.
As is expected, expenditures are approximately u-shaped with a decline
up to the 1-4 age categories, relatively flat profiles until the mid to late 40s and increases
that accelerate after age 65. In 2023,
the most recent year available, provincial-territorial governments spent
$19,875 per capita (in 2025 dollars) for those aged less than one year which
then dropped to $2,377 by the age 10-14 category. This rises very slowly to
reach $3,651 by the age 40-44 category and then rises to reach $10,079 in the
age 65-69 category and hits $32,483 for the 85-89 age category. This fits into
the conventional view that health care costs rise with age and therefore aging
populations will create a sustainability challenge for provincial government
health systems.
However, if one looks more closely at the diagram, one can
see that the orange line for 2011 is always above the blue line for 1998. This
is to be expected. As populations age,
the health spending age profile rises with age but over time cost factors are
also shifting the relationship upwards.
However, when one compares 2023 with 2011, note that there are segments
of the green 2023 line that are below the 1998 line – namely in the late 20s
and early 30s and in the 80 to 89 age categories.
That is between 2011 and 2023, real per capita provincial government
health spending declined in these age categories.
Figure 2 looks at the percent change in real per capita
provincial government health spending from 1998 to 2011 and 2011 to 2023. Except for the <1 age category, growth
rates declined in all age categories over time and sometimes by quite a
bit. For example, between 1998 and 2011,
real per capita provincial/territorial government health spending grew by 46
percent for those aged 35-39 but from 2011 to 2023 it only grew 8.9
percent. However, over the same two
periods, for those aged 25-29, and 30-34, real per capita expenditure growth went
from 33.3 percent to -4.5 percent and 41.9 percent to -5.5 percent
respectively. Even more interesting, for
those aged 75-79, the respective growth rates were 26.7 percent for 1998 to
2011 and 1.4 percent from 2011 to 2023. However,
for those aged 80-84, the growth rate went from 24.1 percent to -2.9 percent
and for 85–89-year-olds from 11.3 to -4.6 percent.
Despite the talk of unsustainable health spending, the
growth rates in health spending have fallen dramatically over time and for some
age categories there have been declines.
What is of more interest is why there are drops in real per capita spending for
the 25-34 age groups and the 80 to 89 groups?
Are these demographic groups becoming more healthy over time and require fewer health services? Have provincial government restraint measures
been borne disproportionately by these age groups? Is the falling birth rate
the reason meaning that there are fewer women of child bearing age facing
complications from birth a factor in the 25-34 age group decline? Is the onset of Medically Assisted Death
(MAID) in Canada in 2016 a factor in the decline for 80–90-year-olds? Or is
there simply a problem accessing primary care that is more prevalent in these
age groups?
These are all important questions. While seeing per capita health spending fall and generating potential sustainability improvements for provincial health systems are welcome, it is important to know the
reasons why this is happening.
