Health care spending could consume half of provincial budgets in Canada by 2030 – study

By on June 1, 2016

(ShutterStock image)
(ShutterStock image)

VANCOUVER – Canada’s provincial governments have to spend much more on health care over the next 20 years, triggering higher taxes, larger deficits, and reduced spending on other services, said a new study released on Tuesday.

In every province, health care spending is expected to consume an increasing portion of total provincial government program spending – growing to an average of 47.6 percent in 2030 from 40.6 percent in 2015 and 34.4 percent in 1998, said the study, released by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Given historical trends, expectations regarding inflation in the future, and an aging population, the status quo on health care spending is not sustainable,” said Bacchus Barua, study co-author and senior economist at the Fraser Institute’s Center for Health Policy Studies.

In Canada, provincial governments shoulder significant financial responsibility for funding health care services along with other public programs such as education and social services.

Of these, health care is, by far, the single largest budget item for every province in Canada, ranging from 34.5 percent of total program spending in Quebec to 44.6 percent in Nova Scotia in 2015, the report showed.

The study estimates that by 2030, five provinces will see health spending grow close to or exceed 50 percent of total program spending.

“The rate of increase expected in health care spending is clearly unsustainable. If governments continue down this path, it will necessitate changes in other policies – either reductions in other spending to accommodate the increases in health care spending, or higher taxation, higher deficits and debt, or some combination of these three,” Barua said.

“Changes are clearly needed in Canada’s health care system in order to ensure the sustainability of not only health care, but also other priority areas of spending,” Barua said.