SUMMARY
Data and Method
This annual report measures the fiscal burden of provincial government spending on healthcare across Canada using the following metrics: Total Provincial Government Health Expenditure (GHEx), Total Revenue All Sources (TRev), Total Federal Transfers (TFed), Debt Interest Expense (DebtEx), Total Provincial Tax Revenue (PTaxRev), Total Provincial-Source Revenue (TPSRev), Total Available Revenue (TARev), Total Available Provincial-Source Revenue (TAPSRev), and Gross Domestic Product (GDP). Data for this edition were sourced from the Canadian Institute for Health Information’s (CIHI) National Health Expenditure Database and Statistics Canada covering the five calendar years from 2011 to 2015.
Metrics
Across Canada in 2015, provincial government health spending averaged 43% of total available revenue (including federal transfers and net of debt interest expenses), ranging from 32% in Quebec up to 57% in Newfoundland and Labrador. Across Canada in 2015, the fiscal burden of provincial government health spending averaged 59% of total available provincial-source revenue (excluding federal transfers and net of debt interest expenses), ranging from 40% in Quebec up to 75% in Newfoundland and Labrador. In 7 of 10 provinces, the fiscal burden of provincial government health spending decreased over the five (5) year period 2011 to 2015. Over the same period, in 8 of 10 provinces, government health spending grew at the same pace or slower than GDP. In 9 of 10 provinces, tax revenue increased 9% faster on average than GDP, ranging from 4% faster than GDP in British Columbia and Manitoba to 21% faster than GDP in Newfoundland and Labrador.
Policy Options
Across all provinces healthcare accounts for a large share of the fiscal burden borne by taxpayers. It is also evident that without federal transfers, the fiscal strain from health spending would reach crisis levels in most provinces. Since 2010, healthcare’s share of available revenue has been eased by a combination of spending restraint and increased tax revenue. The fiscal sustainability of our health system could be improved, with less resort to rationing, tax hikes or federal transfers, by introducing economic incentives to discourage unnecessary demand for medical care, encourage efficient supply of medical goods and services, and moderate medical price inflation. Modest user charges for publicly funded medical goods and services are a fiscally attractive and socially manageable supplementary funding mechanism for Canada’s healthcare system.
