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• Total health expenditures in Canada are projected to reach $372 billion, or $9,054 per Canadian. 
• Total health expenditures increased by 1.7% in 2022 and 4.5% in 2023, and are expected to rise 5.7% in 2024. The rate of growth in 2024 is comparable to that seen between 2008 and 2010, when health care spending rose an average of 5.9% per year. The growth rate in 2024 is also higher than the annual average from 2011 to 2019, when health expenditures increased by 3.9% per year. 
• Higher growth in health care spending may be sustained due in part to the recent rapid increase in population. Also, the overall economy may impact health-sector prices as new provider agreements are negotiated. 
• ºìÁì½í¹Ï±¨ care remains a policy priority for federal, provincial and territorial governments. In 2023, federal and provincial/territorial governments agreed to a new arrangement that will provide the provinces and territories with $196.1 billion in additional health funding over a 10-year period.

Hospital expenditures account for the largest portion of health care spending, expected to represent 26% of total health expenditures in 2024. Hospital spending is projected to grow at a rate of 6.1% in 2024.

According to 2022–2023 data from CIHI’s Canadian MIS Database — which contains financial and statistical information on the day-to-day operations of public hospitals, other health facilities and regional health authorities across Canada — the largest single expense in Canadian hospitals is employee compensation. On average, employee compensation accounts for about two-thirds of total hospital costs. Total employee compensation reached $45 billion in 2022–2023, a 6.7% increase from the previous year, with higher expenses for overtime, sick leave and use of agency workers due to the COVID-19 pandemic. This growth resulted in the number of full-time equivalents (FTEsFootnote ii) rising by about 9,000. Overtime compensation expenses surpassed $1 billion in 2022–2023, a 21% increase from the year before. Sick leave expenses also grew to over $700 million, reflecting a 12% increase from the previous year. Spending on agency workers reached $1.4 billion in 2022–2023, a 54% increase over 2021–2022.

Supply and demand drivers underpin growth in hospital expenditures. Hospitals — with their existing infrastructure — face continued demand due to population aging and growth. Statistics Canada reported a record population increase of 1.3 million people (3.2%) in 2023, the highest since 1957. Surges in health care job vacancies, as noted in CIHI’s The state of the health workforce in Canada, 2022, may continue to exert pressure on employee compensation expenses.

Physician expenditures will account for 13% of total health expenditures in 2024. Spending on physician services jumped by 8.7% in 2022 and 7.5% in 2023, in part due to catching up on demand from the pandemic. Physician spending is projected to increase by 4.4% in 2024.

The number of physicians continues to grow, according to CIHI’s A profile of physicians in Canada, 2023, and continued increases in the need for physician services are expected. Both of these will contribute to a rise in physician expenditures in the future.

Total drug expenditures are projected to increase by 3.8% in 2024. Substitution of generic for brand name drugs continues to have a dampening effect on drug spending growth. However, the new pharmaceutical pipeline for specialty drugs may be a stronger driver in the future. For example, glucagon-like peptide-1 (GLP-1) analogues, used to treat diabetes and obesity, have been top contributors to growth in spending.
 

Historically, Canada’s health care spending has often grown at the same rate as or faster than the overall economy. In the past 2 years, total health expenditure has increased more rapidly than the economy, resulting in an increase in the health expenditure–to-GDP ratio. In 2024, health care spending is expected to increase by 5.7% while economic growthFootnote iii is projected to be 3.7%. As a result, total health expenditure is estimated to represent 12.4% of Canada’s GDP. Excluding the 2020 and 2021 pandemic period, this is the highest ratio ever reached.

Announced spending commitments by federal, provincial and territorial governments come at a time when Canada’s economic growth is expected to be slower. Therefore, health care spending growth could outpace economic growth over the next few years. This would be comparable to the period from 2000 to 2009, when the health expenditure–to-GDP ratio increased from 8.9% to 11.6%, respectively.

Canada is above the Organisation for Economic Co-operation and Development (OECD) average in terms of per-person spending on health care. Among 38 countries in the OECD in 2022 (the latest year for which comparable data is available), the United States again had the highest spending per person on health care (CA$15,113). Canada’s per capita spending on health care was among the highest internationally, at CA$8,119 — less than in Sweden (CA$8,314) and France (CA$8,212), and more than in Australia (CA$8,073) and New Zealand (CA$7,463).

In 2022, Canada’s share of health care spending from private sources was 28.8%, exceeding the OECD average of 25.3% and placing Canada in the top quarter of OECD countries. Private-sector spending is composed mainly of out-of-pocket spending and private, voluntary health insurance payments. Compared with similar OECD countries, Canada ranks higher than Germany (13.3%), France (15.3%) and New Zealand (19.2%).

The public–private split of health care spending was stable from 1999 to 2019, with the private sector’s share remaining around 30%. The private share dropped in 2020 due to increased public spending in response to the COVID-19 pandemic and is returning to pre-pandemic levels.

Since the pandemic, health care systems in Canada continue to evolve. Several emerging factors may impact health expenditures in the future.

• Changes in government policy: The federal government has introduced the Canadian Dental Care Plan (CDCP) and Bill C-64 (An Act Respecting Pharmacare). The CDCP aims to provide dental coverage to uninsured Canadians who meet certain criteria. The pharmacare act aims to subsidize the cost of selected contraceptive and diabetes treatment products (with a view to creating a publicly funded national pharmacare program). The goal of these policies is to cover Canadians’ out-of-pocket medical expenses. These policies could raise total health expenditures as more patients, who previously avoided these services due to cost, start using them. These policies may also change the expenditure composition, with funding shifting from out-of-pocket payments to coverage through the public sector.
• Expansion of publicly funded, privately delivered health care: Provinces and territories are increasingly funding various surgeries at private clinics. Although these services are publicly funded, there is potential for future impacts on the public–private shares of spending.
• Private-sector spending: Total private-sector health expenditures are projected to increase by 6.2% in 2023 and 6.1% in 2024. Growth may continue due to rising demand for private-sector health care goods and services, including prescribed drugs and dental, vision and home care.

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