1.0 Overview. 1.1 Total Health Expenditure and Outlook for 2012 and 2013

Transcription

1 1.0 Overview 1.1 Total Health Expenditure 2011 and Outlook for 2012 and 2013 Total health expenditures in Canada were $200.1 billion in Expenditures are forecast to be $205.9 billion in 2012 and $211.2 billion in 2013, an annual increase of 2.9% and 2.6%, respectively. In the last decade, total health expenditure in Canada doubled from close to $100 billion to just more than $200 billion, largely due to investment by federal, provincial and territorial governments after a period of fiscal restraint from the early to mid-1990s (Figure 1). When adjusted for inflation, total health expenditures rose to $136.8 billion in 2011, which represents a 0.7% increase when compared to In constant dollar terms (1997 dollars), the rates of growth are 1.1% in 2012 and 0.9% in Figure 1: Total Health Expenditure, Canada, 1975 to

2 Trends 1975 to 2011 As the following figure illustrates, there have been three distinct phases in the growth of total health expenditure since 1975: a growth phase from 1975 to 1991; a short period of retrenchment and disinvestment from 1991 to 1996, when governments dealt with fiscal deficits; and a growth phase that averaged 4.0% per year from 1996 until 2011, during which time health care became a top priority for Canadians. During this latter period, major investments were made in health care, including spending on physicians, drugs, hospitals and advanced diagnostics. However, growth in total health expenditure has moderated since Figure 2: Total Health Expenditure, Annual Growth Rates in Constant 1997 Dollars, Canada, 1976 to 2013 Growth in Health Care Spending and the Economy When viewing Canada s recent health spending trends in the larger global context, Canada s experience parallels that of other countries in the Organisation for Economic Co-operation and Development (OECD). The most obvious similarity is the positive correlation between growth in health care spending and growth in the economy between 2000 and Figure 3 illustrates this by comparing Canada with other OECD countries in Almost all countries are above the 45-degree line; this means that, except for Iceland, the rates of increase in spending in OECD countries were above the rates at which their respective economies grew from 2000 to Canada is above the trend line of OECD countries, indicating that Canada invested more of its economic growth in health care than the OECD average. 4

3 Figure 3: Average Annual Growth in Total Health Expenditures per Capita and GDP per Capita, 2000 to 2011 s Country abbreviations are as follows: Australia, AUS; Austria, AUT; Belgium, BEL; Canada, CAN; Czech Republic, CZE; Denmark, DNK; Estonia, EST; Finland, FIN; France, FRA; Germany, DEU; Hungary, HUN; Iceland, ISL; Israel, ISR; Japan, JPN; Korea, KOR; Luxembourg, LUX; Mexico, MEX; the Netherlands, NLD; New Zealand, NZL; Norway, NOR; Poland, POL; Portugal, PRT; Slovak Republic, SVK; Slovenia, SVN; Spain, ESP; Sweden, SWE; Switzerland, CHE; Turkey, TUR; United Kingdom, GBR; United States, USA data was used for Australia, Japan and Mexico; 2008 data was used for Turkey. Organisation for Economic Co-operation and Development. OECD Health Data 2013 (June edition). Paris, France: OECD; Health Care Cost Drivers Overview In November 2011, CIHI published a special report, titled Health Care Cost Drivers: The Facts., which shed light on the underlying factors influencing health care costs. 1 The report examined growth in public-sector health spending from 1998 to 2008 in relation to macroeconomic factors such as fiscal capacity and growth in gross domestic product (GDP). As well, the major spending categories of hospitals, drugs and physicians were analyzed. The analysis used a common analytical framework that focused on price effects, demographics (population growth and aging) and other effects, such as volume and mix of services, technology and innovation. Public-sector health expenditure in Canada increased by 6.7% per year in the 11-year period from 2000 to 2011 (the latest period for which data is available). Forecasts for 2012 and 2013 show a slowing of this rate of growth, to 2.7% and 2.5%, respectively (Figure 4). 5

4 Price effects have been a significant driver of overall health spending. Since no ideal measure of inflation for the entire health care sector exists, economy-wide inflation was used for the purpose of the cost drivers study. General inflation averaged 2.6 percentage points of growth per year from 2000 to Population growth added on average 1.1 percentage points per year to public-sector health care spending, while population aging, at 0.9 percentage points per year, added even less to the total growth. Demographic factors, at a combined 2.0% (both population growth and population aging), have been a relatively modest contributor to the growth of 6.7% per year in health spending. However, both population growth and aging vary considerably among provinces and territories (see Figure 37 in Section 5.3). The other category includes all other factors as a residual, such as changes in technology, increases in service utilization and health-sector inflation above the rate of general inflation. Figure 4: Cost Driver Shares of Average Annual Growth in Public-Sector Health Spending, 2000 to 2011, Compared With Annual Growth in 2012 and 2013 s f: forecast. Age and sex data is available up to s National Health Expenditure Database, Canadian Institute for Health Information; gross domestic product, Statistics Canada. 6

5 Issues to Monitor in the Future Weaker prospects for economic growth combined with fiscal deficits and fewer savings from debt service charges could have a dampening effect on the future growth of public-sector health spending. As the percentage of the population age 80 and older increases, decision-makers will be faced with the challenge of determining the best ways to provide care for older adults. Price inflation has been a significant cost driver. Managing health-specific price inflation for core medicare goods and services, including doctors, nurses, other health care professionals and advanced diagnostics, will be a challenge. Health care system policy- and decision-makers will continue to be challenged to innovate and reform how health care is provided. The provision of health care in Canada continues to evolve. A few examples of the continuing transformation of the Canadian health care system include the introduction of interprofessional collaboration to provide team-based care, expansion in the scope of practice for some non-physician providers, increased focus on patient-centred care, emphasis on integration and continuity of care, shifting to ambulatory and home care, ensuring the affordability of drugs and providing incentives to health care providers to meet the needs of their patient populations. 7

6 1.2 Total Health Expenditure per Capita 2011 and Outlook for 2012 and 2013 Total health expenditure per capita in Canada increased to $5,803 in 2011, continuing the trend since 1998, when health expenditure growth outpaced population growth and inflation. Forecasts for 2012 and 2013 are expected to be $5,902 and $5,988 (Figure 5). Figure 5: Total Health Expenditure per Capita, Canada, 1975 to

7 Trends 1975 to 2011 Total health expenditure per capita in Canada in constant (1997) dollars declined by an annual average rate of two-tenths of one percent during the early to mid-1990s. During subsequent years, the average growth rate rebounded. Total spending on health care per capita increased by an average rate of 2.9% a year from 1996 to 2011 (Figure 6). The rates of increase after adjusting for inflation and population growth are expected to have declined by 0.1% in 2012 and 0.2% in Figure 6: Total Health Expenditure per Capita, Annual Growth Rates in Constant 1997 Dollars, Canada, 1976 to

8 1.3 Total Health Expenditure and Economic Growth 2011 and Outlook for 2012 and 2013 Total health expenditure in Canada was 11.4% of GDP in It is forecast to be 11.3% in 2012 and 11.2% in 2013 (Figure 7). During the past decade, total health expenditure increased by an average of $9.2 billion yearly. Similar to total health expenditure, GDP also grew during the same time period, with the exception of 2009 due to the economic downturn. The decline in GDP in 2009 is reflected in a higher total health expenditure to-gdp ratio for that year. In 2013, GDP is expected to grow faster than health expenditures, resulting in a lower total health spending to-gdp ratio than in 2011 and Figure 7: Total Health Expenditure as a Percentage of Gross Domestic Product, Canada, 1975 to 2013 As in other G7 countries, growth in Canada s health care spending per capita has exceeded economic growth over the last decade, resulting in an increasing share of GDP devoted to health. Between 2000 and 2011, the health spending to-gdp ratio in Canada increased from 9.2% to 11.4%. Similar growth was seen in other countries. For example, health spending as a percentage of GDP in the U.S. increased from 13.7% to 17.7% in the same period. The ratio in France went up from 10.1% to 11.6%, and in the U.K. it increased from 7.0% to 9.4%. 10

9 Trends 1975 to 2013 Total health expenditure as a proportion of GDP was 7.0% in During the late 1970s, total health expenditures increased at rates that were almost identical to the rate of growth in GDP. The two rates of growth diverged during the early 1980s. GDP fell during the 1982 recession and did not recover to its pre-recession level until 1984 (Figure 8). Health expenditure continued to grow during this time. Consequently, the ratio of total health expenditure to GDP increased sharply, from 6.8% in 1979 to 8.3% in Figure 8: Total Health Expenditure and Nominal GDP, Annual Growth, Canada, 1976 to 2013 See Table A.1 and Appendix A.1. s National Health Expenditure Database, Canadian Institute for Health Information; gross domestic product, Statistics Canada. Canada experienced another recession from 1990 until The ratio of total health expenditure to GDP increased significantly, reaching 10.0% for the first time in 1992 (Figure 7). Total health expenditures then grew more slowly than GDP between 1993 and 1997 (Figure 8); consequently, the health-to-gdp ratio fell each year in that period until it reached 8.9% in Health expenditure grew faster than or close to GDP from 1998 to 2010 (except 2007), with the result that the health to-gdp ratio has trended upwards for the last decade, finally peaking at 11.6% in both 2009 and This ratio declined to 11.4% in