Provincial and territorial governments have exceeded targets by 0.9 per cent
If healthcare spending continues to rise faster than the economy can keep up, Canada may experience higher taxes, more borrowing and pressure on other government programs.
An analysis of health expenditure statistics has revealed that overshoots in healthcare spending are a chronic problem, according to a new report by the C. D. Howe Institute, “There is No Try: Sustainable Healthcare Requires Reining in Spending Overshoots,” by William B.P. Robson, the Institute’s president and chief executive officer.
Data was mined from the annual National Health Expenditure reports released by the Canadian Institute for Health Information, and compared preliminary and later numbers to determine whether the government has historically been able to meet its health spending targets.
The study found that provincial and territorial governments have gone over their health budget targets by an annual rate of 0.9 per cent, with health spending on capital, drugs and miscellaneous services typically going over budget.
“Overshoots that large – across the country, on average over time – affect judgments about the fiscal sustainability of publicly funded healthcare,” Robson wrote in the report.
However, such overshoots can be avoided, the report stated. With regard to the data from 2014 to 2018, Robson observed that “the majority of jurisdictions undershot their public health budgets, six undershot their hospital budgets, five undershot their budgets for other institutions and for administration, and four undershot their budgets for physicians and for drugs.”
Two provinces consistently undershot their public health budgets from 2014 to 2018: New Brunswick and Manitoba.
According to Robson, the variation across provinces and territories suggests that they can learn from each other. Jurisdictions which have typically failed to meet budget targets are advised to pay attention to jurisdictions that have been successful in doing so.
Given that the government has generally under-predicted health spending, Robson said that, with regard to the proposed expansions in funding for drugs and perhaps also federally funded pharmacare, “[p]ast experience gives ample grounds for thinking that actual costs of a new program will exceed what advocates initially promise.”
