The growth in health spending seen during the first two years of the COVID-19 pandemic will slow dramatically in 2022, predicts a report by the Canadian Institute of Health Information.
Total health spending in Canada is still expected to increase by 0.8 percent this year, although it is much lower than the 7.6 percent growth seen in 2021 and 13.2 percent in 2020.
The country’s health spending, including public and private spending, is projected to be $331 billion in 2022, or $8,563 per Canadian dollar, and about 12 percent of the country’s GDP for the year, the annual report released Thursday said.
Chris Kuchiak, manager of health spending at the Canadian Institute for Health Information, said COVID-19 was the main driver of growth in health spending over the past two years.
But that is changing in 2022.
Kuchiak said the return of health care services that were postponed during the pandemic and demographic changes such as population growth and an aging population are acting as drivers of spending growth.
“I liken it to a horse race where in the last two years, COVID was the driving expense front. He has fallen back into the pack,” he said.
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According to the report, the COVID-19 response fund accounts for 4.4 per cent of the total health expenditure in 2022, while it was around 10 per cent in 2021.
The report predicts that federal, provincial and regional governments will spend $14.5 billion in 2022 to tackle COVID-19. In comparison, the cost of the COVID-19 response is $32.5 billion in 2021 and $29.3 billion in 2020.
Before the pandemic, the increase in health spending averaged four percent per year.
“In 2022, in fact it is to level off the significant increase in spending over the past two years. But we are not seeing a return to pre-pandemic levels of spending,” Kuchiak said.
The slow growth comes at a time when the health care system is facing unprecedented challenges with emergency department closures and staff shortages across the country.
The report said that spending on hospitals, doctors and medicines combined accounted for more than 50 percent of health spending across Canada in 2022.
Kuchiak said the slow growth in health spending reflects the economic situation in Canada, adding that health spending growth slowed in the early 2010s after a recession in 2009.
“We are entering an era where people are talking about slow economic growth. “When the economy slows down, the fiscal position of the government worsens and there is a tendency to have more budget restrictions (on) health expenditure.”
CIHI’s national health expenditure estimates are based on public and private sources, including all three levels of government, insurance companies and research firms.