TORONTO, April 6 /CNW/ - The amount Canadians spend on healthcare is set
to rise rapidly over the next two decades and Canadians need to face up
to tough choices to deal with this "spending disease," according to a
new C.D. Howe Institute study by David A. Dodge, former Governor of the
Bank of Canada, and Richard Dion, a former economist at the Bank of
Canada. The study, Chronic Healthcare Spending Disease: A Macro Diagnosis and Prognosis, examines the trajectory of total healthcare spending - public and
private - in Canada and the policy choices Canadians must make in
The authors estimate the extent to which healthcare spending is going to
absorb a greater fraction of income than Canadians have experienced to
date under two scenarios: a baseline scenario drawn from historical
experience, and an optimistic scenario, which assumes an unprecedented
improvement in the efficiency and effectiveness of the healthcare
system and large improvement in potential economic growth. Among their
In the base case, healthcare spending rises from 12 percent of GDP in
2009 to 19 percent in 2031.
In the optimistic case, with new policies and cost-reducing technologies
bringing down the cost of healthcare, the rise in spending is more
limited than the baseline, but significant nonetheless, because it
would bring the spending ratio to over 15 percent of GDP by 2031.
In the base case, the annual increase in nominal healthcare spending per capita is set to rise from about
$250 in the last decade to $675 in the 2020s.
This would raise total annual spending per capita after inflation in the
base case from $4,900 per head in 2009 to $10,700 in 2031.
Canadians must choose some combination of: 1) a sharp reduction in
public services, other than health care; 2) increased taxes to finance
the public share of healthcare spending; 3) increased individual
spending on healthcare services currently insured by provinces, through
some form of co-payment or through delisting of services that are
currently publicly financed; 4) or a degradation of publicly insured
healthcare standards - longer queues, and services of poorer quality.
For the study click http://www.cdhowe.org/pdf/Commentary_327.pdf
SOURCE C.D. Howe Institute
For further information:
David A. Dodge, Senior Advisor, Bennett Jones LLP; Richard Dion, Senior Business Advisor, Bennett Jones LLP; Colin Busby, Senior Policy Analyst, C.D. Howe Institute; 416-865-1904; email: email@example.com