Health Care Financing in Canada

Pols 321 Lecture 4

 Topics
• Federal-Provincial Financial Arrangements
• Distribution of Health Care Expenditures
• Reform Trends
Federal-Provincial Financial
Arrangements
EPF: The beginning of the end...
• effectively ended the 50/50 cost sharing
arrangements
– put hospitals, medical care and post secondary
education under one funding formula
– combination of tax points and cash (tied to growth
in GNP and population)
– federal government reduced cash transfers by
GDP -2 in 1986/87, GDP -3 in 1989/90, and froze
the transfers in 1990/91
 Canada Health Act
• Ottawa introduces the Canada Health Act
– retains the five principles
– consolidates the two previous pieces of
legislation
– penalizes the provinces for allowing extra-
billing by reducing EPF payments
– came before an election
 CHST
• rolls CAP and EPF into a single block fund
• places a ceiling for 1996/97 of $ 26.9
billion
• 1997/98 and beyond to be determined
through negotiations
• CHA principles and CAP residency
requirements continue to apply
 CHST ( $ billion)
Year Total Tax Cash Additive Cumul.
entitl point entitl Cash Cash
value reductns reductns
1995/96 29.7 11.2 18.5 - 0.0
1996/97 26.9 11.9 15.0 3.5 3.5
1997/98 25.1 12.6 12.5 6.0 9.5
1998/99 25.8 13.3 12.5 6.0 15.5
1999/00 26.5 14.0 12.5 6.0 27.5
2001/02 27.8 15.3 12.5 6.0 33.5
Distribution of Health Care
Expenditures
 Health Expenditure Percentage GDP, OECD

18
15.3
16
14
10.6
Percentage

12 10
10 8.9
8.2
8
6
4
2
0
US Germany Canada Finland OECD
 Public Health Expenditures as a Proportion of Total
Health Expenditures

100
BC
80
Percentage

Quebec
60
Alberta
40
NFLD
20
Canada
0
1975 1980 1985 1990 1995 2000 2005
Year
 Total Health Expenditures as a Percentage of GDP

35
30 Alberta
25
Precentage

Quebec
20
NFLD
15
10 BC
5 PEI
0 Nunavit
1980 1985 1990 1995 2000 2005 Canada
Year
 Health Expenditures in Canada by Public Source

100

80
Provincial Government
Percentage

60 Federal Direct
40 Municipal
Social Security Funds
20

0
1975 1980 1985 1990 1995 2000 2005
Year
 Total Health Expenditures as a Proportion of Total
Provincial Government Programs

50
Quebec
40
NFLD
Percentage

30
Alberta
20
BC
10
Canada
0
1975 1980 1985 1990 1995 2000 2005
Year
 Public vs. Private
90
80
70
60
50 Public
40 Private
30
20
10
0
 Private Sector Health Expenditures as a Proportion of
Total Provincial Health Expenditures

40
Alberta
30
Percentage

BC
20 Quebec

10 NFLD
Canada
0
1976 1980 1985 1990 1995 2000 2005
Year
 Table 3: Percentage of Total Health Expenditures by Category

Hospital Other Doctors Other Drugs Capital Public Other

Instit. Prof. Health
1975 44 9.1 15.0 7.3 10.2 4.4 3.8 6.1
1985 39.8 10.1 15.1 8.3 10.7 4.6 4.3 7.1
1992 37.1 9.7 14.9 8.5 13.3 3.2 4.6 8.7
1996 34.2 10.0 14.4 8.8 14.4 2.5 5.0 10.7
2003 30.0 9.5 12.9 11.9 16.2 4.6 6.5 8.4
2006 28.4 10.3 13.2 10.7 16.7 4.8 6.1** 6.2

** includes “administration”
 Table 4: Public and Private Percentage Share of Health
Expenditures by Category
Hospital Other Doctors Other Drugs Capital Public Other
Instit. Prof. Health

1975 94.1/5.9 70.8/29.2 98.5/1.5 15.0/85.0 26.0/74.0 70.3/29.7 100.0 49.4/50.6

1985 90.5/9.5 74.5/25.5 98.6/1.4 13.8/81.7 37.2/62.8 77.5/22.5 100.0 54.6/45.4
1992 90.8/9.2 72.3/27.7 99.1/0.9 17.1/82.9 39.9/60.1 75.3/24.7 100.0 56.2/43.8
1996 87.7/12.3 68.1/31.9 99.0/1.0 14.3/85.7 35.2/64.8 72.4/27.6 100.0 69.9/30.1
2003 91.6/8.4 72/28 98.9/1.1 10/90 36.7/63.3 76.5/23.5 100.0 65/35
2006 90.7/9.3 75.2/24.8 98.5/1.5 7.0/93.0 38.5/61.5 71.7/28.3 100.0 80.7/19.3
 Registered Nursing Workforce,
                                                                                                                                                                                                                 

Canada, 1980 to 2007

Notes
In 1988, the decrease is largely attributed to a substantial increase in the number of employment status
Not Stated records in the Ontario data for that year.
In 2000, the increase is partially attributed to the identification of comparatively fewer duplicates in the
Ontario and Quebec data that year.
In 2003, the increase is partially attributed to methodological changes in the submission of data that
year.
Source
Regulated Nursing Database, Canadian Institute for Health Information
 Registered Nursing Workforce, by Jurisdiction and Canada,
2003 to 2007

%
  2003 2004 2005 2006 2007 Change2003-
2007
N.L. 5,430 5,452 5,496 5,515 5,574 2.7%
P.E.I. 1,373 1,377 1,443 1,428 1,435 4.5%
N.S. 8,498 8,602 8,733 8,790 8,843 4.1%
N.B. 7,186 7,375 7,526 7,680 7,726 7.5%
Que. 62,494 63,455 63,827 64,014 64,955 3.9%
Ont. 85,187 86,099 89,429 90,061 90,978 6.8%
Man. 10,034 10,628 10,811 10,902 10,825 7.9%
Sask. 8,503 8,481 8,549 8,480 8,669 2.0%
Alta. 24,037 25,600 26,355 26,752 27,527 14.5%
B.C. 27,711 28,289 27,814 28,840 30,059 8.5%
Y.T. 290 283 302 324 322 11.0%
N.W.T./Nun. 672 930 957 1,033 1,048 56.0%
Canada 241,415 246,571 251,242 253,819 257,961 6.9%
Licensed Practical Nursing Workforce, by Jurisdiction and Canada,
2003 to 2007

%
  2003 2004 2005 2006 2007 Change2003-
2007
N.L. 2,719 2,710 2,698 2,639 2,598 -4.5%
P.E.I. 619 628 606 599 623 0.6%
N.S. 3,022 3,058 3,127 3,174 3,160 4.6%
N.B. 2,429 2,556 2,633 2,646 2,734 12.6%
Que. 14,831 15,472 16,293 17,104 17,492 17.9%
Ont. 25,730 24,467 24,458 25,084 26,126 1.5%
Man. 2,417 2,415 2,590 2,652 2,671 10.5%
Sask. 2,056 2,131 2,194 2,224 2,381 15.8%
Alta. 4,766 5,051 5,313 5,614 5,986 25.6%
B.C. 4,391 4,811 4,884 5,412 5,791 31.9%
Y.T. 60 53 56 60 59 -1.7%
N.W.T. 98 91 101 92 88 -10.2%

Canada 63,138 63,443 64,953 67,300 69,709 10.4%

Nurse Practitioner Workforce, by Jurisdiction and Canada, 2003 to
2007

  2003 2004 2005 2006 2007

N.L. 55 61 66 89 96
P.E.I. - - - - *
N.S. 23 30 37 61 72
N.B. 6 14 19 24 29
Que. - - - 1† 1†
Ont. 494 536 590 639 731
Man. - - * * 31
Sask. - 42 74 88 99
Alta. 73 106 130 156 176
B.C. - - * 35 50
Y.T. - - - - -

N.W.T./Nun. 5 12 19 16 42

Canada 656 801 943 1,129 1,346

Reform Trends
 Trends: Hospitals (1984-91)
• Total number of beds declined from 7.0 to
6.5/1000 (2.9 in 2007)
• Alberta - government targeted 2.4/100.
Capital Health actually achieved
1.4(1.6)/1000.
 Trends: Hospitals (cont.)
• Nationally (1986/87-1994-95)
– 1994/95 - 901 public, 22 private and 55 federal
– total approved beds: 156,547 (98% public)
– Number of hospitals fell by 14 % or from 6.6
4.1 beds/1000 (11%). (actually a 30% declined
in staffed beds) – 2.9 in 2007
– Average annual growth in operating expenses
was 8 % (-2.4 % between 1991/92 and
1994/95)
 Trends: Hospitals (cont.)
• Outpatient vs. Inpatient (1986/87,1993/94)
– outpatient days: increased by 15%
– inpatient days declined by 17%
– day surgery increased by 37%
– visits to emergency wards increased by 1%

– Alberta: ratio of outpatient visits to inpatient

days increased by 130%
 Trends: Hospitals (cont.)
• Factors contributing to growth in costs:
– wage and price inflation (national and sector
specific
– economic downturn
– unionization
– professionalism
– increasing population aging
– rising costs per admission (intensity of
servicing/technology, decreasing productivity)
 Trends: Physicians (1984-1991)
• # increased at at annual rate of 2%
• cost of services/patient increased by 10%
annually (1979/80, 1990/91)
• 10% reduction in medical school enrollment
• increasing service intensity
• declining utilization
• cost per patient increased at 10%/annum
(50% attributable to GPs)
 Trends: Pharmaceuticals
(1987/91)
• Total expenditures increased by 55.(%>
10%/annum (not including drugs dispensed
in hospitals)
• new drugs are more costly than existing
drugs
• cost or volume?
• Price, volume and quantity have all
increased
 Summary
• Cost drivers:
– economy-wide wage and price inflation
accounts for 50%
– population growth 10%
– aging 5 %
– wage and prices (health) 20%
– inpatient/outpatient
– higher service intensity 5%
– lower productivity 10%
 Summary
• Proportion of private vs. public has been
relatively stable over time although there is
a definite downward trend in percentage of
public expenditures
• Definite upward trend in percentage of total
public expenditures devoted to health care
• Upward trend in health expenditures as a
percentage of GDP
 Internet Sources
• http://secure.cihi.ca/cihiweb/dispPage.jsp?c
w_page=home_e

• http://www.fin.gc.ca/access/fedprov-eng.as
p