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There is No Try: Sustainable Healthcare Requires Reining in Spending Overshoots

William Robson
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William Robson: C.D. Howe Institute

C.D. Howe Institute Commentary, 2020, issue 566

Abstract: The Canadian Institute for Health Information’s annual National Health Expenditure (NHEX) is a vital source of data on how much Canadians and their governments are spending on healthcare generally, as well as on specific categories. Because the NHEX reports give both preliminary numbers based on government projections and revised numbers for past years based on actual spending, they also shed light on governments’ ability to hit their healthcare spending targets. Comparing the preliminary and later numbers in successive NHEX reports over two decades shows that provincial and territorial governments have tended to overshoot their healthcare budget targets by 0.9 percent annually. Spending on drugs, miscellaneous services and capital in particular has tended to overshoot. With growth in Canada’s gross domestic product and governments’ tax bases likely to average 3.5 percent to 3.8 percent in the coming years, overshoots of 0.9 percent annually are material to judgments about the fiscal sustainability of publicly funded healthcare. At the same time, the variation in experience in different categories of spending and across jurisdictions gives grounds for optimism about the future. During the 2014-2018 period, which featured the historically typical average 0.9 percent annual overshoot across the country, 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. New Brunswick and Manitoba undershot over the entire period, and Newfoundland and Labrador also stood out as a province that budgeted for, and achieved, modest growth in healthcare spending. This variation across the country suggests that provinces and territories can learn from others’ experience when it comes to holding the line on spending, generally, and shifting care to more cost-effective channels. Every lesson in holding the line on healthcare spending matters. Budgeting sustainable increases in healthcare spending is helpful, but only if actual spending reflects those targets will publicly funded healthcare stay in line with Canadians’ long-term capacity to pay for it.

Keywords: Health Policy; Health Financing and Insurance (search for similar items in EconPapers)
JEL-codes: H75 (search for similar items in EconPapers)
Date: 2020
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