Health care expenditure
In 1994, total health expenditure (in current dollars) was CAD 72.5 billion or CAD 2478 per
capita. Health expenditure accounted for 9.7% of the gross domestic product (GDP) in
1994, a
reduction of 0.4% from the 1992 and 1993 peak level of 10.1% of GDP. Similarly, per capita
health expenditures decreased in 1994 to CAD 2478, a decline of CAD 19 from 1993. Growth in
the economy (GDP) for 1994 was approximately 5.2% compared to 3.3% for 1993.
In 1994, total public sector health expenditure decreased by 0.7% (the first time in 20 years),
while the rate of increase in private sector health expenditure was 5.6%. The private sector share
of total health expenditure rose to 28.2% in 1994 from 26.9% in 1993.
The "denominator effect" played a major role in the decline of Canada's 1994 health
expenditure/GDP ratio. Health expenditure (the numerator) increased by only 1.0% in 1994,
while Canada's economy (the denominator) expanded by 5.2%. The relative share of health
expenditure diminished, causing the health expenditure/GDP ratio to decline.
The decrease in health spending as a percentage of GDP indicates that a different postrecessionary health expenditure pattern is emerging in Canada. Not only has there been a levelling
off but also a decline in the health spending/GDP ratio now that the economy has recovered from
a period of low economic growth in the 1990s. Previously, the health spending/GDP ratio used to
increase to a new level and then stabilize after a recession, as was the case after both the mid1970s and early 1980s economic downturns. In 1994 the health spending/GDP ratio decreased
and forecasts for 1995 and 1996 indicate that further declines will be forthcoming (as low as
9.1% by the end of 1996).
Health expenditure controls are now appearing across all categories in the public health sector
which, when coupled with the strong economic performance, has resulted in a declining health
spending/GDP ratio.
Table 3. Total expenditure on health care (millions CAD)
1975 1980 1985 1990 1991 1992 1993 1994
Value in current prices 12254.8 22398.4 40038.2 61041.6 66290.3 70032.1 71775.3 72462.6
Value in 1986 dollars 26305.9 31593.5 41129.5 51147.9 54069.5 56297.2 56990.5 56779.1
Value in current price
per capita
528 911 1543 2196 2358 2463 2496 2478
Value in 1986 dollars 1133.43 1284.64 1585.46 1840.48 1922.97 1979.81 1982.07 1941.29
Share of GDP 7.1 7.2 8.4 9.1 9.8 10.1 10.1 9.7
Public share of total
expenditure
76.4 75.7 75.7 74.6 74.6 74.1 73.1 71.8
Private share of total
expenditure
23.6 24.3 24.3 25.4 25.4 25.9 26.9 28.2
Source: Ministry of Health of Canada.
Health care finance and expenditure 21
Fig. 2. Total expenditure on health as a percentage of GDP in WHO’s European Region, 1994
a
1993, b
1992,c
1991 Percentage of GDP
2.3
2.8
3.1
3.2
3.4
4.1
4.2
4.4
4.5
4.7
5
5.9
6
2.8
3.6
4.6
4.7
4.7
4.8
6.2
6.9
7
7.5
7.7
7.9
8.7
4.2
4.6
5.7
6.5
7.1
7.2
7.3
7.3
7.4
7.7
8.1
8.1
8.2
8.2
8.5
8.8
9.4
9.5
9.7
9.7
Armenia
0 2 4 6 8 10
7.8
5.9
4.1
Austria
France
Switzerland
Germany
Netherlands
Italya
Israela
Finland
Iceland
Belgium
WE avg.
Sweden
Portugala
Norwaya
Irelanda
Spaina
United Kingdom
Denmark
Luxembourg
Greecea
Turkey
Croatia
Slovenia
a
Czech Republic
Slovakia
Hungarya
Estonia
CEE avg.
Lithuania
Bulgaria
Latvia
Polanda
Romania
Albania
Tajikistanc
Uzbekistanc
Turkmenistan b
Ukraine
Georgiac
Kyrgyzstan b
Azerbaijan
Kazakhstanc
CIS avg. c
Belarusc
Russian Federationb
Moldova
The Former Yugoslav Republic of Macedonia
Source: OECD health data, 1996; World Bank; WHO Regional Office for Europe, health for all database.
Structure of health care expenditures
The largest health expenditure category in Canada is hospitals, accounting for 37.3% of total
health expenditure, followed by physicians and drugs, representing 14.2% and 12.7% of total
expenditure, respectively, in 1994. The category “other expenditure” represent 14.6% of total
expenditure. Other expenditure consists of many expenditure subcategories such as ambulance
services, home care, public health, research and administration.
The hospital share of total health expenditure declined from 45.0% in 1975 to 37.3% in 1994, a
decline of 7.7 percentage points. The capital expenditure share declined from 4.4% of the total
health expenditure in 1975 to 2.9% in 1994.
Drug expenditure increased by 3.9 percentage points, from 8.8% of the total health expenditure in
1975 to 12.7% in 1994. Expenditure in the categories of physicians and other professionals
remained about the same in this period, except for the last few years when the physicians' share
declined from 15.4% of the total health expenditure in 1991 to 14.2% in 1994. Other expenditure
increased from 10.3% of total health expenditure in 1975 to 14.6% in 1994.
