Health Care Spending and Health Outcomes

Topic Box from the 2006 Sixth Annual Benchmark Report

Government spending on health care has been growing in real terms for decades and it is likely to continue to grow as Canada's population ages. In 1976, BC spent $3.5 billion on health care (all figures in 1997 dollars). By 1986, BC's expenditure had reached $5.1 billion and by 2005 it had reached $9.8 billion. As a percent of GDP, BC's health expenditure has gone from 5.5% in 1982 to 7.2% in 2005. As a percent of provincial government program spending, BC's health care spending went from 26.6% in 1976 to 40.9% in 2005.

In 2005/06 preliminary provincial rankings, BC ends up fifth in overall provincial government health care spending per capita at $2,855, behind Alberta at $3,183, Manitoba ($3,152), Newfoundland and Labrador ($3,098) and Saskatchewan ($2,997). As noted elsewhere in this report, BC does very well on health outcome indicators relative to other provinces (i.e., life expectancy, potential years of life lost, and mortality from cancer and cardiovascular disease). However, drawing a causal connection between high provincial government health care spending and health outcomes in BC (and other jurisdictions) should be done with considerable caution. For example, a review of health outcomes in Newfoundland and Labrador – the province with the third highest per capita provincial government health spending – shows that a correlation between high relative spending and good health outcomes does not necessarily follow. Using the most recent data, Newfoundland and Labrador ranked 10th for life expectancy and the percentage of obese people, 9th for cardiovascular disease and cancer mortality, and 7th on potential years of life lost.

Many factors affect health care spending and act as drivers for future cost pressures. One of these drivers is population ageing because a disproportionate amount of lifetime health care costs occur late in life. Of added concern for BC is that the Canada Health Transfer allocation formula does not differentiate between relatively young and ageing populations, meaning that BC could be disproportionately affected in the future, due to our relatively older population.