Canada - World Health Organization Regional Office for Europe

3. Financing
The public sector in Canada is responsible for almost 70% of total health
expenditures (THE). After a period of spending restraint in the early to
mid-1990s, government expenditures have grown rapidly, at a rate of
growth only exceeded by private health expenditure. Since health expenditures
have grown more rapidly than either the growth in the economy or public
revenues, this growth has triggered concerns about the fiscal sustainability of
public health care. Contrary to popular perception, demographic ageing has
not, at least yet, been a major driver of health system costs in Canada. Over the
last two decades, prescription drugs have been a major cost driver, but in the
last five years, the growth in this sector has been matched by hospital spending
and overtaken by physician expenditures. In the case of physicians, a primary
cost driver has been increased remuneration, and in the case of hospitals, a
combination of more hiring and increased remuneration for existing staff (CIHI,
2011b).
Almost all revenues for public health spending come from the general
tax revenues of F/P/T governments, a considerable portion of which is used
to provide universal medicare – medically necessary hospital and physician
services that are free at the point of service. The remaining amount is used to
subsidize other types of health care, including long-term care and prescription
drugs. While the provinces raise the majority of funds through own-source
revenues, they also receive less than a quarter of their health financing from the
Canada Health Transfer, an annual cash transfer from the federal government.
On the private side, OOP payments and PHI are responsible for most health
revenues. The vast majority of PHI comes in the form of compulsory
employment-based insurance for non-medicare goods and services including
prescription drugs, dental care and vision care. PHI does not compete with the
provincial and territorial “single payer” systems for medicare.
3. Financing