Canada - World Health Organization Regional Office for Europe
Canada - World Health Organization Regional Office for Europe
Canada - World Health Organization Regional Office for Europe
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<strong>Health</strong> systems in transition <strong>Canada</strong> 67<br />
To understand the underlying health cost drivers, it is essential to separate<br />
health spending by service programmes or functions, and then examine the<br />
impact of health-specific inflation, increased utilization and ageing. From the<br />
1980s until the mid-2000s, prescription drugs were the fastest growing category<br />
of health expenditure, and most of this growth was due to a combination of<br />
increased utilization, the introduction of new drug therapies and higher prices.<br />
In this respect, <strong>Canada</strong> has had among the highest generic drug prices in<br />
the world (perhaps in part due to the lack of generic price regulation at the<br />
national level). In contrast, factory gate prices of branded prescription drug are<br />
regulated by the PMPRB while CADTH provides provincial governments with<br />
a centralized drug assessment and review process <strong>for</strong> new prescription drugs<br />
(Romanow, 2002; McMahon, Morgan & Mitton, 2006).<br />
Since 2005, there has been an acceleration in spending on physicians driven<br />
more by increases in remuneration than volume. Hospital expenditures have<br />
also grown rapidly due mainly to increases in staffing levels, compensation and<br />
the increased use of advanced technologies, including advanced diagnostics.<br />
In sharp contrast, the growth in prescription drug spending in recent years<br />
has been largely due to increases in utilization as opposed to price, due to the<br />
maturing of patents as well as a slowing in the rate of new drugs coming on the<br />
market relative to previous periods (CIHI, 2011b).<br />
3.2 Sources of revenue and financial flows<br />
The principal source of health system finance is taxation by the F/T/P<br />
governments (see Fig. 3.6). Since medicare services are exempt from patient<br />
payment at the point of service, they are entirely financed by government<br />
revenues mainly at the provincial level. The sources of funding <strong>for</strong> other health<br />
goods and services are derived from a combination of taxation, OOP payments<br />
and PHI. The vast majority of PHI comes in the <strong>for</strong>m of employment-based<br />
insurance that employees are required to take on as part of a given package<br />
of remuneration and benefits. Social insurance <strong>for</strong>ms the smallest portion of<br />
health funding and is largely used <strong>for</strong> health benefits <strong>for</strong> workplace injuries or<br />
ailments available under workers’ compensation schemes in the provinces and<br />
territories (see section 3.3.2).