Canadians should hold off on declaring a slowdown in government healthcare spending to sustainable growth rates, says a C.D. Howe Institute report.
In Bending Canada’s Healthcare Cost Curve: Watch Not What Governments Say, But What They Do, author William B.P. Robson finds that reports of slower growth in healthcare spending have been repeatedly wrong-footed and recent estimates that healthcare spending is no longer growing faster than the economy may also prove optimistic.
He looks at the annual spending reports from the Canadian Institute for Healthcare Information (CIHI), which have repeatedly shown slower growth in healthcare spending by provincial and territorial governments.
“The problem is that the reports rely on government budget estimates for the current and immediately preceding years’ figures. When the actual numbers come in, they tend to show significantly higher spending,” Robson explains. “Governments have slowed healthcare spending in recent years. But, to be fiscally sustainable, it has to be in line with growth in the economy, and, until we see the final numbers, we can’t conclude we have succeeded.”
Upward revisions to initially estimated provincial and territorial healthcare spending since 1998 have been just about a universal experience, the report states. While they were negligible in Manitoba and in British Columbia, they were substantial in several eastern and Prairie provinces and huge in the territories. For the country as a whole, the average annual upward revision between initial estimates of healthcare spending and the final numbers was almost one percentage point—a difference that could decisively affect judgments about whether its trend is now in line with, or above, growth in Canadian GDP.
The history of healthcare spending overruns by provincial and territorial governments means Canadians must wait for the final numbers before concluding that public healthcare spending is growing at a sustainable rate.
“The preliminary numbers are what governments say,” Robson says. “What matters for the sustainability of publicly funded healthcare in Canada is what they do.”
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