Health Expenditures in Canada by Age and Sex, 1980-81 to 2000-01

Trend Analysis

Estimates of health expenditures by age and sex developed by Health Canada and based on the National Health Expenditure (NHEX) Database from the Canadian Institute for Health Information (CIHI) show that total health expenditures were $97.6 billion in 2000-01, an increase of $7.2% or 6.5 billion over 1999-2000. Per capita health expenditures were $3,174 in 2000-01.

Per capita total spending for health increased by 138.0% from 1980-81 ($949) to 1990-91 ($2,259); however, it only increased by 40.5% from 1990-91 to 2000-01 ($3,174). It must be noted that, in real terms, this translates into an increase of 30.8% in per capita total health spending from 1980-81 to 1990-91 and only increased by 17.2% from 1990-91 to 2000-01.

Trends in percentage change of per capita spending hold in all age groups. As an example, per capita spending for people aged 65+ increased by 129.9% from 1980-81 to 1990-91, and then only increased by 33.2% from 1990-91 to 2000-01.

Although reductions in health budgets during the mid1990s are partly responsible for these downward changes in health spending, one must not forget the impact of the use of less costly treatments, such as the use of drug therapy to replace surgical procedures, reductions in the duration of hospital stays and a much larger use of one-day surgery, which all contributed to an increase in productivity.

Also, while most provinces and territories have made important investments into non-acute care services, such as home care and community-based services, the reduction of hospital stays may have increased the burden of families and other unpaid caregivers.

It is estimated that 56.2% of total health expenditures in 2000-01 were for females, compared to 43.8% for males. In 2000-01, females made up 50.5% of the total population, compared to 49.5% for males.

In the 0-14 age group, per capita health expenditures were higher for males ($1,476) than for females ($1,395). A possible explanation for this difference is that males are more prone to injury in their early years. Analysis of the National Longitudinal Survey of Children and Youth (1996-97) weighted data show that the number of injuries over a 12-month period for children 0-14 years of age was about 10% higher for males than females.

Females had higher per capita health expenditures than males in the 15+ age groups, with the exception of the 65 to 84 age groups. One reason females in the 65-74 and 75-84 age groups accounted for lower per capita expenditures is that they used fewer hospital and physician services than males in the same age groups.

In 2000-01, 42.7% of total health expenditures were made for seniors aged 65+, compared to 35.0% twenty years ago. Although these figures indicate that the share of seniors aged 65+ increased over the last twenty years, it must be remembered that their share of the population also increased, from 9.4% of the total population in 1980-81 to 12.5% in 2000-01.

In fact, for seniors aged 65+, their share of health expenditures increased less, at 22.0%, than their share of the population, which increased by 33.0%.

Health expenditures for seniors aged 65+, which were $10,834 per capita in 2000-01, increased by 206.4% up from the 1980-81 level, while the population of seniors aged 65+ increased by 67.0% in the same period. In comparison, per capita health expenditures for the 15-24 age group, at $1,872 in 2000-01, increased by 274.4% in the same period, while the population in that age group decreased by 14.2%.

People in the 75-84 age group spent $12,535 per capita for health expenditures in 2000-01, while people in the 85+ age group spent $27,135. Data extracted from the Statistics Canada's 1998-99 National Population Health Survey show that nurse consultations per 1000 population were twice as high for seniors aged 85+ than for persons in the 75-84 age group. While this crude figure is not converted in costs, it gives an indication of the important amount of care received by this segment of the population.

Per capita total health expenditures for older seniors aged 85+ ($27,135 in 2000-01) were approximately eight times higher than per capita total health expenditures for all age groups. The major portion of this amount, 75%, comes from long stays in residential care facilities, such as nursing homes, and the use of palliative care beds in long-term care hospitals.

For the 85+ age group, $10,401 per capita was spent for hospital expenditures and $9,358 for other institutions.

The Public : Private Share of Health Expenditures

Health expenditures in the public sector were 70.7% of total health expenditures in 2000-01. This is down from the level of 75.2% recorded in 1980-81.

Health expenditures in the private sector were 29.3% of total health expenditures in 2000-01. These expenditures represented 29.8% of total health expenditures in 1999-2000 and 24.8% in 1980-81.

From 1980-81 to 2000-01, the public share of total health expenditures decreased from 75.2% to 70.7%. This drop in the public share occurred in every age group with the exception of the 25-34 age group. The public share of the 25-34 age group has increased since the mid-1990s, probably because of the large amount of money spent on health promotion and prevention for this age group.

During the early to mid-1990s, provincial and territorial governments began to review extended and other health care services in an effort to curb health spending. Extended and other health care services, rather than insured health services, became the target of review because of regulations that restrict the way insured health services can be administered.

The increased use of one-day surgery and the reduction in the number of days spent in hospital contributed to cost reductions in public sector expenditures for most age groups. These early discharges meant that health care services, such as prescribed drugs provided by publicly funded hospitals, had to be paid by individuals who were released from an institution at an earlier time, or were passed on earlier to the provincial and territorial governments that provided public coverage for such health care services.

Several factors affect the ratio of public and private health expenditures: government fiscal restraint; inflation; technological advancements; changes in public coverage of extended health care services, such as dental care and eye examinations; the introduction of and changes to co-payments; the impact of recessions and economic slowdowns on personal spending; consumer preferences toward alternative medicines. The expansion of available services is also a factor; the range of extended health services is growing and therefore a larger market for proprietary health services is emerging.

Some of these factors may also have influenced the ratio of public and private health expenditures for some specific age groups. For example, the 15-24 age group, which experienced a reduction of dental care coverage, and the 45 to 74 age groups with the introduction of deductibles, contributions and copayments for prescribed drugs for seniors.

For seniors aged 65+, the larger share of health expenditures paid by the public sector, compared to other age groups, is explained in part by the wide range of programs and services that provincial and territorial governments offer seniors, particularly access to long-term care facilities, prescription drug benefit plans and extended health care services (see Text Table 1).

From 1980-81 to 2000-01, the 75+ age group experienced only a small shift from public to private health expenditures. This is because most health services provided to seniors aged 75+ are considered medically necessary and are therefore covered under public health insurance. Furthermore, for some people in this age group, hospitalization reduces extended and other health care service costs, such as drug plan premiums, home care services and residential care facilities, whose expenditures are shared by governments and individuals.

Given the numerous factors that influence both public and private health care spending, a more comprehensive model would be required to better estimate the influence of each factor on the public and private sector composition of health expenditures of a specific age group.

Total Health Expenditures in Provinces and Territories

As mentioned earlier, per capita health expenditures were $3,174 in 2000-01 in Canada. The territories excepted, Manitoba spent the most at $3,528 per capita and Prince Edward Island spent the least at $2,849 per capita.

For the 0-14 age group, Alberta spent the most at $1,634 per capita in 2000-01, while Prince Edward Island spent the least at $1,217 per capita. Total health expenditures for this age group were $1,437 per capita throughout Canada.

Total health expenditures for seniors aged 65+ were $10,834 per capita throughout Canada in 2000-01. Among the ten provinces, Manitoba at $12,734 per capita spent the most on seniors aged 65+ and Quebec spent the least at $9,388 per capita.

Per capita health expenditures made by the territories are always higher than in any province. As an example, compared to Manitoba, which spent the most among the provinces on seniors aged 65+ at $12,734 per capita, Yukon spent $17,427 per capita and the Northwest Territories spent $30,963 per capita.

One reason for the higher cost in the territories is that they must meet the health care needs of a small population spread across vast regions. For instance, while the average per capita cost of ambulance services is $122 throughout Canada, this expenditure reached a per capita figure of $657 in Yukon and $2,540 in the Northwest Territories for the year 2000-01. The closest province with high per capita ambulance service expenditures is Nova Scotia at $255 per capita in 2000-01.

Another reason for the high per capita amount in the territories is the difficulty of benefiting from economies of density for most of the programs and services offered.

Provincial and Territorial Government Health Expenditures

Public sector health expenditures made by provincial and territorial governments represented 64.8% of total expenditures in 2000-01, while health expenditures for other public sector (federal government direct, municipal government and Workers' Compensation Boards) represented 5.9% of total health expenditures, for a total of 70.7% for all the public sector.

In 2000-01, Prince Edward Island had the lowest provincial government health expenditures at $1,842 per capita, while Manitoba had the highest at $2,398. In comparison, throughout Canada, $2,058 per capita was spent.

In general, per capita provincial and territorial government institutional health expenditures begin to increase from age 55 onward, which reflects the increased use of institutional care as people age. In the other categories of provincial and territorial government health expenditures, per capita spending decreases from age 65 on.

Per capita provincial and territorial government health expenditures were highest for seniors aged 65+ in all categories of expenditure, except for the category of other expenditures (public health, health research, capital, etc.), where it was higher for persons aged 15-24.

For seniors aged 65+, in 2000-01, Prince Edward Island had the lowest provincial government health expenditures at $7,074 per capita, while Manitoba had the highest at $10,040. In comparison, provincial and territorial government health expenditures for seniors aged 65+ throughout Canada were $8,172 per capita.

Per capita provincial and territorial government health expenditures vary considerably between the provinces and territories. These variations reflect the unique programs and services delivered by each province and territory, as well as other factors, such as fiscal situation and political decisions.

Specific health needs for specific population segments, such as seniors, children, young mothers, etc., may also be important factors in the delivery of care and services. Two provinces, Manitoba at 13.5% and Saskatchewan at 14.5%, have a larger proportion of seniors aged 65+ than the national average of 12.5%. The larger proportion of seniors in these two provinces means that it is in the interest of these provinces to continue to control costs, like all provinces and territories, and to adapt health care services to the needs of an older population.

Expenditures in a province or territory are also influenced by the density and geographical distribution of its population. A small population dispersed over a large geographical area means that a province or territory cannot benefit from economies of scale and density. As previously noted, this is especially true in the territories.

The financing of health care (block funding, annual budget, etc.), its administration (central, regional) and the level of remuneration of health personnel also have some influence on the level of health expenditures. Finally, public coverage of some care health services (drugs, community-based services, home care and home support services) may make a major difference to the level of health expenditures.

In conclusion, although the level of per capita health expenditures gives some information on the amount of money spent in a province or territory for a particular age group or sex in itself, it cannot be considered as a good indicator of the quality of the care provided in that province or territory.