Leaders at every level of government have acknowledged that Canada’s health system is in crisis and that additional funding is urgently needed both to address immediate gaps in care and make longer-term structural changes.
Addressing these challenges and ensuring system sustainability will require the provincial/territorial and federal governments to work together using a mix of funding, reforms and health innovations.
To identify which areas of health care governments are prioritizing, the Canadian Medical Association (CMA) commissioned a first-of-its-kind report on health spending in the 2022–23 federal, provincial and territorial budgets.
The findings in this report are a starting point for reform and an impetus for political leaders to move forward, together, to stabilize the health system and transform the future of care.
This report builds on the CMA’s recent calls for collaboration between all levels of government to fix Canada’s collapsing health system and will be heavily leveraged as we continue to work with policy-makers on these burning issues.
Health care continues to be a top priority for governments across the country. Provinces are budgeting for an average increase of 4.4% in health spending compared to an average increase of 0.9% across other areas. Health funding continues to represent 30% to 40% of the total provincial/territorial budgets.
There is also a high degree of alignment among provinces, territories and the federal government on which initiatives to fund:
Mental health care
All provinces and the federal government dedicated significant funding to improve access to mental health care, including the deployment of new facilities and staff. The federal government and some provinces also targeted addiction programs.
Newfoundland and Labrador is planning a $30 million investment in mental health care, including $16.3 million for the ongoing construction of an adult facility in St. John’s and a six-bed unit in Happy Valley-Goose Bay.
Increasing system capacity
The federal government and many provinces have earmarked funds for the recruitment of health care professionals, with a focus on increasing the workforce in remote and underserved communities. Budgets also reflect investments in building and repairing health care infrastructure, with some provinces targeting emergency medical services.
Quebec is planning a $604 million investment to improve working conditions and increase full-time hospital staff, including salary increases and retention bonuses.
Care for older adults and continuing care
Many provinces are committing to new infrastructure and additional funding for home-support services to ensure that older adults and people with disabilities can receive the right level of care at home.
Saskatchewan’s budget allocates $17 million for home care for older adults, flu vaccines and continuing care services.
Other shared health care funding priorities:
- Upgrading health facilities to increase capacity
- Reducing surgical and diagnostic backlogs
- Investing in emergency services, including increasing the number of paramedics and hiring more emergency department staff
- Improving access to medications by supplementing drug benefit programs
- Expanding virtual care to increase access to primary care
Canada Health Transfers
While health funding – the largest budget item in most cases – is primarily the responsibility of the provinces and territories, they do receive federal money.
The Canada Health Transfer (CHT) is the federal government’s primary funding vehicle for provincial and territorial health expenses, but it accounts for less than 25% of their health budgets.
Given the long-term challenges facing the health care system, our report examined three funding scenarios to assess how much of provincial/territorial health spending will be covered by the CHT over the next 12 years.
Scenario #1 – Status quo
We grew CHT based on the formula currently in place. This work showed that demand will outpace growth in the CHT, leading to a steady decline in the share of provincial/territorial health costs covered by the CHT beginning in 2026–27.
Scenario #2 – CHT at 35% of provincial/territorial spending
We calculated how much the CHT would need to be raised to cover 35% of provincial/territorial health spending (as called for by provincial/territorial leaders) and found that in fiscal year 2023–24, the CHT would need to increase by 75% to meet 35% of provincial/territorial spending on health cares. That is equal to a $34 billion boost to the CHT.
Scenario #3 – Annual growth and base adjustment
We brought together a number of assumptions. First, we included a $4 billion annual base adjustment to cover continuing pandemic costs. We then assumed that the annual CHT escalator returned to 6%. Finally, given that our analysis showed that care for older adults is a provincial/territorial priority, we included the cost of moving some home care currently provided by informal caregivers into the health care system. In this scenario, average CHT funding would need to increase by about $14 billion per year and would cover almost one-quarter of provincial/territorial health care costs by the end of our forecast.
Between 2023–24 and 2035–36, health care spending is forecasted to grow at an average annual rate of 5.2% to reach roughly $409 billion. During this period, provincial/territorial government revenues are expected to grow at an average annual rate of approximately 3.3%, well below spending requirements.
Investing in innovation
Despite relatively high levels of health spending in Canada, the availability and timeliness of care is below the average of the 38 member countries of the Organisation for Economic Co-operation and Development. This suggests that innovation is as essential to a more sustainable health system as funding – and several provinces and territories are investing in new programs.
Expanding virtual care
Nova Scotia will improve the availability of virtual care for family physicians and expand virtual care for services for mental health and emergency departments.
Prince Edward Island is implementing “medical homes and neighbourhoods.” This model follows a team-based approach to primary health care, with “homes” and “neighbourhoods” consisting of both specialized and general health care workers.
Centralizing access to specialists
New Brunswick has announced a pilot project to streamline access to orthopedic specialists: primary care physicians will be able to refer patients to specialists, who can then choose an available specialist in their zone or wait for a specific surgeon.
Measuring what matters
Provinces including Quebec, Nova Scotia, British Columbia and Ontario have announced measures to improve the availability and utility of patient health and epidemiological data.
This analysis shows that provinces and territories have many common health care priorities. Many are investing in innovative solutions to both short- and long-term challenges but will require additional federal funding to support future health care reform.
What’s needed now is a ‘Team Canada’ approach – a commitment from governments to work across jurisdictions to tackle shared challenges and ensure every Canadian, wherever they live, has access to a sustainable health system.