10/29/2013 03:04 EDT | Updated 01/23/2014 06:58 EST

Health-Care Spending In Canada Slows, Lowest Increase In Years: Report

TORONTO - The growth of total health spending in Canada has slowed, with the increase this year expected to be the lowest since the mid-1990s, a new report suggests.

The report, from the Canadian Institute for Health Information, says total health spending in Canada this year will be $211 billion, up 2.6 per cent from the figure for 2012.

That increase is less than half the average annual growth racked up from 2000 to 2010, which came in at about seven per cent, on average, each year.

Governments are picking up roughly 70 per cent of that tab and individuals the remaining 30 per cent — a breakdown which has been stable for some while, said Walter Wodchis, an associate professor of health economics at the University of Toronto.

CIHI said the slowing of spending on hospitals, physicians and drugs is mainly responsible for creating the effect.

Wodchis said he was surprised spending on drugs had stabilized, given that more and more care in modern medicine depends on medication.

But Steven Lewis, a health economist from Saskatchewan, said part of the lower spending on drugs comes from the fact that provinces have negotiated better prices for generic drugs.

As well some of the expensive blockbuster drugs that came on the market in the past decade are now off patent, which means cheaper generic versions are available, he said.

He suggested the trend reflected in CIHI's annual health expenditures reports shows the doomsayers who insisted health-care costs would spiral upward unchecked got it wrong.

"I think what it demonstrates is that contrary to the dire predictions of various think-tanks, it's folly to look at a spending trend that lasts a few years, extrapolate it out 30 years and then claim that the sky will fall because 90 per cent of provincial budgets will be consumed by health care," Lewis says.

"Governments can and do expect some fiscal discipline on the health-care system. They did it in the mid-'90s. They're doing it again now. And expenditures tend to ebb and flow with the rate of growth in the economy and overall provincial and to some extent federal deficit situations."

Chris Kuchciak, CIHI's manager of health expenditures, said it will be interesting to see if the flattening of health spending growth continues.

"We've actually seen this picture before in the mid-1990s where governments were cutting back. And then of course ... in the late '90s and the last decade we had this huge reinvestment. So the key thing here will be to see if the slowdown in growth will be sustainable in the future," Kuchciak said.

Lewis noted spending on payments to doctors was up 3.6 per cent in the report and he predicted that will be an area to watch. The country is currently experiencing an overproduction of new doctors, the result of a virtual doubling of medical school enrolments from the late 1990s onward.

These new doctors will need to make a living somehow, he noted.

"I think we've just seen the tip of the iceberg unless there is a fundamental rethink of how we deploy and pay physicians," Lewis said.

"The fairly modest increase in physician spending is probably temporary unless we redeploy physicians and unless we find different ways to pay them."

The report said Canada will spend roughly $6,000 per person on health care this year in Canada.

And on a per capita basis compared to gross domestic product, Canada's health-care spending in 2011 placed the country as the fifth highest spender, after the United States, the Netherlands, France and Germany.

Also on HuffPost

Top 10 Hospitals In Canada - CBC Rate My Hospital