Health Care Expenditures and Cost Drivers in Canada
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1 Health Care Expenditures and Cost Drivers in Canada Focus on Pharmaceuticals Louis Thériault, Vice-President Industry Strategy and Public Policy The Conference Board of Canada April 26, 2017 conferenceboard.ca
2 Context Canada is a rich country and as expected spends a lot on health care By comparison, Canada spends even more than other rich OECD countries; who pays for it contrasts significantly Good news: there is a lot of money in the system that can be redeployed Low health care spending growth is temporary, robust growth will resume Aging population Home and Community Care Precision medicine and high cost drugs Slower GDP growth will constrain fiscal capacity Innovation will be the central theme business models, procurement, pharmaceuticals, medical devices, technology, etc. 2
3 Health Spending per Capita among Highest 2015 or nearest year, US $, PPP Source: OECD Statistics 3
4 Slower Growth in Health Expenditures per cent of GDP, Canada $199B in 2011 $228B in
5 Health Spending Correlated with Fiscal Reality Federal and Regional Deficits, National Accounts Basis, $billions 20 Federal Provinces Sources: Statistics Canada; The Conference Board of Canada. 5
6 Cost driver shares of average annual growth in public-sector health spending 6
7 Canada Among Highest Spenders on Pharmaceuticals retail spending on pharmaceuticals, per capita 7
8 Private Payer Share Much Larger in Canada retail spending on pharmaceuticals by type of financing, 2013 or nearest year 8
9 In 2015 Individuals for whom public drug programs paid $10,000 or more toward drug costs accounted for 2.1% of beneficiaries and 33.5% of public drug spending. Spending on statins decreased by 20.9% in 2012 but decreased by only 1.9% in Drug program spending per beneficiary for statins has decreased by 56.7%, from $304 in 2011 to $132 in Source: Prescribed Drug Spending in Canada: A Focus on Public Drug Programs, CIHI,
10 Population distribution by age, 2016 and , , , , , ,000 0 Sources: The Conference Board of Canada; Statistics Canada. 10
11 Labour Force Growth average annual compound growth, per cent f f f Sources: Statistics Canada; The Conference Board of Canada. 11
12 Contributions to Growth in Health Care Spending (average annual compound growth rate, forecast ) Total Health Care Spending 5.6 Contributions: Changes in access 1.0 Demographic changes 1.8 Population growth 0.8 Aging 1.0 Inflation 2.9 NOTE: Numbers may not add due to rounding Source: The Conference Board of Canada. 12
13 Federal Fiscal Stimulus at the Cost of Deficits Federal government balance, public accounts basis, $ billions Source: Department of Finance. 13
14 Federal and Provincial Gov t Balances as a share of GDP, N.L. P.E.I. N.S. N.B. Que. Ont. Man. Sask. Alta. B.C. Federal Sources: The Conference Board of Canada; Statistics Canada; various government budgets. 14
15 Federal and Provincial Gov t Net Debt as a share of GDP, % 40% 30% 20% 10% 0% N.L. P.E.I. N.S. N.B. Que. Ont. Man. Sask. Alta. B.C. Federal Sources: The Conference Board of Canada; Statistics Canada; various government budgets. 15
16 Challenges in Public Sector Spending ( annual growth, difference) Source: The Conference Board of Canada.. 16
17 Challenges in Human Resources ( annual growth, difference) Source: The Conference Board of Canada.. 17
18 Implications Governments make choices consistent with their capacity to pay Going forward, status quo will be challenged Pressure from an aging population offers an opportunity to re-examine how we deliver health care, what is included, and who pays The end of the patent cliff and emergence of high cost specialty treatments will increase growth in pharmaceutical costs Innovation in pharmaceuticals drugs and devices will offer unprecedented health benefits New business model needed to make sure Canadians have access to the right treatment for the right public health benefit at the right cost Scenario planning needed to quantify and inform the impact of policies, programs, and investments, as well as guide decision-making 18
19 conferenceboard.ca
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