The sustainability of public health expenditures: evidence from the Canadian federation

Abstract

The fiscal sustainability of government health expenditures is defined as the gap between growth rates of spending and measures of the resource base. The results show that over the period 1965-2008, real per capita Canadian provincial government health spending has grown at rates that exceed growth in basic measures of the resource base such as per capita gross domestic product (GDP), per capita federal transfers and per capita provincial government revenues. Forecasts of future spending to 2035 using determinant regression and growth rate extrapolation techniques show that Canadian provincial government health spending is projected to continue rising in the future and its share of provincial GDP will rise. While the amount spent on health is ultimately a public policy choice, provincial government health spending also cannot continue growing faster than the resource base indefinitely.