Commentary
By: Jake Fuss and Nadeem Esmail

This budget season, two common themes have emerged. Across the country, provincial finances are in an abysmal state characterized by large deficits and accumulating debt. At the same time, premiers across Canada are pouring more money into health care, asserting this is needed to fix the very real problems Canadians face in health care.

But health-care spending is not at all the problem. In fact, provinces should reform health care to get better value for the vast sums already being spent, while keeping their financial houses in order.

When compared with other universal health-care countries, Canada’s health spending already ranks among the highest in the developed world, while Canadian access to care ranks among the lowest with among the fewest medical technologies per population (e.g. MRI and CT scanners), fewest physicians and hospital beds per population, and some of the longest waiting lists for access to care in the developed world.

This is not a new reality: for more than two decades, access to health care in Canada has gotten relatively worse compared with other universal countries, despite Canada continually ranking among the highest spenders. It seems the provinces have missed this reality and determined at least part of the fix will be found in more spending.

For example, the B.C. government recently tabled a budget that includes a $13.3 billion deficit in 2026/27. One of the big drivers of this borrowing is the rapid increase in health-care spending. In 2021/22, the fiscal year before Premier Eby took office, health spending was $27.6 billion. It’s now expected to reach $40.6 billion in 2026/27—an increase of 47.1 per cent. The province’s population is only expected to grow by about 8.0 per cent over that same period. The Alberta government similarly projects a $9.8 billion deficit in 2026/27, with growth of 38.1 per cent in health-care spending between 2021/22 and 2026/27. And other provinces project sizeable deficits with large annual increases in health spending.

Instead of trying (and failing) to solve the problem with more spending, the provinces should understand how other countries get so much more without further (and rapidly) increasing spending.

The developed world’s top-performing universal health-care countries such as Australia, Germany, the Netherlands and Switzerland all deliver timelier and more accessible universal health care, while spending a similar amount or less than we do, by following four key policy approaches not found in Canada’s provinces.

First, each of these countries takes advantage of the private sector’s efficiency and patient focus in the delivery of hospital and surgical care. In Canada, the hospital system is a public monopoly. Meanwhile, 39 per cent of Australian hospitals, 43 per cent of German hospitals, and 51 per cent of Swiss hospitals are private for-profit facilities, harnessing the innovation and effectiveness of the private sector.

Second, hospitals in these countries are paid per-patient treated, which encourages hospitals to treat more patients and in a more timely fashion. Compare that to Canada’s provinces where hospitals are given an annual budget each year to care for patients, which makes each patient a cost for the hospital and leaves only very weak incentives to treat more patients or treat them more rapidly.

Studies from across the developed world show hospitals deliver more care, more efficiently, in a more timely manner when they’re paid per patient rather than annually.

Third, patients in these more successful countries share the cost of their care through user fees and deductibles. The reasoning is simple—people will make more informed decisions about when and where it’s best to access the health-care system when given a financial incentive to do so. As a result, patients use fewer resources—making more available for other patients and saving money overall—and end up no worse off in terms of health outcomes as long as appropriate protections are in place for vulnerable populations.

Finally, patients in these other countries have a private alternative available to them for times when the public system is unwilling or unable to meet their needs. None of these countries has outlawed (i.e. prohibited) privately purchased health care to deliver more timely, high quality and universally accessible care.

With the notable exceptions of Quebec and Alberta for two of these policy differences, Canada’s provinces are largely committed to a government-centric approach to health care that’s not followed by any higher-performing universal health-care country and has clearly delivered a very poor but expensive system to Canadians.

To be fair, the federal government via the Canada Health Act currently disallows user fees and deductibles, making this reform impossible for provinces without risking the loss of federal cash transfers for health care. There’s also a question of whether Ottawa might reduce federal transfers for provinces allowing a private alternative for patients or other reforms. But health-care policy is determined by the provinces, and these four policies, while not necessarily compatible with the Canada Health Act, are clearly entirely compatible (if not more compatible) with the goal of delivering universal access to high-quality care in a timely fashion.

Provincial finances are in a terrible state, with governments across the country projecting deficits and debt for the foreseeable future. The provinces are also spending money they don’t have to boost up health expenditures, for an already remarkably expensive but still failing health-care system. It’s time they took a smarter approach and actually fixed health care while being more responsible with taxpayer dollars.

Jake Fuss is Director of Fiscal Studies for the Fraser Institute. Nadeem Esmail is the Director of Health Policy at the Fraser Institute.