Aging and Expenditures on Health Care

Summary

• Health care is the single largest budget item for every provincial government in Canada.
• Per-capita spending on health care is substantially higher for individuals aged 65 and older than for younger individuals, and the disparity increases consistently as average age increases beyond 65 years. For example, the per capita expenditure for the 80-85 age group was more than twice the mean per-capita expenditure across all age groups in Canada in 2017.
• Canada’s population is projected to age substantially in the years ahead. Specifically, while individuals aged 65 and older accounted for 16.2 percent of the total population in 2018, they are projected to account for 23.4 percent of the population in 2040.
• Assuming no change in the prices of inputs to the provision of health care services, the growth in the number of Canadians aged 65 and older will result in an increase in health care expenditures of approximately 88 percent from 2019 to 2040.
• To put this projected increase into perspective, health care expenditures on individuals aged 65 and older accounted for 45.7 percent of total health care expenditures in 2019. Given the projected aging of the population, individuals aged 65 and older will account for fully 71.4 percent of total health care expenditures in 2040 in the absence of policies that improve the efficiency of health care delivery to this cohort of the population.