More spending on health care is an expensive way to buy health

It’s budget season and Canadian provincial governments are continuing the tradition of spending more on health care than any other single portfolio. For example, Alberta spends almost half of its provincial budget on health – an estimated $22 billion this year – which is more than any other ministry. After adjusting for population and inflation, health care spending in Alberta has more than doubled since 1995. Ontario committed $61 billion, about 40 per cent of the overall budget, to health.

This means that all other ministries, like social services and education, must make do with what public money remains. 

This large share of public spending on health care suggests that these governments truly want to improve the health of the population. We know intuitively that increased spending on health care should correspond with additional services and better access, which in turn should lead to improved health outcomes among Canadians.

Yet international research highlights the importance of both social and health spending when trying to improve health outcomes. This is because health responds to the socio-economic factors a person experiences, like income, education, employment and social support networks, among other factors. These are sometimes collectively called “the social determinants of health” to emphasize the importance of non-health care-related factors to health outcomes.

So, if the government wants to improve the health of their population, is health care the highest-return place to invest? Our analysis suggests the answer is “no.”

Using provincial expenditure data in Canada, we found that more spending on social services per dollar spent on health care services is associated with better health outcomes. In other words, if a government had $600 million dollars to spend (approximately the increase in health spending in Alberta this year), it might do more for population health to spend that money on social services than health care.

You might ask: why does social spending do anything at all to improve the health of the population? Population health is measured in terms of outcomes like life expectancy and potentially avoidable mortality. Expenditure on social services mitigate the factors that lead to these poor health outcomes. This includes spending on programs for people with disability and their families, supporting low-income families and helping them find employment, preventing family violence, community investment in mental health initiatives and homelessness programs.

Homelessness is an extreme example and it is clear that the health of people experiencing homelessness is worse than that of the general population. Further, it surprises few people that housing is the main determinant of health for people experiencing homelessness, not health care. This has motivated hospitals in the U.S. to fund affordable housing as it can have more impact on health outcomes compared to spending on health care services.

We know these programs improve health outcomes. Yet on the government ledgers and in annual budgets, governments consistently choose to allocate dollars to ministries of health rather than social services. Spending on health care in real per capita terms across the country has doubled since 1981 while social spending has seen little growth.

In fact, Canada spends the least on social programs as a percent of GDP compared to 10 other high-income countries. By international comparison we are lagging behind. This is an implementation issue as Canada was once a thought leader in this area with a 1974 report, New Perspectives on the Health of Canadians (also known as the Lalonde Report) being one of the first studies to propose a comprehensive framework for understanding health determinants, acknowledging the limited role of health care in improving health.

If you listen to a government during budget season it would seem they are doing all they can to ensure the health of the people in their province. Often they point to “spending on health” as evidence of their dedication to this issue. What they mean by “spending on health” is spending on the health care system. Yet we lack evidence that supports the idea that additional spending on health care is the most efficient way to improve health outcomes for Canadians.

Deciding how to allocate money is no easy task, many stakeholders battle for their slice of the government spending pie based on historical trends. Yet, we know that historical spending choices are not a good indication of the right spending mix and that our current spending patterns on health care are unsustainable. If we don’t change how we are spending our money today, the broader well-being of current and future generations of Canadians is the cost. 

Daniel J. Dutton is a Post-doctoral Scholar at The School of Public Policy, University of Calgary.

Dr. Jennifer Zwicker is an expert advisor with EvidenceNetwork.ca, a Director of Health Policy at The School of Public Policy and Assistant Professor in the Department of Kinesiology at the University of Calgary.