Endless spending increases will not fix Canada’s health-care system

Canada’s health-care system ranked as the most expensive (as a share of the economy) among 30 universal health-care countries. And despite these relatively high levels of spending, Canada continues to lag behind its peers on key indicators of performance.

In February 2023, the federal government announced the money they send to the provinces for health care would increase, yet again. Despite being billed as a fix for health care, these spending increases will not actually provide any relief for Canadian patients.

The Canada Health Transfer (CHT), the main federal financial tool for funding provincial health care, has increased from $34.0 billion in 2015/16 to $52.1 billion this year (2024/25), a 53.1 per cent increase in about a decade. Moreover, the federal government has committed to increases in the transfer at a guaranteed 5 per cent until 2027/28.

This latest increase in the CHT, however, is only one part of the $46.2 billion in new money being doled out over the next 10 years. More than half (roughly $25 billion) is currently being given to provinces who’ve signed up to work towards a number of “shared priorities” with Ottawa, such as mental health and substance abuse.

Clearly, the federal government has decided to substantially increase health-care spending in more than one way. But will it produce results?

These periodic “fixes” occasionally championed by Ottawa every few years are nothing new. And unfortunately, the data show that longstanding problems, including long waits for medical care and doctor shortages, will persist even though Canada is certainly no slouch when compared to its peers on health-care spending.

A recent study found that, when adjusted for differences in age (because older populations tend to spend more on health care), Canada’s health-care system ranked as the most expensive (as a share of the economy) among 30 universal health-care countries. And despite these relatively high levels of spending, Canada continues to lag behind its peers on key indicators of performance.

For example, Canada had some of the fewest physicians (ranked 28th of 30 countries), hospital beds (ranked 23rd of 29) and diagnostic technology such as MRIs (ranking 25th of 29 countries) and CT scanners (ranking 26th out of 30 countries) compared to other high-income countries with universal health care.

It also ranked at or near the bottom on measures such as same-day medical appointments, how easy it is to find afterhours care, and the timeliness of specialist appointments and surgical care.

And wait times have been getting worse. Just last year Canada recorded the longest ever delay for non-emergency care at 27.7 weeks, a 198 per cent increase from the 9.3 week wait experienced in 1993 (the first year national estimates were published).

But it’s not just the health-care system that’s in shambles, despite our high spending. Our federal finances are, too. Years of substantial increases in federal spending have strained the country’s finances. The Trudeau government’s latest budget projects a deficit of $39.8 billion this year, with more spent on debt interest ($54.1 billion) than on what the federal government gives to the provinces for health care.

Again, these periodic injections of federal funds to the provinces to supposedly fix health care are nothing new. Ottawa has relied on this strategy in the past and wait times have grown longer over the last three decades. Endless increases in spending will not fix our health-care system.

Authors:

Mackenzie Moir and Jake Fuss

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National dental program likely more costly than advertised

Published on July 4, 2025

Todayville

From the Fraser Institute

By Matthew Lau

At the beginning of June, the Canadian Dental Care Plan expanded to include all eligible adults. To be eligible, you must: not have access to dental insurance, have filed your 2024 tax return in Canada, have an adjusted family net income under $90,000, and be a Canadian resident for tax purposes.

As a result, millions more Canadians will be able to access certain dental services at reduced—or no—out-of-pocket costs, as government shoves the costs onto the backs of taxpayers. The first half of the proposition, accessing services at reduced or no out-of-pocket costs, is always popular; the second half, paying higher taxes, is less so.

A Leger poll conducted in 2022 found 72 per cent of Canadians supported a national dental program for Canadians with family incomes up to $90,000—but when asked whether they would support the program if it’s paid for by an increase in the sales tax, support fell to 42 per cent. The taxpayer burden is considerable; when first announced two years ago, the estimated price tag was $13 billion over five years, and then $4.4 billion ongoing.

Already, there are signs the final cost to taxpayers will far exceed these estimates. Dr. Maneesh Jain, the immediate past-president of the Ontario Dental Association, has pointed out that according to Health Canada the average patient saved more than $850 in out-of-pocket costs in the program’s first year. However, the Trudeau government’s initial projections in the 2023 federal budget amounted to $280 per eligible Canadian per year.

Not all eligible Canadians will necessarily access dental services every year, but the massive gap between $850 and $280 suggests the initial price tag may well have understated taxpayer costs—a habit of the federal government, which over the past decade has routinely spent above its initial projections and consistently revises its spending estimates higher with each fiscal update.

To make matters worse there are also significant administrative costs. According to a story in Canadian Affairs, “Dental associations across Canada are flagging concerns with the plan’s structure and sustainability. They say the Canadian Dental Care Plan imposes significant administrative burdens on dentists, and that the majority of eligible patients are being denied care for complex dental treatments.”

Determining eligibility and coverage is a huge burden. Canadians must first apply through the government portal, then wait weeks for Sun Life (the insurer selected by the federal government) to confirm their eligibility and coverage. Unless dentists refuse to provide treatment until they have that confirmation, they or their staff must sometimes chase down patients after the fact for any co-pay or fees not covered.

Moreover, family income determines coverage eligibility, but even if patients are enrolled in the government program, dentists may not be able to access this information quickly. This leaves dentists in what Dr. Hans Herchen, president of the Alberta Dental Association, describes as the “very awkward spot” of having to verify their patients’ family income.

Dentists must also try to explain the program, which features high rejection rates, to patients. According to Dr. Anita Gartner, president of the British Columbia Dental Association, more than half of applications for complex treatment are rejected without explanation. This reduces trust in the government program.

Finally, the program creates “moral hazard” where people are encouraged to take riskier behaviour because they do not bear the full costs. For example, while we can significantly curtail tooth decay by diligent toothbrushing and flossing, people might be encouraged to neglect these activities if their dental services are paid by taxpayers instead of out-of-pocket. It’s a principle of basic economics that socializing costs will encourage people to incur higher costs than is really appropriate (see Canada’s health-care system).

At a projected ongoing cost of $4.4 billion to taxpayers, the newly expanded national dental program is already not cheap. Alas, not only may the true taxpayer cost be much higher than this initial projection, but like many other government initiatives, the dental program already seems to be more costly than initially advertised.

Matthew Lau

Adjunct Scholar, Fraser Institute

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Prairie provinces and Newfoundland and Labrador see largest increases in size of government

Published on July 3, 2025

Todayville

From the Fraser Institute

By Jake Fuss and Grady Munro

A recent study found that Canada has experienced one of the largest increases in the size of government of any advanced country over the last decade. But within Canada, which provinces have led the way?

The size of government refers to the extent to which resources within the economy are controlled and directed by the government, and has important implications for economic growth, living standards, and economic freedom—the degree to which people are allowed to make their own economic choices.

Too much of anything can be harmful, and this is certainly true regarding the size of government. When government grows too large it begins to take on roles and resources that are better left to the private sector. For example, rather than focusing on core functions like maintaining the rule of law or national defence, a government that has grown too large might begin subsidizing certain businesses and industries over others (i.e. corporate welfare) in order to pick winners and losers in the market. As a result, economic growth slows and living standards are lower than they otherwise would be.

One way to measure the size of government is by calculating total general government spending as a share of the economy (GDP). General government spending refers to spending by governments at all levels (federal, provincial, and municipal), and by measuring this as a share of gross domestic product (GDP) we can compare across jurisdictions of different sizes.

A recent study compared the size of government in Canada as a whole with that of 39 other advanced economies worldwide, and found that Canada experienced the second-largest increase in the size of government (as a share of the economy) from 2014 to 2024. In other words, since 2014, governments in Canada have expanded their role within the economy faster than governments in virtually every other advanced country worldwide—including all other countries within the Group of Seven (France, Germany, Italy, Japan, the United Kingdom, and the United States). Moreover, the study showed that Canada as a whole has exceeded the optimal size of government (estimated to fall between 24 and 32 per cent of GDP) at which a country can maximize their economic growth. Beyond that point, growth slows and is lower than it otherwise would be.

However, Canada is a decentralized country and provinces vary as to the extent to which governments direct overall economic activity. Using data from Statistics Canada, the following charts illustrate which provinces in Canada have the largest size of government and which have seen the largest increases since 2014.

The chart above shows total general government spending as a share of GDP for all ten provinces in 2023 (the latest year of available provincial data). The size of government in the provinces varies considerably, ranging from a high of 61.4 per cent in Nova Scotia to a low of 30.0 per cent in Alberta. There are geographical differences, as three Atlantic provinces (Nova Scotia, Prince Edward Island, and New Brunswick) have the largest governments while the three western-most provinces (Alberta, Saskatchewan, and British Columbia) have the smallest governments. However, as of 2023, all provinces except Alberta exceeded the optimal size of government—which again, is between 24 and 32 per cent of the economy.

To show which provinces have experienced the greatest increase in the size of government in recent years, the second chart shows the percentage point increase in total general government spending as a share of GDP from 2014 to 2023. It should be noted that this is measuring the expansion of the federal government’s role in the economy—which has been substantial nationwide—as well as growth in the respective provincial and municipal governments.

The increases in the size of government since 2014 are largest in four provinces: Newfoundland and Labrador (10.82 percentage points), Alberta (7.94 percentage points), Saskatchewan (7.31 percentage points), and Manitoba (7.17 percentage points). These are all dramatic increases—for perspective, in the study referenced above, Estonia’s 6.66 percentage point increase in its size of government was the largest out of 40 advanced countries.

The remaining six provinces experienced far lower increases in the size of government, ranging from a 2.74 percentage point increase in B.C. to a 0.44 percentage point increase in Quebec. However, since 2014, every province in Canada has seen government expand its role within the economy.

Over the last decade, Canada has experienced a substantial increase in the size of total government. Within the country, Newfoundland and Labrador and the three Prairie provinces have led the way in growing their respective governments.