Commission on the Reform of Ontario's Public Services

The Cost: Now and Ahead
Chapter 5: Health
We have outlined briefly (in Chapter 1, The Need for Strong Fiscal Action) some of the costs
of the health care system financed by the provincial government and the factors that drive
those costs higher. To recap, Ontario’s health care budget in 2010–11 was $44.77 billion,
or 40.3 per cent of everything the provincial government spends on programs.
In 2010–11, the big components of Ontario’s health care spending were:
CHART 5.1 Major Components of Ontario Health Care
Spending, 2010–11
Total: $44.77 billion
Community Care,
$2.68B, 6.0%
Long-Term
Care Homes,
$3.44B, 7.7%
Prescription
Drugs,
$3.45B, 7.7%
All Other*,
$7.76B, 17.3%
Operation of
Hospitals,
$15.53B, 34.7%
Doctors and
Practitioners
(i.e., payments under OHIP),
$11.91B, 26.6%
*May include Public Health, e-Health, Capital, Consolidations and the Ministry of Health Promotion
and Sport (MHPS).
Sources: Ontario Ministry of Health and Long-Term Care and MHPS.
What, then, is the prognosis for the years ahead? It is relatively simple to extrapolate future
costs by examining the factors that drive health care spending. More people need more health
care and any increases in compensation for the people who work in the health care system
are cost drivers that affect all corners of the health care system. Ontario’s population can be
expected to rise by about 1.2 per cent annually in the years to 2017–18, while inflation
(mostly in the form of compensation) is likely to add another two per cent per year to the cost
of health care. New drugs and related technology will add another 1.5 per cent to the cost of
the drug programs. Yet another three per cent in annual cost increases will come from the
more intense use of health care, as new treatments become available.
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