Health Care Expenditures, Public Administration and the Business Cycle

Claims of the unsustainability of Medicare abound and have been fuelled by the consequences of the 2008-09 economic recession. The looming question for Canadian public health care services is "How will public administrations in Canada sustain their health care expenditures during the next few years, given the pressure from debt recovery and the new federal payment transfer for health care?” To examine these issues, variations from 1989 to 2009 in Canadian public administration health care expenditures (HCE) are compared with variations in GDP, in public administration revenue, their expenditures on items other than health care, transfer payments for health from the federal government to provinces, and debt charges. Since the turn of the millennium, Canadian public administrations have increased HCE in constant dollars in context of: 1) decreasing share of public revenue and expenditures in terms of GDP; 2) constant share (70%), since 1996, of expenditures for items other than health care on total expenditures ; 3) parallel trends, with a 3 year lag, for GDP and expenditures for services covered by Medicare; 4) constant share of total HCE in terms of public administration total revenues from 2003 to 2007; 5) constant share of federal transfers for health on provincial public administration expenditures for total health care and for Medicare; and 6) reverse trends for share of HCE and debt charges. Given this context, the rhetoric of apocalyptic share of HCE on public administration budget is having a boost, while increases in this share has more to do with the factors included in the denominator rather than with those in the numerator.