Ontario’s new contract with doctors will increase health spending by $1.5 billion over four years, the budget watchdog said Wednesday in a look at the province’s fast-growing health costs.
The financial accountability officer said that projected increase, however, will not have a significant impact on Ontario’s overall health budget, which he expects to quickly rise over the next several years due to inflation, population growth and aging.
Last month’s arbitration ruling put no hard cap on increases in the $12-billion physician services budget, which the government had urged. It means the government will foot the bill for any growth at a time when it is working to eliminate a $13.5-billion deficit.
In terms of the overall health budget, though, Peter Weltman said the extra costs for physician services won’t have a significant impact.
The FAO projects that the rate of growth in overall health spending will rise over the next several years – having already grown from an average of 2.2 per cent between 2011-12 and 2016-17 to 4.4 per cent over the last two years – to an average of 4.6 per cent between now and 2022-23.
The $60-billion health budget could rise to over $73 billion in 2022-23, the FAO said.
The government has pledged to balance the budget without raising taxes, though it has yet to lay out a timetable for a return to the black. The FAO said if Ontario plans to eliminate the deficit over the next four years exclusively through restraining spending, health-sector costs would need to be $8.6 billion below the status quo projection by 2022-23.
“This represents a health spending reduction of almost 12 per cent,” Weltman said. “Restraining health-care spending to this extent without compromising health-care access or quality would be a significant challenge.”
When asked if cuts were coming, Health Minister Christine Elliott said, “We anticipate that we are going to be able to put more people into front-line services.”
Despite the FAO’s report coming on the heels of an announcement from the government of a major health sector transformation, Weltman said he couldn’t factor it in to his findings.
“We looked at the legislation and we did not incorporate that into this report,” he said. “We’re still missing some details. We are very keen, though, to see what details are included in the upcoming spring budget.”
Elliott announced last month that the 14 local health integration networks, Cancer Care Ontario, eHealth Ontario and several other agencies would be consolidated into one central organization, and local health teams would be established to co-ordinate care.
Growth in the health budget will also be due to the government’s commitment to add 15,000 long-term care beds over five years, and an investment of $1.9 billion in mental health over ten years, Weltman said.