This week reveals stark contrasts in healthcare funding approaches, mounting cost pressures, and evolving strategies for healthcare delivery. From Quebec's fiscal constraints to Alberta's Resource-Driven surplus, the healthcare landscape reflects shared challenges in meeting growing healthcare demands.
Quebec's Fall 2024 Economic Update presents a sobering picture of healthcare financing challenges. Finance Minister Eric Girard's announcement of a $2.1 billion investment over five years comes amid increasing healthcare expenditures and a soaring deficit. In 2024-2025, government portfolio expenditures are projected to grow by 6.5%, driven by rising costs in healthcare and social services, education, and higher education, along with unplanned expenses such as flood-related damages. In particular, healthcare and social services expenditures are set to rise by 3%, with $750 million from the contingency reserve used to address increased labour costs in the sector.
Economic forecasts showed improvement, with GDP growth revised upward to 1.2% for 2024 and projected at 1.5% for 2025, while the living standards gap with Ontario has narrowed to 11.1% from 15.9% in 2018. The government will implement a 2.85% optimization of the tax system and its benefits, providing $5.2 billion in household relief over five years. Additionally, $3.4 billion in tax expenditures will be reduced, including aligning capital gains taxation with federal changes and adjusting the career extension tax credit to better fit the labour market.
The current accounting deficit stands at $8.8 billion (1.4% of GDP), with Quebec maintaining its commitment to achieving a balanced budget by 2029-30. Long-term fiscal goals include reducing the net debt burden from the current 39% to 30% of GDP by 2037-38. A contingency reserve of $750 million for 2024-25 (increasing to $1.5B annually) has been established to protect against economic uncertainties.
The response from Quebec stakeholders has been mixed. The Council of Canadian Innovators, while praising Quebec's support for innovation, warns that$1 billion in healthcare cuts could hamper research progress. Opposition parties have been more critical, accusing the government of underestimating the deficit and prioritizing "frivolous" spending over public services. Quebec Liberal Party claims the real deficit could be $15 billion, while Québecsolidaire warns of creeping austerity, and the Parti Québécois condemns inefficiencies like the Santé Québec agency.
Quebec's decision to raise the eligibility age for the tax credit for career extension to 65 has sparked concerns among business groups, who warn it may worsen labour shortages and discourage workforce retention.
In contrast, Alberta's 2024-25 Second Quarter Fiscal Update and Economic Statement tells a different story. Alberta Finance Minister Nate Horner announced a projected $4.6 billion surplus for the current fiscal year, higher than the first quarter forecast of $2.9 billion, driven by increased income tax revenue from population growth and oil and gas royalties. However, the province faces its own healthcare challenges, with expenses projected to increase by $716 million due to population growth, an aging population, and higher demand for physician services, including more fee-for-service billings. An additional $451 million will support rising patient numbers and their complex needs, while $265 million will be allocated to Alberta Health Services for expanded services such as lab tests, urgent care, and family health access.
Alberta's rapid population growth of 4.4%(207,000 people) between July 2023-2024 has already consumed the province's $2 billion contingency fund, with significant portions directed to healthcare and education. Despite expectations of reduced population growth to 2.5% next year due to lower federal immigration targets, unemployment is projected to rise from 7.2% in 2024 to 7.4% in 2025, highlighting challenges in absorbing the rapid population expansion into the labour market.
The Council of Canadian Innovators has emphasized the need for the province to finalize strategies for privacy policy and intellectual property commercialization to foster innovation, particularly in health technology procurement. While experts from the Fraser Institute cautioned that the province's reliance on volatile resource revenues leaves its finances vulnerable to downturns, with a slight drop in oil prices potentially pushing the government back into deficit. Critics argued that the Smith government must reduce spending to avoid repeating the cycle of rising expenditures during resource booms, which has historically led to deficits when revenues decline.
Against this backdrop of provincial funding challenges, a new report from GreenShield, a Canadian national non-profit health and benefits organization, highlights a concerning trend in healthcare costs. Their "2024 Drug Trends Report" reveals a substantial $300 million increase in total drug costs, driven by rising demand for medications related to obesity, diabetes, and mental health. The report emphasizes the growing role of pharmacists in prescription initiation and underscores the critical need for accessible drug coverage to address Canada's escalating chronic health conditions.
Amid these financial and healthcare delivery challenges, the Canadian Dental Association (CDA) has achieved international recognition, winning gold at the 2024 Global Facilitation Impact Award for its"2024-2029 Forward Focus Strategic Plan." The award acknowledges the plan's collaborative approach and forward-thinking objectives, developed through extensive stakeholder engagement across Canada. The CDA's “Forward Focus” strategic plan on improving oral health access, supporting dentists, and ensuring proactive engagement on national dental issues represents a bright spot in Canadian healthcare planning.
As provinces wrestle with healthcare funding decisions and organizations grapple with rising costs, these developments underscore the complex interplay between fiscal management, healthcare delivery, and long-term planning.
Book a free consultation today to learn how these healthcare trends and policy shifts might impact your organization's strategic planning and operations.
