Canadian healthcare spending projected to reach $433 billion in 2026

New CIHI figures show hospital expenditures rising 5.1 per cent as workforce costs, capacity pressures and investments in healthcare delivery continue to shape spending across Canada.

Canada’s total healthcare spending is projected to reach $433 billion in 2026, an increase of 4.8 per cent over the previous year, according to new figures released by the Canadian Institute for Health Information (CIHI).

The latest National Health Expenditure Trends report, published November 10, estimates that healthcare spending will account for 12.8 per cent of Canada’s gross domestic product (GDP), equivalent to approximately $10,398 per Canadian.

Although overall spending growth has moderated from the increases recorded in recent years, healthcare expenditures continue to rise faster than the broader economy.

For Canadian hospitals, the findings highlight ongoing pressures associated with workforce compensation, service demand and investments in healthcare capacity.

Hospital spending expected to rise 5.1 per cent

Hospitals remain the largest category of healthcare expenditure in Canada, accounting for a projected 25.6 per cent of total spending in 2026.

Hospital expenditures are expected to increase by 5.1 per cent this year, compared with growth of 4.3 per cent in 2025 and 7.0 per cent in 2024.

Employee compensation continues to represent the largest expense for hospitals, accounting for approximately two-thirds of total hospital spending.

According to CIHI’s hospital spending data, compensation costs increased by 7.5 per cent to $53.9 billion in 2024–2025. During the same period, the number of full-time equivalent hospital employees increased by 9.2 per cent, representing the largest annual workforce expansion in decades.

It was the first time since 2010–2011 that hospital workforce growth exceeded compensation growth, suggesting that hospitals are expanding staffing capacity while increases in labour costs begin to moderate.

However, hospitals continue to face elevated costs related to private agency staffing, overtime and sick leave. Although growth in these expenses has slowed from post-pandemic peaks, costs remain above pre-pandemic levels.

Spending growth may signal greater investment in capacity

One of the report’s central findings is a potential shift in the factors driving healthcare expenditure growth.

In recent years, rising inflation and rapid population growth absorbed a substantial portion of additional healthcare spending.

With those pressures beginning to ease, CIHI estimates that public-sector healthcare spending in 2026 will increase by more than $5 billion beyond what would be explained by inflation and demographic changes.

This suggests that a greater share of new spending may be directed toward expanding healthcare services, improving access, strengthening the workforce and investing in technology.

Lacey Langlois, director of Health Spending at CIHI, said the changing drivers of expenditure growth could indicate greater investment in healthcare capacity and new approaches to delivering care.

The report also emphasizes the importance of measuring whether additional spending produces meaningful improvements for patients.

While the figures suggest opportunities to strengthen the healthcare system, they do not establish that increased expenditure has already translated into improved access or clinical outcomes.

Physician and drug spending continue to increase

Beyond hospitals, physician services and prescription medications remain major components of Canada’s healthcare expenditures.

Physician spending is projected to account for 14.1 per cent of total healthcare spending in 2026, with expenditures increasing by 8.3 per cent.

The increase reflects continuing demand for physician services and persistent challenges in primary care access.

Drug expenditures are expected to account for nearly 13 per cent of national healthcare spending.

CIHI notes that workforce shortages, population aging and the increasing use of healthcare services will continue to influence spending patterns.

Digital health technologies, including artificial intelligence, may also affect future expenditure trends by changing how care is delivered and how clinical and administrative work is organized.

However, these technologies may require substantial initial investment before potential operational efficiencies can be realized.

Rural hospitals face distinct financial pressures

CIHI’s accompanying Spending Trends in Health Service Delivery report identifies important differences between urban and rural hospitals.

Although staffing has grown faster than Canada’s population overall, workforce expansion has been stronger in urban hospitals.

Rural hospitals continue to experience greater recruitment and retention challenges, often relying more heavily on overtime and agency personnel to maintain services.

The report also finds that inpatient and outpatient costs have increased more rapidly in rural hospitals, reflecting factors such as patient complexity, longer hospital stays and differences in service delivery.

Rural emergency departments frequently serve broader healthcare needs where access to primary care and other community-based services is limited.

These findings underscore the importance of considering regional circumstances when evaluating hospital spending and allocating healthcare resources.

Canada’s healthcare spending has increased substantially over the past several years, rising from $336 billion in 2022 to a projected $433 billion in 2026.

Public-sector funding is expected to account for approximately 71 per cent of total healthcare expenditures this year, with the remainder financed through private sources, including households and insurance.

CIHI projects public-sector healthcare spending growth of 5.2 per cent in 2026, even as inflation and population growth moderate.

For hospital leaders, the findings raise important questions about how additional resources can best support sustainable staffing, improved patient access, modernization of infrastructure and more efficient service delivery.

As governments and healthcare organizations continue to address system pressures, the challenge will be ensuring that higher spending translates into measurable improvements in capacity, quality and patient care.

Primary sources: CIHI 

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