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Health care costs expected to jump by 9% in 2025

Employers, hesitant to pass too much expense to their workers, will continue to bear the brunt of the annual increases.

Another year, another hefty raise in employers’ health care costs.

For 2025, the average cost of coverage in the United States is expected to climb by 9%, surpassing $16,000 per employee, said professional services firm Aon.

The anticipated jump, which assumes employers will not implement employee cost-sharing initiatives and other savings strategies, is higher than the 6.4% increase employers absorbed this year, after applying cost-saving measures.

The average health care budget for 2024 is $14,823 per employee, according to Aon’s analysis, which draws information from more than 950 employers with a collective 6.7 million workers and $100 billion in 2024 health care spend.

Aon noted medical claims continue to rise at elevated levels while prescription drug costs are climbing due to continued growth in specialty drugs and increased use of GLP-1 medications for diabetes and obesity.

“In the health care sector, both rising employment levels and wage increases fueled by economy-wide inflation during the past few years are pushing health care costs higher,” said Debbie Ashford, Aon’s North America chief actuary for medical solutions. “To keep pace with these pressures, the health care industry negotiates higher prices.”

Specialty drugs, although the leading factor in prescription drug spending, represent only a small fraction of overall utilization, Ashford noted. A surge in new drugs in the GLP-1 category alone is expected to add 1% to the aggregate health care cost increase.

Compared to employers’ cost hike in 2024, employees are expected to see a more modest increase. “Employers continue to bear the brunt of rising health care costs,” said Farheen Dan, North American health solutions leader at Aon. “Plan sponsors are wary of passing significant expenses onto plan participants, striving to keep plan benefits affordable.”

There were significant industry-by-industry differences this year in employers’ cost changes. The biggest hikes were for technology/communications (7%), the public sector (7%), finance/insurance (7%), and professional services (6%).

Lesser increases were borne by retail/wholesale (2%), manufacturing (5%), and health care (5%).

Aon suggested that its cost prognostications will improve now that it’s launched its “Health Risk Analyzer.” The predictive analytics tool uses advanced machine learning “to help employers predict high-cost elements and gain a deeper understanding of which conditions will drive future health care spending.”

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• 78% of business leaders expect ROI on generative AI investments in 1 to 3 years By Adam Zaki
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Alberta premier says province plans to transfer some hospitals away from AHS

Premier danielle smith discussed the topic at ucp members-only event in drayton valley.

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Alberta's premier says the province plans to lease new hospitals to Alberta Health Services with the option of transferring operations to another operator if it decides AHS isn't doing a good job. 

Danielle Smith outlined the plan in response to audience questions at a members-only United Conservative Party town hall in Drayton Valley on Aug. 17.

CBC was not at the event but relied on two different videos of the event posted on social media by Alberta podcasts The Breakdown and The Lavigne Show.

Smith's government is currently breaking the provincial health authority into four separate organizations dealing with acute care, primary care, continuing care, and mental health and addiction.

Alberta Health Services will remain responsible for running acute care.

• Alberta to dismantle current patient-care model, create new health delivery system
• Health minister introduces bill to split up Alberta Health Services

Smith told the crowd that her government is changing how hospitals are run. Instead of building hospitals and handing them over to AHS, the province is going to keep ownership of the building. 

"We will lease it to an operator," she said. "Now, why is that important? Because if our operator isn't performing the services we need them to, we're going to take it back."

Smith said the fear of losing a hospital to another provider will motivate AHS managers to do better. 

At first, the plan would only apply to newly built hospitals, but Smith suggested the province will consider taking back ownership of some existing hospitals as a next step.

The premier's office declined to comment on the plan and directed questions to the office of Health Minister Adriana LaGrange.

LaGrange's press secretary, Andrea Smith, said in a written statement that "Alberta's government has been clear that we expect to see better results from Alberta Health Services, especially when it comes to providing acute care services in rural and remote communities  … We've raised these concerns with AHS and have asked them to develop strategies to address them."

The statement said "the work to refocus Alberta's health-care system includes transitioning Alberta Health Services, over time, to focus on delivering only acute-care services."

"Alberta's government is committed to ensuring key health partnerships continue, providing Albertans with the health care they need when and where they need it," Andrea Smith wrote. "Ensuring we have the right partner delivering these services is critical and we will continue to evaluate this on an ongoing basis."

Plan won't help health system: critics

The proposal is alarming health care critics who say it won't ensure Albertans will get better health care. 

"This is something that's going to just inject more chaos into the health-care system," said Dr. Luanne Metz, the NDP critic for health care. "Competition among our hospitals does not work."

Metz is concerned this is another step toward American-style health care. She is also concerned over the government's decision to consider a proposal from a private company to open an urgent-care facility in Airdrie.

Andrew Longhurst, a health policy researcher at Simon Fraser University in Vancouver, said allowing outside operators to run Alberta hospitals will not improve the health system.

He said it's mistaken to think a new operator will improve quality of care or fix staffing challenges, which is a national problem. 

"I think it's very misguided and it's actually quite destructive at a time when there is a huge amount of fragility in Alberta's health system right now," Longhurst said. 

Creating an atmosphere of fear among hospital management is also counterproductive, he added. He believes Smith is acting on ideology and not in the best interests of Albertans.

ABOUT THE AUTHOR

Provincial affairs reporter

Michelle Bellefontaine covers the Alberta legislature for CBC News in Edmonton. She has also worked as a reporter in the Maritimes and in northern Canada.

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Consolidated canadian government finance statistics, 2021.

Released: 2022-11-22

Canadian general government deficit shrinks, still above pre-pandemic levels

The consolidated Canadian general government ( CGG ) deficit (which includes all federal, provincial, territorial and local governments) dropped sharply from $291.9 billion in 2020 to $99.0 billion in 2021, a 66.1% decrease. The increase in revenues (+13.9%)—particularly driven by corporate income taxes (+26.4%), taxes on goods and services (+17.1%) and personal income taxes (+9.7%)—combined with the decrease in expenses ( -6 .8%) contributed to the reduced deficit. The decrease in expenses was driven by decreased COVID -1 9-related transfers, shown by large declines in subsidies ( -4 4.0%) and social benefits ( -2 2.2%).

The net operating balance is the difference between revenues and expenses for a given period and is a summary measure of the sustainability of government operations. When revenues are lower than expenses, a deficit is recorded, while the reverse induces a surplus.

The federal government accounted for the majority ($88.7 billion) of the CGG deficit, while the consolidated provincial, territorial and local governments ( PTLG s) recorded a deficit of $10.2 billion. Compared with 2020, the federal government deficit declined by 65.2%, while that of PTLG s shrank by 72.6%.

As a percentage of nominal gross domestic product ( GDP ), the CGG deficit decreased sharply to 3.9% after reaching 13.2% in 2020. The strong growth in GDP (+13.6%) and the quick reduction of the federal government deficit contributed to the improvement of the deficit-to- GDP ratio.

Chart 1  Net operating balance, Canadian general government, federal government and provincial, territorial and local governments, 2008 to 2021

Revenue goes up as gross domestic product surges

In 2021, federal government revenue grew by $34.3 billion (+9.8%) linked to significant increases in taxes on income, profits and capital gains (+$20.0 billion) and taxes on goods and services (+$12.1 billion). Federal government expenses decreased sharply ( -2 1.7%) compared with 2020, from $605.5 billion to $473.9 billion. Decreased expenses were primarily attributable to fewer subsidies and social benefits: Canada Emergency Wage Subsidy and Canada Emergency Response Benefits totalled $149.2 billion in 2020 and $19.1 billion in 2021.

Chart 2  Federal government expenses by main categories, 2008 to 2021

PTLG revenues went up by $65.8 billion (+10.6%) compared with 2020. Tax revenues grew by 16.8%, mainly driven by higher personal income taxes (+$19.2 billion or +16.6%), taxes on goods and services (+$17.2 billion or +15.2%) and corporate income taxes (+$16.7 billion or +48.0%). Property income increased by 56.5%, mostly attributable to the jump in rent revenue from oil and gas royalties (+351.6%). This growth is mostly explained by a surge in oil and natural gas prices on the world markets: in Alberta alone, oil and gas royalties ascended to $16.0 billion in 2021 (from $3.0 billion in 2020).

PTLG expenses increased by $38.8 billion (+5.9%), thus mitigating the impact of strong revenue growth on the deficit. Among all provinces, expenses increased most sharply in Saskatchewan (+17.6%), followed by Prince Edward Island (+9.2%), Nova Scotia (+7.0%) and British Columbia (+6.9%). The growth in Saskatchewan's expenses was mainly due to higher agricultural subsidies. Indeed, extreme weather conditions have caused significant damage to crops, resulting in a sharp increase in crop insurance claims.

Chart 3  Net operating balance, provincial, territorial and local governments, by province and territory, 2020 and 2021

Among the provinces, Quebec ($3.9 billion or 0.8% of GDP ) and Nova Scotia ($0.4 billion or 0.8% of GDP ) posted a surplus in 2021, while other provinces remained in deficit. Compared with 2020, the deficit-to- GDP ratio improved in all provinces, except in Prince Edward Island. The highest deficits expressed as a percentage of GDP were observed in Saskatchewan (2.4%), Newfoundland and Labrador (2.2%) and Manitoba (1.1%).

Canadian general government fiscal burden remains stable

Fiscal burden measures the taxes and social contributions paid to governments by individuals, businesses, and non-residents, expressed as a percentage of GDP . These compulsory transfers constituted 83.5% of total revenues generated by the CGG in 2021.

Including the Canada Pension Plan ( CPP ) and Quebec Pension Plan ( QPP ), taxes and social contributions in Canada totalled $878.6 billion in 2021, up from $772.4 billion in 2020 (+$106.2 billion or +13.7%). This represented a fiscal burden of 35.0% of nominal GDP in 2021, a similar level to the previous year.

While federal government revenues from taxes and social contributions as a percentage of GDP decreased, from 14.9% in 2020 to 14.5%, the PTLG fiscal burden increased in 2021 to 17.3% of GDP from 16.8%. PTLG fiscal burden as a percentage of GDP was highest in Quebec (23.1%), followed by Ontario (18.1%) and Nova Scotia (18.0%), while Alberta (10.1%) posted the lowest fiscal burden among the provinces. The territories recorded a significantly lower fiscal burden than the provinces, with Nunavut posting the lowest at 3.8%. The territories rely more heavily on federal transfers than on fiscal revenues to deliver essential goods and services to the population.

Federal transfers to the provinces and territories decline from the peak of 2020

The federal government extends different types of grants to the provinces and territories to help them provide essential programs and services to all Canadians, such as health care, education, social assistance, and childhood development. The largest transfers are the Canada Health Transfer, the Canada Social Transfer, equalization payments and territorial formula financing.

In 2021, PTLG s received $112.4 billion in federal grants, down from the peak of $129.5 billion in 2020. In 2020, the federal transfers to PTLG s included $19.7 billion related to the Safe Restart Agreement. Grants received by Ontario ($32.5 billion) and Quebec ($30.0 billion) represented 55.6% of the total federal grants to the PTLG s. These two provinces had 61.2% of the Canadian population in 2021.

On a per capita basis, federal transfers paid to PTLG s declined, from $3,397 in 2020 to $2,909 in 2021. Among all provinces, Prince Edward Island received the highest grants per capita ($6,433), followed by Nova Scotia ($5,248) and New Brunswick ($5,230). By contrast, British Columbia received the lowest grants per capita ($2,116), closely followed by Ontario ($2,167) and Alberta ($2,348).

Chart 4  Grant revenue per capita by province for consolidated provincial and local governments, 2020 and 2021

In the territories, federal grants amounted to $57,273 per capita in Nunavut, $44,028 in the Northwest Territories and $35,847 in Yukon. Federal transfers accounted for 77.9% of total revenues in the territories.

Interest charges remain low despite debt accumulation

Canada's total outstanding general government debt costs billions of dollars each year in interest charges. In 2021, CGG 's interest expenses accrued on debt liabilities totalled $64.6 billion (+6.2%) compared with $60.8 billion in 2020. Thus, Canadian governments spent 6.8 cents of every dollar earned on debt charges.

In 2021, the federal government spent $24.0 billion on interest, up 12.2% compared with 2020. The interest expense to revenue ratio was relatively stable at 6.2 cents (6.1 cents in 2020). In the early 1990s, despite a similar level of gross debt as a percentage of GDP , the federal government was paying more than 30 cents in interest for every dollar of revenue received, reflecting much higher interest rates at that time.

In 2021, at the Canada level for PTLG , interest expenses totalled $40.7 billion (+3.0%), which represented 5.9 cents for every dollar of revenue, down from 6.4 cents in 2020. At the provincial level, Quebec (8.7 cents) and Manitoba (8.5 cents) spent the most on interest per dollar of revenue in 2021, while British Columbia (3.4 cents) and Alberta (3.6 cents) spent the least.

Chart 5  Ratio of interest expense to revenue, 2008 to 2021

Gross debt-to-gross domestic product ratio goes down, but remains higher than pre-pandemic levels

During the economic downturn related to the pandemic, Canadian general government revenue decreased and spending rose sharply, which significantly contributed to debt accumulation. In 2021, the CGG 's liabilities (gross debt) totalled $2,942.2 billion ($76,135 per capita), an increase of $69.9 billion compared with the previous year. In 2021, the federal gross debt ($1,569.6 billion) remained higher than that of PTLG ($1,460.4 billion).

While the gross debt-to- GDP ratio of CGG fell to 117.2%, down from the peak of 130.0% reached in 2020, it remained significantly above pre-pandemic levels (105.6% in 2019). Gross debt at the Canada level for PTLG decreased, from 66.6% of GDP in 2020 to 58.2% in 2021. Among all provinces, the gross debt-to- GDP ratio decreased most significantly in Alberta, from 53.9% to 39.5%, and in New Brunswick, from 80.2% to 65.9%. British Columbia (35.7%) and Alberta (39.5%) recorded the lowest ratios of gross debt-to- GDP , while Manitoba (88.6%) and Quebec (88.0%) posted the highest levels.

Chart 6  Total liabilities (gross debt), 2008 to 2021 

Growth in financial assets outpaces liabilities, lowering net debt

While gross debt represents the magnitude of outstanding debt, it does not take into account financial assets. It only provides information about liabilities (unconditional obligations to creditors) of the government. Net debt or net liability (total liabilities less total financial assets) gives a more comprehensive view of the financial position of the government. Net debt is used as a key indicator to assess the sustainability of fiscal policy.

Net debt of the Canadian general government ($1,452.8 billion) fell, from 68.7% of GDP in 2020 to 57.9% in 2021. This decrease in net debt is mainly explained by the large downward revaluation of liabilities in the form of debt securities, such as bills and bonds, at their market value. The price of bonds has an inverse relationship with interest rates. Market anticipation of sharp increases in interest rates to counter inflation made the yield on outstanding debt securities less attractive to investors, driving down their market value.

Debt securities: market and nominal value

In Government Finance Statistics ( GFS ), assets and liabilities are valued at current market prices, as if they were acquired in market transactions on the balance sheet reference period. For liabilities in the form of debt securities, the market value thus represents the amount that the government would pay to buy back (extinguish) a debt security in the secondary market.

Nominal value for a debt security refers to the amount of principal advanced (issue price) and accrued unpaid interest, which the government owes at a specific point in time to the creditor. Liabilities at nominal value in GFS are recorded as a memorandum item in the balance sheet.

The difference between market and nominal value represents the changes in the value of government tradable debt instruments on the market.

Chart 7  Debt securities accumulation at market and nominal value of Canadian general government, 2008 to 2021

Federal government net debt edged down in 2021 (-$4.1 billion) to $910.5 billion, still above pre-pandemic levels. Federal government net debt-to- GDP ratio decreased to 36.3% in 2021, following the upswing from 29.8% in 2019 to 41.4% in 2020.

PTLG s accounted for more than 90% of the decrease in CGG 's net debt. In 2021, PTLG net debt was down $60.4 billion to $542.3 billion, or 21.6% of GDP , from 27.3% in 2020. It was the lowest net debt-to- GDP ratio since 2008. Financial assets of the PTLG increased by 5.7% (+$49.5 billion), while their liabilities decreased slightly ( -0 .7% or -$10.9 billion) to $1,460.4 billion in 2021.

In 2021, a decline in net debt was observed in all provinces. The largest decreases in net debt were recorded in British Columbia ( -5 9.0%), New Brunswick ( -2 5.4%) and Alberta ( -1 8.1%).

Among PTLG s, Newfoundland and Labrador recorded the highest net debt per capita ($19,478), followed by Ontario ($18,697), Quebec ($18,545) and Manitoba ($17,233).

Expressed as a percentage of GDP , the highest net debt was recorded in Quebec (31.8%), followed by Manitoba (30.3%), Ontario (29.3%) and Newfoundland and Labrador (26.9%). Again, in 2021, British Columbia posted the lowest net debt ratios by far (1.5% of GDP or $1,010 per capita), well below the Canada total level for PTLG (21.6% of GDP or $14,032 per capita).

The Northwest Territories, Yukon and Nunavut were the only jurisdictions to post a positive net financial worth (total financial assets less total liabilities). Debt in the territories was low compared with the provinces, as their borrowing capacity is restricted to limits set by the federal government.

Social contributions to Canada Pension Plan and Quebec Pension Plan increase

The CPP and QPP are the largest social security funds in the country; along with Old Age Security, they are the foundation of Canada's public retirement income system. In 2021, Canadian workers' and employers' contributions to the CPP and QPP significantly increased (+14.0%), from $72.5 billion in 2020 to $82.6 billion in 2021. Beneficiaries of these plans, mostly retired citizens, received $69.1 billion (+3.2%) in social security benefits in 2021, up from $66.9 billion in 2020.

In 2021, Canadians' nest eggs grew by 9.4%, a more-than-decent return on the funds' investments, following one of the best performances on record in 2020 (+21.5%). Thus, the funds' net financial worth reached $648.6 billion in 2021 (25.8% of GDP ) compared with $592.9 billion in 2020 (26.8% of GDP ). In a rare occurrence, the growth of the QPP net financial worth (+14.9%) has outpaced CPP growth (+8.4%) in 2021.

Chart 8  Growth of net financial worth for the Canada Pension Plan and Quebec Pension Plan, 2008 to 2021

The net financial worth of the CPP and QPP measures the net financial assets available for the payment of future social security benefits. At the end of 2021, net financial worth was $16,783 per capita, up 7.9% from $15,553 in 2020.

Chart 9  Net financial worth, Canada Pension Plan and Quebec Pension Plan, 2007 to 2021

  Note to readers

This release includes revisions to both unconsolidated and consolidated Canadian Government Finance Statistics ( CGFS ) data for the 2019 and 2020 reference periods, as well as the addition of the 2021 reference period.

Annual data correspond to the end of the fiscal year closest to December 31. For example, data for the federal government fiscal year ending on March 31, 2022 (fiscal year 2021/2022), are reported for the 2021 reference year.

Preliminary CGFS data are published eight months after the end of the fiscal year; therefore, estimates were prepared before several public accounts and financial statements were audited and published by government entities.

CGFS data differ from reports published by governments due to differences in institutional coverage, accounting rules, timing and integration with the Canadian macroeconomic accounts.

Consolidation is a method of presenting one overarching statistic for a set of units. It involves eliminating all transactions and debtor–creditor relationships among the units being consolidated. In other words, the transaction of one unit is paired with the same transaction as recorded for the second unit and both transactions are eliminated.

In 2021, the consolidation method removed $374.3 billion in internal revenues and expenses, as well as $286.5 billion related to internal debtor–creditor relationships for the Canadian General Government ( CGG ).

Consolidated data are released for the CGG , which combine federal government data with provincial, territorial and local government ( PTLG ) data, but exclude data for the Canada Pension Plan and Quebec Pension Plan.

Consolidated data are also released for the PTLG s, which include provincial and territorial governments, health and social service institutions, universities and colleges, municipalities and other local public administrations, and school boards.

The constitutional framework of PTLG s in the territories differs from that in the provinces, leading to differences in the roles and financial authorities of government. These differences, as well as other geographic, demographic and socioeconomic dissimilarities between the North and the rest of Canada, give rise to marked disparities in government finance statistics.

PTLG data can be compared across provinces and territories because consolidation takes into account differences in administrative structure and government service delivery by removing the effects of internal public sector transactions within each jurisdiction.

Because PTLG finance statistics vary significantly across jurisdictions in Canada due to size differences, per capita data are used to facilitate comparisons. Per capita data are based on population estimates as of April 1 for Canada, the provinces and the territories, available in Table 17-10-0009-01 .

Calculations as a percentage of gross domestic product are based on the nominal GDP at market prices, expenditure-based, estimates for Canada, the provinces and the territories, available in Table 36-10-0222-01 .

In this release, revenues, expenses, assets and liabilities are reported in nominal terms.

Net financial worth is the total value of financial assets minus the total value of liabilities. When financial assets are greater than liabilities, the measure is referred to as net financial assets. When liabilities are greater than financial assets, the measure is referred to as net liabilities or net debt as per public accounts.

The Canadian Government Finance Statistics 2014 classification structure is now available in the Definitions, data sources and methods module of our website.

Additional information can be found in the Latest Developments in the Canadian Economic Accounts ( Catalogue number 13-605-X ). The User Guide: Canadian System of Macroeconomic Accounts ( Catalogue number 13-606-G ) is also available. This publication has been updated with Chapter 9. Government Finance Statistics .

Contact information

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136 ; 514-283-8300 ; [email protected] ) or Media Relations ( [email protected] ).

Alberta NDP Leader Naheed Nenshi slams premier Danielle Smith‘s plan to transfer hospitals

Naheed Nenshi delivers his acceptance speech after being named as the new leader of the Alberta NDP in Calgary, on June 22. Jeff McIntosh/The Canadian Press

Alberta’s Opposition leader says Premier Danielle Smith needs to explain her plan to potentially transfer control of underperforming hospitals to third parties.

NDP Leader Naheed Nenshi says Smith also needs to explain why she chose to quietly reveal the new policy two weeks ago at a members-only United Conservative Party event with no subsequent mention of it to the general public.

Nenshi, in an interview Tuesday, said the silence indicates the government is scared the plan won’t be popular or “they’re making it up as they go along.”

“This is no way to run a system with over 100,000 employees, to do it at your whim, to have no real plan and to just spout off the next thing that comes into your head that you think will please the audience you’re in front of,” Nenshi said.

“It’s pretty scary.”

The policy changewould be part of a broader planannounced last year by Smith to dismantle Alberta Health Services, or AHS, the agency tasked with delivering front-line care.

Smith has been sharply critical of the agency, accusing it of failing to rise to the challenge during the COVID-19 pandemic. After taking office in 2022, she fired its governing board.

The province is replacing AHS with four agencies tasked with overseeing specific areas of health care, with AHS left to focus on acute care in hospitals.

However, on Aug. 17, Smith told a United Conservative Party town hall in Drayton Valley, Alta., that the new AHS mandate may be reduced further.

Smith told the audience her government plans to hand over the operation of underperforming hospitals to third parties.

“We’re prepared to take away their authority to operate hospitals as well,” Smith said on video recordings of the meeting posted online.

“We need Alberta Health Services to focus on delivering the best care in the 106 facilities they operate for us – they have been distracted trying to run everything else, so we’re taking away all of their excuses.

“If our operator isn’t performing the services we need them to, we’re going to take it back.

“The next phase is to see how many of those hospitals that AHS currently operates that we can retake ownership over. We can’t do it for all of them,” said Smith.

Smith said the government is already offering up private charter surgical facilities and the services of faith-based public provider Covenant Health in an effort to create competition and “fear” among providers.

“When you’re dealing with a monopoly, and they believe that they can deliver any type of care and there’s no consequences, they’re going to continue to deliver bad service,” she said.

Smith’s office declined to provide a comment Tuesday to The Canadian Press and directed questions to Health Minister Adriana LaGrange’s office.

LaGrange’s office declined to respond to e-mailed questions about how hospital underperformance might be measured and how transferring authority might address staffing shortages.

In a statement, Andrea Smith, LaGrange’s press secretary, said the government wants to see “better results” from AHS, especially in rural and remote communities where there has been an increasing number of closures of emergency departments.

“The work to refocus Alberta’s health-care system includes transitioning Alberta Health Services, over time, to focus on delivering only acute care services,” she said, adding that AHS and Covenant Health will both still play key roles.

“Ensuring we have the right partner delivering these services is critical and we will continue to evaluate this on an ongoing basis.”

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