Out-of-pocket health care costs surge 18.5% across Canada since 2022 inflation peak

Out-of-pocket health care costs have surged 18.5 per cent across Canada since inflation peaked in June 2022 — nearly matching the rise in food prices and creating an affordability squeeze many Canadians don't see coming.

The jump in health care costs often flies under the radar, experts say, partly because many costs are covered by the public health care system and partly because health expenses tend to be sporadic rather than the monthly rent or weekly grocery bills that dominate household budgets.

"You pay your rent every month and you pay your grocery bill every week," said Jimmy Jean, vice-president and chief economist at Desjardins Group in Montreal. "So it's very much in consumers' faces in a way that you couldn't say for a dental appointment that you have twice a year."

But the data tells a stark story. The broad category of health and personal care has climbed just over 15 per cent since June 2022, behind shelter costs (more than 16 per cent) but ahead of overall inflation (just over 11 per cent). The subset of health care services — eye exams, physiotherapy appointments, and basic dental care — is up 18.5 per cent, nearly matching food price increases of almost 19 per cent.

Dental care services and eye care goods have both seen prices rise 20 per cent since June 2022. These are emblematic of a public-private split within health care, where one side controls costs and the other does not. "Prescription eyeglasses and contact lenses — most of that industry is all private for-profit, increasingly investor-driven, private equity is involved. And it's similar with dental care," said Andrew Longhurst, a senior researcher at the Canadian Centre for Policy Alternatives. "These are areas where there is virtually no public provision, very limited not-for-profit provision, and there are no public constraints on what those costs are."

The trend is long-running. Statistics Canada data shows health care service prices have generally tracked well above overall inflation for the past 20 years — exceeding overall inflation 85 per cent of the time. Even during the pandemic-era inflation spike, when other prices spiked dramatically, health care costs maintained their upward trajectory.

Part of the pressure stems from the sector's fundamental economics. Skilled labour costs dominate health and dental services, and extracting productivity gains is difficult in work that cannot be easily automated or scaled. As aging populations demand more health services and provincial governments signal fiscal restraint, the cost pressures are expected to intensify.

"I think that growth is only going to increase as we see greater aging and we see provincial governments — especially among the larger provinces — really pulling back and choosing fiscal restraint and austerity," Longhurst said.