Canada's health-care spending is projected to reach $433 billion in 2026, an increase of nearly five per cent from the previous year, as spending growth begins to shift toward investments in health system capacity, care delivery and technology, according to a new report from the Canadian Institute for Health Information (CIHI).
The report projects that health-care spending will account for nearly 13 per cent of Canada's gross domestic product (GDP) this year, continuing to grow faster than the overall economy.
Spending growth signals potential shift in investment priorities
Although the pace of health-care spending growth is moderating after several years of elevated increases, it remains above pre-pandemic levels. CIHI says the latest projections point to a potential change in the factors driving spending increases.
In the years following the pandemic, much of the growth in public-sector health-care spending was attributed to inflation and pressures associated with an aging and growing population. In 2026, however, spending is projected to increase by more than $5 billion beyond what those factors would account for, suggesting greater investment in health-system capacity and the delivery of care.
The report identifies workforce and capacity pressures, capital investment, technology and artificial intelligence, as well as broader economic conditions, as factors expected to influence health-care spending in the coming years.
While investments in these areas could increase costs in the short term, CIHI says they could also create opportunities to expand the system's capacity and change how care is delivered.
"What's notable this year is not simply that health care spending continues to grow, but that the factors behind that growth may be shifting," said Lacey Langlois, director of Health Spending at CIHI.
"As population and inflation pressures begin to ease, we may see more health care spending translate into new health system capacity and new ways of delivering care. Health data is immensely valuable to assess how investments made within the sector make a difference for patients."
Hospitals remain largest spending category
Hospitals continue to represent the largest share of Canada's health-care spending, accounting for more than one-quarter of total national health expenditures in 2026.
Hospital spending increased 5.1 per cent from the previous year, with employee compensation representing a significant component of the costs.
CIHI noted that spending growth related to private agency staffing, overtime and sick leave has slowed from its post-pandemic peak. However, those costs remain elevated compared with pre-pandemic levels, continuing to contribute to hospital operating expenses.
Spending on physician services and drugs also increased in 2026, representing approximately 14 per cent and nearly 13 per cent, respectively, of total national health expenditures.
The figures underscore the continued importance of hospitals, physician services and pharmaceuticals within Canada's overall health-care spending, even as investment patterns potentially shift toward expanding system capacity and introducing new approaches to care delivery.
Technology and capacity among future spending pressures
CIHI's projections suggest that technology and innovation, including artificial intelligence, will remain important considerations for health-care spending decisions.
Capital investment and workforce requirements are also expected to influence expenditures as governments and health-care organizations address capacity constraints and consider different approaches to delivering services.
The institute notes that these investments could have longer-term implications for how health services are organized and delivered, although their immediate effect may be higher spending.
The report, National Health Expenditure Trends, 2026, provides an overview of projected spending across Canada's health-care system and examines the factors influencing expenditure growth.
CIHI is an independent, not-for-profit organization that gathers and distributes health information in collaboration with federal, provincial and territorial partners and stakeholders to support policy, management, care and research.
The organization has been providing health-system information for more than 30 years, with a focus on data privacy, security, accessibility and innovation.