Canada: #18 in the 2024 World Index of Healthcare Innovation

Introduction

In the 2024 World Index of Healthcare Innovation, Canada ranked 18th, improving from 25th in 2022. However, its overall ranking was negatively affected by its performances in Science & Technology and Fiscal Sustainability, where it ranked 18th and 27th, respectively. On a positive note, Canada excelled in Quality, securing the 7th position.

Background

Canada’s healthcare system is a single-payer model, initiated by Tommy Douglas in Saskatchewan in 1947 and expanded federally with the 1966 Medical Care Act. This legislation established provincial single-payer coverage for physician services funded through block grants. Contrary to the prevalent U.S. perception of “socialized medicine,” Canada’s system is characterized by a decentralized approach akin to what many American conservatives advocate for Medicaid.

Public healthcare in Canada is universally accessible and provided free at the point of service. However, over two-thirds of Canadians supplement this with private insurance, which covers additional services not reimbursed by the public system, such as dental, vision, and home care, along with many prescription drugs and private hospital rooms. In 2023, private insurance comprised about 14 percent of total health expenditure, while public spending accounted for approximately 72 percent.

The balance between private and public healthcare facilities varies across provinces. Ontario, for example, predominantly features private, nonprofit hospitals, whereas other provinces operate public regional hospitals. Hospitals are generally managed by regional boards that represent local communities, and hospital-based physicians are compensated on a fee-for-service basis, rather than being hospital employees.

To manage healthcare costs, Canada employs mandatory federal budgets for hospitals and regional health authorities, comprehensive drug formularies, and negotiated provider fee schedules. The Patented Medicine Prices Review Board plays a crucial role in regulating the prices of new patented medications. Meanwhile, provinces manage the costs of generic drugs and control pricing under public drug plans, leading to variations in the availability of pharmaceuticals.

From an economic perspective, Canada maintains a relatively healthy debt-to-GDP ratio, which stood near 37 percent as of last year. Healthcare expenditures constitute about 12.4 percent of the country’s GDP. Despite high domestic drug prices—among the highest globally—Canadians face significant cross-border demand for prescription medications from Americans seeking more affordable options.

The Canadian healthcare system operates on a tiered structure that allows a comprehensive integration of public and private elements. This dual approach not only facilitates broad access through public insurance but also caters to more specific needs via private coverage. The system’s strength lies in its ability to offer universal coverage while maintaining options for those who seek expanded services. This structure reflects Canada’s commitment to balancing equity in access with sustainability and cost control, a model that continues to evolve in response to public health demands and economic conditions.

Dimension Performance

Quality

Canada excelled in the Quality dimension, ranking 7th. Notably, it performed well in preventable disease (8th) and demonstrated strong healthcare infrastructure (5th). In terms of pandemic preparedness and response, Canada ranked 6th. Finally, its ranking in patient-centered care saw an improvement, climbing to 19th in 2024 from 22nd in 2022.

Choice

Canada ranked 16th for Choice. While the Canadian system ranked highly in access to new treatments (6th), it has room to improve in fostering greater uptake of biosimilars alongside excellent generic drug uptake. Canada also performed poorly in freedom to choose healthcare services (25th), a product of the country’s single-payer system. Rising prices also dropped Canada three places to 19th in affordability.

Science and Technology

Canada again ranked 18th in Science and Technology. Two elements kept Canada’s score low: medical advances (27th) and health digitization (20th), though Canada performed at the median in scientific discoveries (15th), bolstered by highly-cited medical research.

Fiscal Sustainability

Canada ranks poorly across many elements of Fiscal Sustainability (27th). National solvency is in danger with a debt-to-GDP ratio eclipsing 117 percent, and public healthcare spending (26th) and the growth of public healthcare spending (15th) are significant drivers.