$3 billion funding gap drives privatization and downloads costs onto Ontarians. .

There’s little relief in sight for Ontario’s public health care system. Ontario’s 2026-27 budget delivers austerity for the province’s under-resourced health care system.

Ontario funds hospitals at the lowest per person rate in the country, at $1,805 per person, below the national average of $1,949 per person (based on 2022 data), and the province had the second lowest per person funding rate for the entire health care sector, at $5,268 per person, below the national average of $5,562 per person.

This translates into a provincial health care system that is under such strain that it can no longer meet the needs of the population. Overcrowded hospitals and hallway medicine are the norm.

There are two major concerns with this budget: how much is being invested in health care and where that money is going.

The budget delivers service and spending cuts

First, the public health care system is not getting the funding it needs to maintain service levels. The health care sector is projected to get $97.8 billion in 2025-26. While this number sounds big, in inflation-adjusted terms that account for population growth and aging, funding will increase by a paltry 0.5 per cent, then it will be cut by 1.6 per cent in 2026-27.

In raw terms, the Financial Accountability Office of Ontario (FAO) estimates that $6.4 billion in new spending is required in 2026-27 just to maintain 2024-25 service levels. But budget 2026 only adds $3.4 billion in additional spending, which leaves the health care system short by $3 billion in the upcoming fiscal year.

In 2027-28, the funding gap is expected to widen even further. The FAO estimates that $9.6 billion of new funding is required to maintain service levels in 2027-28. Budget 2026 offers only $2.3 billion—leaving a gap of $7.3 billion.

Funding austerity drives private-pay health care

Provincial funding austerity benefits privately financed—or “private-pay”—health care. When individuals and households are forced to pay out-of-pocket or with private insurance for health care services, this is a form of privatization.

From 2014 to 2023, per person private health care spending increased by 38 per cent—higher than provincial spending, at 35 per cent. Provincial per capita spending should be increasing at a greater pace than private spending, either in the form of out-of-pocket or insurance payments. It’s not.

The trend is worrisome—and budget 2026 is likely to make it worse.

In six of the last 10 years (2014 to 2023), per person health care private spending increased faster than per capita provincial public health care spending. Although provincial spending on health care remains a much larger share of total spending, the fact that private out-of-pocket and insurance spending has outpaced provincial spending is cause for concern.

In the absence of adequate provincial investment in health care, households pay privately for health care that should be available and adequately funded by the provincial government—that’s the principle behind universal health care in Canada.

Indeed, when the government has the political will to invest in public health care, we see results. In 2020, the COVID-19 pandemic brought a 12 per cent increase in per person provincial health spending—and private spending dropped by eight per cent.

When the government steps up, it means public services can be mobilized quickly and people are not forced to pay privately—or go without. We cannot forget how rapidly provincial governments committed resources to increase health care sector capacity.

The Ontario government needs to treat the current crisis in Ontario’s health system with the same urgency that it did in the early days of the pandemic.

Where is the money going?

The second problem is that a growing share of public health care funds is going into for-profit health care delivery, where public dollars leak into private profits.

This second form of privatization involves the provincial government using public funds to pay private, for-profit companies to deliver services.

The budget is silent on how much in public spending will be going towards this form of privatization—nor are these expenditures available in publicly available data. However, previous CCPA research has shown it to be a growing share of public health care expenditures.

While the public hospital sector is being downsized through reduced provincial funding, Ontario is expanding outsourcing contracts with for-profit surgical facilities. In December, the Ontario government announced four new private orthopedic surgery facilities as part of a $125 million scheme to increase for-profit involvement.

This is the largest one-time injection of public dollars into for-profit health care in Ontario—and likely Canadian history, outside of Quebec, despite evidence that Ontario pays private companies much more than public hospitals for the same procedures.

Chronic underfunding has also encouraged Ontario public hospitals to rely on costly for-profit staffing agencies to staff critical services. Ontario hospitals paid out over $9 billion to for-profit agencies over a decade. Between 2013-14 and 2022-23, real per capita private agency costs in Ontario nearly doubled (98 per cent increase) while spending on public hospital staff increased by only six per cent.

Based on public contracts with for-profit surgical and diagnostic companies and staffing agencies alone, Ontario flows at least $1 billion annually to for-profit health care corporations.

Aside from government announcements, the public is at a considerable disadvantage when trying to understand how much public funding is going to for-profit corporations that are contracted to deliver health care services.

The CCPA relies on Freedom of Information legislation to make sense of how public dollars are subsidizing private profits. This is a growing concern in Ontario and other provinces.

The Ontario government’s plans to further restrict access to government information and the premier’s communication on this issue signals a disturbing shift away from transparency and accountability. We need only look south of the border to see where this road takes us.

A better way is possible

In sum, there is a deepening public health care funding crisis in Ontario. The new provincial budget encourages greater privatization—both out-of-pocket payments for health care services and outsourcing to investor-owned corporations.

Instead of creating a funding gap of $3 billion that will reduce service levels, the provincial government should invest in the care economy and services Ontarians rely on—so that we’re not forced to increasingly pull out our credit card for needed health care services.

Republished from Canadian Centre of Policy Alternatives under a Creative Commons License

Andrew Longhurst