TORONTO - Health-care costs in Canada doubled over the past decade and will cross the $200 billion mark this year, a report released Thursday reveals.

The report shows, though, that the growth in health-care spending has actually started to slow, after rising at an average of seven per cent a year during the period from 1998 to 2008.

Health-care spending will increase by four per cent this year, the lowest percentage increase in the past 15 years, says the report, from the Canadian Institute for Health Information.

A key driver of the rising costs is what the system pays doctors. And with medical schools geared up to churn out substantially more physicians in coming years, the system could be heading for a perfect storm, a health consultant who studied the report predicts.

"The pig is moving through the python," says Steven Lewis, a consultant based in Saskatoon. "We're starting to see the first effects of greatly increasing enrolment in medical school, the pouring out of new graduates."

Lewis says medical schools in the country have increased enrolments by 75 per cent over the past decade.

As those doctors graduate, Canada is moving from a state of under-supply to one of over-supply -- at least in the cities. Small towns and rural settings are still plagued by a shortage of physicians and the influx of new doctors is unlikely to mitigate that problem.

Currently most doctors in Canada are paid by what's called a fee-for-service model. They can charge the province and territory in which they practise a set amount for doing an annual check up, or administering a flu shot or ordering diagnostic tests.

If the fee-for-service payment model is retained, the system will be building in an incentive for doctors to over care for patients as a way to guarantee their incomes, Lewis says.

"In a fee for service system of course, they need to provide services in order to make a living. So that's going to create even more pressure in the future for additional costs."

The CIHI report is called National Health Expenditure Trends, 1975 to 2011. It was released with a companion report, entitled Health Care Cost Drivers: The Facts.