Canada is expected to spend approximately $242 billion on health care this year, with spending growing by almost four per cent over last year.

That $242 billion works out to about $6,604 per Canadian -- $185 more per person than last year, reports the Canadian Institute for Health Information (CIHI), a not-for-profit organization that analyzes health care information in Canada.

Health costs are expected to represent 11.5 per cent of Canada’s gross domestic product (GDP) in 2017 -- similar to last year, the organization predicts.

For years, public health observers have worried the amount of money spent on health care has not kept pace with inflation and population growth. CIHI says since 2010, the average annual increase on health care has been only 3.2 per cent. But that appears to be shifting, says Michael Hunt, the director of health spending and strategic initiatives at CIHI.

“Canada’s economy is improving and, as we have seen in the past, when there is more economic growth, more money is spent on health care,” he said in a statement.

Hospitals will continue to use the largest share of health care dollars in 2017, as they have for 20 years, accounting for 28.3 per cent of total spending.

Medications will use up another 16.4 per cent, while physician services are close behind at 15.4 per cent of costs.

Over the last couple of years, the pace of growth on drug spending has increased; this year, spending on medication is forecast to grow by 5.2 per cent.

“It’s not surprising that pharmaceutical costs are increasing,” Hunt told CTV News Channel on Tuesday. “We do see a shift to newer, more expensive biologicals.”

Medications used to treat rheumatoid arthritis and Crohn’s disease, called anti-TNF drugs (tumour necrosis factor alpha inhibitors), account for the highest proportion of public drug spending, even though they are used by a small percentage of the population.

Newer medications used to treat hepatitis C also contributed to the growth in medication spending in 2016.

Hunt says the aging population in Canada also plays a role in the increased costs of healthcare in the country.

“We know the aging population is adding about one per cent per year to total expenditures,” he said. “As the population begins to age into those more elderly years, they will certainly contribute more in terms of what’s required to meet the health care needs of an aging population.”

When broken down provincially, the more sparsely populated areas--such as the territories-- bring added expenses to the fold, Hunt says.

Provinces along the East Coast generally have older populations and as a result, have an increased demand for healthcare, he added.

In 2017, $39.8 billion is expected to be spent on medications in Canada. Of that, $14.5 billion -- or 42.7 per cent -- will be financed by the public sector.

Those costs will be covered by provincial/territorial programs ($12.4 billion); federal direct drug subsidy programs ($760 million); and social security funds ($1.3 billion).

The rest will be paid for privately, either through private health insurance, or out-of-pocket. In fact, out-of-pocket drug costs are expected to add up to $13.3 billion, or $362 per person, this year.

Canada spent $1,012 per person on medications in 2015. That’s much less than the United States, which spent $1,457 per person, but more than every other country in the OECD (Organization for Economic Co-operation and Development) except Switzerland. Canada also spent significantly more than the OECD average of $709 per person.