Will Ontario hospitals get a 4% funding increase?

Health sector expense for 2025/26 is projected to be $5.658 billion higher than as reported in the government's Third Quarter Finances. Up to the 3^rd Quarter Finances there had been about a billion dollar increase over the health sector Budget plan (with a $664 million budget increase for hospitals and the rest for home care). So, in total, the health sector budget got an additional $6.7 billion added to it since the 2025/26 Budget plan. This is a significant increase - - and shows the Ministry of Finance's Budget planning is way, way off.

The health sector budget for 2025/26 is now $97.8. In the 2025/26 Budget it was set at $91.1 billion.  So, the total planned increase over the Budget projection is 7.35%.  

Health sector 2024/25 expenditures were $91.3 billion. So, the planned increase over 2024/25 is 7.1%. The government planned harsh austerity for health care and ended up increasing the budget plan sharply.

Being off by this much is not a new phenomenon. The government’s Budgets remain highly unreliable.

It is not clear from the Budget which health care providers are getting what in 2025/26 – an extra $5.67 billion is a lot to spread around at the very end of the fiscal year and the Budget lacks details on where this $5.7 billion is supposed to go.

Reportedly the health “base” (meaning spending by the Ministry of Health but not the Ministry of Long-Term Care) is to increase to $89.025 B in 2025/26 from $81.711 B in 2024/25.  This is an 8.95% increase over 2024/25 – or $7.3 billion.  The plan had been to spend $81.85 billion in 2025/26. So, they overspent their plan by 8.8% -- or $7.17 billion. 

The plan for 2026/27 is to increase Ministry of Health funding to $91.9 B – a 3.1% increase. Based on past experience, that is just the starting point. Reality (aided by campaigns by communities, providers, and unions) will push that higher. 

Ministry of Long Term Care: MLTC saw a 4.8% increase in 2025/26 over 2024/25 actuals, increasing funding to $9.28 billion, exactly as planned in the 2025/26 Budget. So, there is no in year improvement for MLTC. Indeed, they may come in under budget - we will see when the Public Accounts come out in the fall.

The plan is to increase MLTC funding by 6.3% in 2026/27 (i.e., by $556 million). It's not clear what is going on here.  Perhaps they believe they will (finally) add a significant number of new beds.

For Long-Term Care services the government promises only to keep direct care at 4 hours per resident per day and 36 minutes per resident per day for allied health workers. Nothing new or improved.

The Budget claims that 4,054 new LTC beds have been added. This implies that 1,483 beds were added this past year (4054 - 2571 reported last year =1483). That is significantly faster than they have added beds in the past. They added only 2,571 beds between June 2018 and April 2025. But still this means that at the current rate of expansion, they won’t get to 30,000 additional beds for another 17.5 years (i.e., 2043). They promised to do this by 2028.

Medium Term Outlook: It’s not just 2025/26 that has seen a significant budget improvement. The medium-term expense outlook has improved significantly for the health sector.  In the 2025/26 Budget the 3-year plan was for an average of 0.7% annual increases. That was improved to 1% in the Fall Economic Statement. Those plans were ludicrously low. 

Now they have (slightly) come to their senses and are looking at a 3.47% increase over the interim 2025/26 figure of $97.8, bringing the total to $101.2 billion for 2026/27.  For 2027/8 they project a 2.3% increase, and for 2028/29 they project a 3.1% increase. So, the government has improved its medium term projections - -but it is still far, far short of need, given aging, population growth, inflation and people getting chronic illnesses at younger ages and living longer with chronic illnesses.

Deficit lower than planned: And as has happened in the past, despite funding increases, the deficit came in under the Budget plan – by $2.3 billion. 

This may well prove to be an understatement – they may not spend everything they now have in their 2025/26 budget plan (it takes a while for the money to flow so 2025/26 spending won’t finalize at the year-end on March 31) and they still have $600 M in reserves and their contingency fund. These will come off the deficit if they are not spent. 

Will hospitals get a portion of the extra $5.7 billion in funding for 2025/26? For 2025/26, hospital operations line-item funding was budgeted at $27.090 B. In the third quarter an additional $664 million was budgeted for hospitals, bringing the total to $27.754 B.  This squares with the Toronto Star’s report that funding was increased in the Budget by $1.1 billion to $28.9 B ($27.754 B + $1.1 B = $28.854 B). But note - -this does not include any portion of the last minute $5.7 billion health care top up for 2025/26.

So, if the hospitals do get a share of the extra $5.7 B that was provided for the health 2025/26 budget, it is a little hidden – or at least not included in the $28.9 billion reported by the Star. 

The Budget is very coy and only says this significant end of the year increase is “primarily to address pressures related to the delivery of health care and to address growing demand for other health services, such as utilization-driven programs like the Ontario Health Insurance Plan and Ontario Public Drug Programs.”

Four percent funding increase for hospitals?  The government claims that it will increase hospital funding by 4%. But will it?  

Hospitals have big deficits and a shortage of working capital so it would make sense that they get some of the $5.7 billion in last minute cash for 2025/26. 

If, say, $800 million of hospital deficits are paid off via the extra $5.7 B budget health increase for 2025/26, then 2025/26 funding will be increased by $800 million and a  4% funding increase would have to build on top of that -- i.e., $27.8 billion plus $800 million plus 4% -- or $29.74 billion -- and that is $840 million more than the $28.9 billion reported by the Star. 

Bottom line: Where the extra $5.7 billion for 2025/26 is going remains unclear. All we know for sure is that it is not going to LTC – and that drugs, doctors, and some unnamed health care providers are budgeted to get some, unknown amounts of last minute cash for 2025/26.  In all likelihood no one will find out how much until 2025/26 is nothing but a fading memory.  (It's a funny way to run a health care system.)

It is also notable that there were zero new promises made for the additional $5.7 billion in health funding announced in last weeks Budget. The government is simply admitting, at the last moment, the true cost of health care for 2025/26.  This may provide some relief for some health care providers but will not lead to improved services-- the year will be over before any of the providers receive the money.  

The only slightly improved medium-term forecast for health care funding means that the charade of low-balling health care budget expenses in the Budget will continue for another year- -although perhaps not quite at such an outrageous level.