Malanik-Busby, Carleigh; Cabral, James

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Legislative Costing Note

Bill C-201 (45-1)

An Act to amend the Canada Health Act (mental, addictions and substance use health services)

Carleigh Busby ; James Cabral

Published on December 16, 2025 PDF

Bill C-201 proposes to amend the Canada Health Act to add mental, addictions and substance use health services to the definition of “insured health services”.

If implemented January 1, 2026, PBO estimates the net federal cost of Bill C-201 would be $24.4 billion over 2025-26 to 2029-30.

Bill C-201 proposes to amend the Canada Health Act to add mental, addictions and substance use health services to the definition of “insured health services”.

If implemented January 1, 2026, PBO estimates the net federal cost of Bill C-201 would be $24.4 billion over 2025-26 to 2029-30. As health care is a provincial and territorial responsibility, the direct cost to cover these services would be borne by provincial and territorial public health insurance plans. That is, we assume that Bill C-201 shifts the financing of (existing) private spending on mental, addictions, and substance abuse health services to the public sector. Further, we assume the net federal cost will be equal to this additional cost to the public sector. At the national level, there is a modest incremental increase in spending on these services, reflecting our assumed behavioural response.[^1]

Estimates are presented on an accrual basis as would appear in the budget and public accounts.
A positive number implies a deterioration in the budgetary balance (lower revenues or higher spending). A negative number implies an improvement in the budgetary balance (higher revenues or lower spending).
Totals may not add due to rounding.
* Current spending includes direct federal spending, federal and provincial medical expense tax credit expenditures and spending on other levels of government’s public sector employees.

Baseline expenditures on mental health (MH) care are estimated as the sum of earnings for mental health, addictions and substance use care professionals in the public sector and private sector, including self-employed workers,[^2] plus associated overhead costs.

Total spending by occupation and year were computed using head counts (services for physicians), wages or fees, and hours worked from various sources. Estimates for non-psychiatrist physicians and non-psychiatric nurses were adjusted to reflect the share of MH services. Counts of social workers and social service workers were adjusted to account only for those providing direct patient care. Counts of therapists in counselling and related specialized therapies were adjusted to reflect those providing counselling and psychotherapy services, inferred based on information from provincial colleges and professional organizations.

Direct federal spending reflected in the private sector was calculated using information provided by departments and publicly available information. Provincial, territorial and municipal (P/T/M) MH spending was assumed to be equal to Public Service Health Care Plan (PSHCP) expenditures scaled by the ratio of P/T/M public servant counts to federal public servant counts. We also estimated MH expenses claimed through the various medical expense tax credits (METC).[^3]

Baseline expenditures were projected assuming no changes to the Canada Health Act. Occupation head counts grew with rates based on Employment and Social Development Canada’s Canadian Occupational Projection System. Physicians’ services were projected using 2019-2024 growth rates obtained from CIHI’s National Physician Database. Wages (payments for physicians) across sectors were assumed to grow with median wage growth observed over 2019-2024. We then imposed a gap where wage growth in the private sector was assumed to be greater than that of the public sector. This gap was set equal to the 1992-2023 percentage point gap for other services by other professionals from CIHI’s NHEX. Projected hours worked were set to their 2021-2024 average.

Direct federal spending was projected using growth of PSHCP claims. Projected counts of P/T/M public servants were extrapolated using their 2006-2024 average growth rate. Total federal METC tax expenditure was grown using the 2021-2026 average growth rate from the tax expenditure reports; total provincial/territorial METCs were grown using SPSD/M[^4] and aligned with PBO’s latest Economic and Fiscal Outlook (EFO). The amount of the METCs associated with MH expenses was projected using the 2021-2024 average ratio of PBO’s private MH expenditures (less other projected direct federal and P/T/M MH spending) to CIHI’s NHEX total private health expenditures.

The net federal cost was estimated assuming Bill C-201 was implemented. We calculated a behavioural response where Canadians with unmet needs, who did not see a health care professional for their MH or substance use concerns because of cost, would utilize psychologists and therapists in counselling and related specialized therapies services at a rate consistent with the average annual hours of counselling among Canadians with unmet need who did see a health care professional.

Sourced LFS data do not account for services provided in secondary jobs. PBO did not assume growth in primary care providers’ time allocated to MH and addictions services (despite historical growth) to offset anticipated supply shortages reflected in ESDC head count projections. The behavioural response of greater use of MH and addictions counselling services among existing users was not included. We did not make assumptions regarding the implementation of Bill C-201, which would likely have implications for government-provider remuneration and operating arrangements (including wages, wage growth and rules/incentives for operating in the private sector) and allocation of the incremental cost between federal and provincial/territorial governments.