Health-care spending was supposed to be the insatiable monster, gobbling up provincial budgets until there was little money left over for other programs.

But in the last three years, spending on health has actually slowed down. It is still rising, just not at the breakneck pace of the last decade, according to a new report from the Canadian Institute for Health Information (CIHI), the agency that crunches numbers on Canadas health-care system.

This year, Canada is projected to post health-care spending growth of 2.1 per cent, the slowest rate of growth in 17 years. That is a much lower rate than the roughly 7-per-cent annual increases that were the norm from 2000 to 2010, the report says.

Experts say the trend toward less-ravenous health-care budgets is likely to continue for the foreseeable future, largely because cash-strapped provincial governments have little choice but to rein in the systems costs. Austerity measures and budget deficits have forced some provinces to re-examine how they spend scarce health-care dollars.

One of the things that theyve been trying very hard to do is do cost constraint and start getting a little bit more efficient around how they do things, said Raisa Deber, a professor of health policy at the University of Toronto.

But there are potential pitfalls on the road to continued restraint: If the provinces cannot keep a lid on what they pay nurses and doctors, or if a slew of new, expensive prescription drugs floods the market, spending could begin to rise more sharply again.

Health-care spending increases are slowing against the backdrop of a looming change in how Ottawa contributes to health care, the largest line item for provincial budgets.

Last March, the 10-year, $41-billion Canada Health Accord expired and with it the guarantee of a 6-per-cent annual increase in health-transfer payments to the provinces.

The federal government has already promised to maintain the 6-per-cent increases until 2017, but after that, Ottawa will rely on economic growth and inflation figures to determine the increase, a formula that some premiers warn will leave a hole in their health-care budgets. The Conservatives have said, however, that they will not let the increase drop below 3 per cent per year.

[The federal government] has made it clear that this is all really a provincial responsibility and all they are going to do is hand over some dollars from time to time, said Colleen Flood, a University of Ottawa law professor who specializes in health policy. Lots of people have various opinions about that, but in a way I think it has been good from the perspective of making it very clear that the provinces really need to take responsibility and run their respective health-care systems adroitly.

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Health-care spending projected to grow at slowest pace in 17 years