Canada’s federal health-care program for asylum claimants is on track to cost more than $1.5 billion a year within the next five years, according to a new report from the Parliamentary Budget Officer (PBO).
In a fiscal analysis released Feb. 12, Parliamentary Budget Officer Jason Jacques estimated that spending under the Interim Federal Health Program (IFHP) will approach $1 billion in the current fiscal year and rise to over $1.5 billion by 2029–30 if current trends continue.
The report was prepared at the request of the House of Commons health committee, which is examining how immigration policy is affecting Canada’s health-care system. Committee members asked the PBO to assess recent spikes in program costs and project future expenditures.
The IFHP provides temporary health coverage to certain foreign nationals who are not yet eligible for provincial or territorial health insurance. Eligible recipients include resettled refugees, asylum claimants, protected persons, immigration detainees, victims of human trafficking, and other vulnerable groups approved by the immigration minister.
According to the PBO, the program’s costs have risen sharply in recent years, increasing from $211 million in 2020–21 to $896 million in 2024–25 an average annual growth rate of nearly 34 percent. Although spending is expected to continue rising, the pace of growth is projected to slow to about 11 percent annually over the next five years.
The report attributes the surge in costs to a significant rise in asylum claims and longer processing times, which extend how long claimants remain eligible for federal health coverage. While the intake of asylum applications has moderated somewhat over the past year, it still exceeds the government’s capacity to process and determine claims, the PBO noted.
Under the projections, the average annual cost per beneficiary is expected to increase from $1,363 this fiscal year to $2,148 by 2029–30.
“It’s clear that costs for this program are growing very quickly and faster than overall federal spending,” Jacques told members of the health committee during his appearance.
The IFHP covers a broad range of medical services, including hospital care, ambulance services, diagnostic tests, prescription drugs, urgent dental treatment, limited vision care, mental health services, mobility aids, prosthetics, and certain long-term and home-care services. The program is designed to provide health coverage while individuals await decisions on their immigration status or until they become eligible for provincial coverage.
Immigration, Refugees and Citizenship Canada (IRCC) says the program helps bridge critical gaps in care for refugees and other “uniquely vulnerable” foreign nationals.
The rising cost of the program has sparked political debate, particularly around eligibility for individuals whose asylum claims have been rejected.
Conservative MPs questioned whether rejected claimants including those facing deportation or criminal charges should continue to receive benefits.
During the committee meeting, PBO adviser-analyst Caroline Nicol said that, based on IRCC guidance, coverage typically remains in place until the individual leaves Canada, even if their claim has been denied or they have been ordered removed.
This policy drew criticism from some Conservative members, who argued it could incentivize individuals to remain in the country despite deportation orders.
The federal government has announced changes aimed at reducing program costs. Budget 2025 includes plans to introduce a modest co-payment model for certain supplemental health services, though these measures were not included in the PBO’s cost projections.
Under the proposed changes, IFHP beneficiaries would pay $4 per prescription medication and 30 percent of the cost for other supplemental services such as dental care, vision care, counselling, and assistive devices.
Liberal MP Doug Eyolfson said the co-payment model is expected to generate annual savings between $127 million and $232 million. IRCC has described the measure as necessary to maintain access to care while managing growing demand and ensuring the program’s long-term sustainability.
The PBO noted that incorporating the co-payment system would likely lower overall cost projections. Jacques also indicated that his office has not yet factored in potential changes under Bill C-12, which proposes tighter immigration controls and remains under Senate consideration.
Some Liberal MPs argued that because the report does not reflect these recent policy changes, its projections should be interpreted cautiously.
Despite anticipated reforms, the PBO’s analysis underscores the mounting fiscal pressure associated with Canada’s asylum system, particularly as application volumes continue to outpace processing capacity.
