Canada's asylum health costs hit $1 billion as processing delays drive spending, not overuse

Canada's spending on health coverage for asylum-seekers and refugees has more than quadrupled over the past five years, reaching nearly $1 billion this fiscal year and projected to hit $1.5 billion in 2029-30, up from $211 million in 2020-21, according to the Parliamentary Budget Officer.

To reduce costs, Ottawa introduced co-payments this year requiring asylum-seekers and refugees to pay $4 per prescription and 30 per cent of the cost of supplemental health services like dental and vision care. The PBO estimates this will save about $162 million in 2026-27. But the actual driver of spending growth reveals the limits of this approach.

The cost increases stem not from over-generous benefits, but from longer processing times. Coverage applies as long as the refugee is in the system, including appeals. Under current rules and volumes, every extra month adds about $72 million to the price tag. Which means two months of delays in the immigration determination system will eat up the entire annual savings from the new charges.

Canada's asylum system is among the most generous and complex in the world. Eligible claimants may proceed through several stages of review and appeal, including an initial decision by the Immigration and Refugee Board, an appeal to the Refugee Appeal Division and judicial review by the Federal Court. This complexity combined with chronic undercapacity has produced a massive backlog — as of last December, more than 300,000 claimants were waiting for their initial decision. In 2024-25, the average stay in the system was about four years.

In fiscal year 2024-25, the IRB received more than 173,000 new refugee claims but was budgeted to process just 60,000. Adjudicators disposed of almost 79,000 cases that year, 30 per cent above target but still falling behind by more than two to one. No co-payment can close a gap that wide.

Meanwhile, 74,000 failed asylum claimants remain eligible for health coverage while they appeal their cases or await departure. Nearly half of the claimants rejected in 2019 were still in the system more than three years later. Between January 2016 and December 2025, approximately one-third of claims were rejected, but roughly 79 per cent of those rejected filed at least one appeal. Applying those ratios to the current backlog suggests 92,600 claims could ultimately be rejected, with 73,000 likely being appealed.

A case that is appealed takes six to 12 months longer to finalize, adding an estimated $146.5 million in annual costs — a little over half for supplemental benefits.