Health Care and the Ageing Population

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Appeared in the National Post, July 2007

On Tuesday, Statistics Canada reported that Canada's population is continuing to age: the 65+ population made up a record 13.7 per cent of the total population in 2006 while the under-15 population in Canada fell to its lowest level ever (17.7 per cent). Since the ageing population will have a number of effects on health care programs in Canada, it's important to understand the implications of ageing on the health care system and how best to prepare for it.

A key implication of an ageing population is one of taxation and expenditure. Average health care spending rises as individuals age since older people are more likely to require joint surgery, eye surgery, and general physician care in order to maintain their lifestyles. Data on provincial health spending by age from the Canadian Institute for Health Information bear this out: average per capita provincial/territorial health spending in Canada was about $2,630 in 2004, while spending for those aged 65-69 was about $5,016, and spending on those aged 80-84 was roughly $11,902.

As Canada's population ages, health spending is likely to rise. And since health care is funded from general government revenues, the burden of financing care, which already falls disproportionately on the working age population, will grow.

As well as spending more on health care, we will also likely see an increase in demand for care. As health needs rise among the population, the health care system will need to find more resources to deal with greater demand for health services. Notably, physicians are also ageing along with the population as a whole, which means increasing physician retirements will come around the same time as the increase in demand from ageing. And this is all happening in the context of a system that is unable to keep pace with current demand.

In 2003, more than 1.2 million Canadians could not find a regular physician. As for specialist care, in 2006 the median wait time from referral by a general practitioner to treatment across 12 major specialties stood at nearly 18 weeks, and was much longer for some specialties like eye surgery and orthopaedic surgery.

If the system is unable to meet demand today, how can we expect the system to keep pace with a demographically-driven expansion in demand tomorrow?

Money is not, and will not be the answer. Canada's health care program is not lacking for funds: in 2003, the latest year for which comparable data are available, Canada ranked second in age-adjusted health expenditures among developed nations that maintain universal access health insurance programs. At the same time, Canada ranked near the bottom in access to physicians, to technology, and to care among those developed nations. Clearly, Canadians are not getting good value for money from their health care program. Solving that problem is the key to being ready to deal with the needs of ageing Canadians in the future.

The solution to Canada's demographic challenges lies in understanding what other developed nations have done to ensure that their health care programs were equipped to deal with the expansion in demand. In some ways, Canada benefits from its relatively young population, which gives us the opportunity to learn from other developed nations' experiences and choose the best health care policies up front.

In 2003, Japan and Germany had the oldest populations among developed nations that maintain universal access health care programs. Notably, Japan's health care program stands out as an excellent example for others as it achieves top-ranked health outcomes and provides access to medical care without waiting lists. Germany's model also provides access to care without waiting lists. While Germany's model cost more than Canada's before age-adjustment, Japan's model cost less, which suggests that a significant increase in expenditure might be avoidable with the appropriate policy regime.

Unlike Canada's Medicare, these nations rely on private competition in the hospital care sector, on user fees for medically necessary services, and on a parallel private health care sector to ensure that patients of all incomes get access to high quality care in a timely fashion. Such policies lead patients to make more informed decisions when seeking care and give providers the incentive to deliver more health services at higher quality and more efficiently than they would otherwise. It should be noted that this successful policy regime is common to all of the top-ranked health care programs in the developed world (either those that provide superior health care outcomes when compared with Canada’s or those that provide access to health care without waiting lists).

Our ageing population will have a greater demand for health care in the future. While that may well mean more spending on health care, it will also mean longer waiting lists and more Canadians going without care unless the system is restructured so that provides services more efficiently and effectively. The lessons from nations whose populations are older than our own and whose health care programs are able to deliver more and better services for the dollar will have to be followed if Canadians are to be ready for an ageing population. Not doing so will only mean more spending on a health care system that is already unable to meet the needs of those it is supposed to serve.

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