Health-care spending may spike by 88 per cent due to Canada’s aging population
The pandemic has made health care, already a pressing issue, a top priority for policymakers in Canada. But in addition to COVID-19, two other phenomena may profoundly affect the financial sustainability of Canada’s health-care system in coming years—Canada’s aging population and the much higher per-person health-care costs for older Canadians than for younger Canadians.
Indeed, Canadians aged 65 and older accounted for 16.2 per cent of Canada’s total population in 2018 and will account for a projected 23.4 per cent of the population in 2040.
Moreover, according to the available data (2017), per-person spending on health care is substantially higher for Canadians aged 65 and older than for younger Canadians, with the disparity increasing as average age increases beyond 65 years. For example, per-person spending for the 80 to 85 age group was more than twice the mean per-person spending across all age groups in Canada.
In fact, health-care spending on Canadians aged 65 and older accounted for 45.7 per cent of total health-care expenditures in 2019. Given the projected aging of the population, that percentage will rise to 71.4 per cent of total health-care expenditures in 2040.
And according to a new Fraser Institute study, which uses 2017 estimates of per-person health-care expenditures (assuming no post-2017 inflation in health-care costs), this projected growth in the number of Canadians aged 65 and older will increase health-care spending by approximately 88 per cent from 2019 to 2040.
In other words, by 2040, absent policy change, around one-quarter of Canada’s population will consume nearly three quarters of the government’s (inflation-adjusted) health-care budget. This seems politically unsustainable, and inappropriate from a public health perspective. Clearly, there’s an urgent need for governments to implement policies that improve the efficiency of health-care services for seniors. The alternatives include either a dramatic increase in government spending on health care or a dramatic increase in rationing, which will mean longer wait times for care.
COVID will likely not alter this outlook in any significant way. While the pandemic’s tragic death toll has been largely concentrated among seniors, especially those in care facilities, the death rate among Canadians in their 50s and 60s has thankfully been quite low. Subsequently, by 2040, the proportion of the population in their 70s and 80s will not have changed much. (Although it’s possible that some portion of younger people who contracted this coronavirus will have health conditions that manifest in their older age, which might mean that inflation-adjusted per-person health-care spending on seniors in 2040 will be higher than in 2017.) If so, it would only increase the financial pressure that an aging population will place on Canada’s health-care system.
Spending on medically necessary services, which comprise the single largest budget item for every provincial government in Canada, are affected by other factors besides the age distribution of the population including rising costs of health-care inputs such as new biologic pharmaceutical drugs (although the benefits of new drugs and other health-care innovations may well be worth the additional costs). But our aging population is a major factor.
Policymakers across the country, including in Ottawa, should understand today the likely scenarios of tomorrow, and craft policies with the health and wellbeing of all Canadians in mind.
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