THE BLOG

The Problem With Canada's Unsustainable Health System

12/12/2013 12:30 EST | Updated 02/11/2014 05:59 EST

A little over 2 months ago, the Society of Actuaries and the Canadian Institute of Actuaries released their "Sustainability of the Canadian Health Care System and Impact of the 2014 Revision to the Canada Health Transfer," report, outlining the viability of our health care system over a 25-year horizon. While the report seemed to slip under the media radar, the results are nonetheless daunting. Actuarial analysis of the Canadian health care system concludes that, at current growth rates, a staggering 97 per cent of total revenues available to provinces and territories will be spent on health care expenditures by 2037, compared to 44 per cent in 2012.

Canada ranks as the fifth most expensive country of the OECD in terms of per capita health care expenditures, dedicating resources equal to a whopping 11.4 per cent of GDP to health care. In spite of these tremendous costs, Canadians remain immensely proud of their health care, and often grow exceedingly reluctant at the idea of rethinking the system. We stubbornly harbor a status-quo mentality when it comes to our prized health care system; perhaps a symptom of witnessing our southern neighbours' struggles in that regard over the years.

As our population ages and the ratio of working Canadians declines, projected real GDP simply won't continue to grow at the same pace as observed historically. With this reality in mind, it is imperative that Canadians come to terms with the fact that this generational demographic shift will result in steep growth of health care expenditures. One of many examples is the supply of physicians; it will need to increase by at least 46 per cent over the next 25 years just to keep up with increased demand for services by the aged population. And according to this report, without much-needed significant government intervention, we are at risk of losing free health care altogether.

To make matters worse, the recent modification in the way that the Canadian Health Transfer (CHT) will now be calculated further complicates things. While Canadian provinces and territories are primarily responsible for their own health care delivery, the federal government provides funding support through the CHT. On Dec. 19, 2011, however, the federal government announced (under the radar, as usual) that they were going to significantly drop funding from the current 21 per cent to 14.3 per cent by 2037. As a result, Canadian provinces will have no choice but to impose severe cutbacks to other already neglected sectors (such as the arts, public transportation, infrastructure, education, social welfare, etc.) and put in force abrupt tax increases.

The rippling effects of this bottleneck situation will be felt by all. For the first time in history, as the outnumbered youth struggle to support their aging elders, their living standards will be significantly lower than that of their parents. Cutbacks in social services, coupled with an increased proportion of revenue being spent on healthcare will mean we won't live as comfortably as the generations that preceded us. Paradoxically, the senior population will vehemently demand high quality health care services (isn't that what they paid taxes for?) but inevitably find themselves utterly disappointed.

Assuming that the government will take action, several economically viable options must be brought to the table in an attempt to safeguard the sustainability of our health care system. Public policymakers will need to put more emphasis on programs to control risk factors associated with chronic diseases and more seriously address issues such as obesity and nutrition. The importance of research and cost-reducing technology as a means to improving the effectiveness of processes and procedures will have to be stressed. More imperatively, the government must find new and/or additional sources of funds to support projected expenditure increases. Boosting GDP growth traditionally means raising taxes/fees, cutting government programs/services, or a combination of both. But with an already burdened youth minority, the extent and effectiveness of such measures will need to be carefully calculated.

Many have advocated the virtues of Public Private Partnerships as a way to alleviate this burden. Several successful hospital projects involving PPPs have already been developed across the country, namely in Ontario and British Columbia, and this trend is continuing to grow. In these cases, PPPs have provided much needed capital to finance government programs and projects, all while freeing public funds for core economic and social programs.

However, research has found that in many cases PPPs offer no evidence of improved service levels and that private sector involvement leads to information being classified as sensitive to business interests, resulting in a loss of accountability to taxpayers. This means that while partnering with private sector organizations can provide new sources of capital, expertise and technology, the loss of public control that occurs when a private sector company is involved in financing, building or delivering public services remains a major issue. In the end, PPPs clearly need to be an integral part of the solution, but it is our responsibility to demand transparency through government monitoring and control.

Moreover, while our attitudes regarding health care policy needs to shift, perhaps it is also time to rethink the place and role of senior citizens in our society. The cult of youth, self-reliance, and independence means old age is more miserable than ever before. While our elderly used to hold a central place in society and family dynamics, they are now relegated to retirement facilities. What then, is the value of elders in our society? Not much, if we consider the staggering rates of senior isolation and depression. And with the impending burden they will soon represent, it is easy to see how this situation is bound to worsen with time.

The paradigm needs to shift now. Instead of viewing the elders as the reason for the eminent Canadian health care crisis, we need them to be an active part of the solution. In the business world for instance, white collar workers seem to have an expiration date; past 65, you're a relic. Go play golf, buy a condo in Florida, and let us younger technologically savvy folks handle things. While it is true that the technological learning curve might be a real challenge for older workers, it doesn't mean that they are to be dismissed altogether. With their experience and knowledge, they can add valuable insight in regards to long-term planning, mentoring, and overall management. In addition, seniors can also be extremely useful once retired. As grandparents, great-uncle or great-aunts, they can serve as highly qualified and free babysitters. This represents a cost-effective alternative to high priced babysitting services and state subsidized day cares.

In the end, it is hoped that both policymakers and the general population will come to terms with the importance of developing both funding and societal strategies in order to maintain high quality standards in the Canadian health care system. There needs to be a shift in our status-quo mentality; we must accept that we will have to work longer and pay more taxes, all while actively holding our governments accountable in regards to long-term health care policy. And while Canadians don't seem ready to have this discussion, they will sooner or later have to face the facts to ensure the survival of their prized health care system.