Aging Population and Its Potential Impact
What’s the Issue?
Canada’s population is aging and per capita healthcare costs increase with age. Many political commentators have put these facts together to predict the aging population threatens the sustainability of Canada’s healthcare system. But what if some other facts are thrown into the mix?
- The aged are only a small part of the population. An increase in the aged population is still only a small percentage of a small percentage.
- Too many Canadians are being persuaded to use more expensive treatments including brand-name drugs for which there are cheaper alternatives. That is, for many brand name drugs there are cheaper generic versions which are biologically equivalent. This isn’t just a problem for the elderly.
- There are examples out there for how to do things more efficiently which will save money.
Most Canadians might also be surprised to know that an aging population is nothing new. Canada’s population has been aging for the past 40 years now. This means that there’s already lots of data on how an aging population really affects healthcare. And a lot of concrete ideas on how to manage it without breaking the bank.
- When a Nursing Home Is Home: How Do Canadian Nursing Homes Measure Up on Quality? This report and accompanying Quick Stats establish a baseline for assessing the quality of care provided to nursing home residents, using risk-adjusted indicators. The report also highlights several nursing homes that have improved performance over time
- Our in-house expert, Dr. Kimberlyn McGrail: Higher utilization, not aging, is driving up healthcare spending. Check out the video on the EvidenceNetwork.ca – You Tube channel!
- From healthydebate.ca: Will the Aging Population Bankrupt our Health Care System? Many believe that aging of the population is the main cause of increased health care costs. If this is true, this paints an exceptionally worrying picture about the sustainability of health care in the future. However, somewhat surprisingly, the majority of researchers don’t believe that aging plays a major role in increasing health care costs. What’s the story? This story features videos from Stephen Duckett, former CEO of Alberta Health Services, and Samir Sinha, Director of Geriatrics at Mt Sinai and University Health Network Hospitals. View the story here.
- A plethora of research indicates population aging does not threaten the financial sustainability of Canada’s healthcare systems, and in fact is only expected to increase healthcare spending by about 1% annually from 2010-2036. Every year the increased number of elderly will be small in comparison to Canada’s overall population, and consequently their impact on the delivery of healthcare in Canada will also be small.
- Seniors healthcare is more costly than healthcare for younger people, for a variety of reasons. The evidence still supports only a 1% annual increase in healthcare costs due to population aging.
- Aging of the population typically accounts for only a small fraction of inflation-adjusted health cost increases. Health cost increases are driven by changes in the quantity and types of healthcare received by Canadians of all ages, not by demographic changes. That is, an aging population provides opportunities for all sorts of interventions without good evidence of increased health or quality of life, but this is an issue for all Canadians, not just the elderly.
- The accuracy of the projected financial impact of population aging on healthcare expenditures depends on several factors, including the economy, and the accuracy with which fertility, immigration, and mortality rates and their impact have been estimated.
- An aging population does not necessarily threaten the sustainability of Canada’s healthcare system, but it does create a need to ensure we are able to provide seniors with the right care, in the right place, at the right time.
- In this 2011 paper, researchers show there are significant opportunities for cost savings in how care is delivered to the elderly. Rather than current systems where home care and nursing homes may be in separate organizations, the authors call for an integrated system to provide lower cost, seamless care for seniors across a wide range of services such as meals on wheels, home care, supportive housing, long term care and specialized geriatric assessment and treatment units in hospitals. Such a system makes it possible to substitute lower cost home care for higher cost nursing home care while maintaining choice for clients and family members, and comparable, or better, quality of care.
- The Institute for Research in Public Policy (IRPP) has produced three reports reviewing how the aging of Canada’s population will present a host of complex and evolving social and economic policy challenges for governments at all levels over the next few decades. The research focuses on a wide range of fundamental issues, including labour market changes, the adequacy and security of retirement income, funding and delivery of healthcare and care-giving services, regional effects, federal-provincial dynamics, and end-of-life questions. They have commissioned several reports.
- Recommended Reading On Aging Population.
Pension reform — Lessons from Australia
Canadians are being told that we might learn a lot from pension reforms that took place in Australia starting in 1992. That, for sure, is correct. We can learn that retiring with any real level of financial security is expensive. Employers in Australia must contribute a minimum of 9 percent of an employee’s gross earnings into a privately managed fund and these contributions will rise to 12 percent by 2019-20.
PEI proposal fails to spark CPP reform
This week, Finance Ministers across Canada met to consider an expansion to the Canada Pension Plan (CPP). One specific proposal for reform was that introduced by the PEI Finance Minister back in September. Wes Sheridan outlined the need for an expansion of the CPP and then described in some detail his idea for a “wedged” expansion.
An enhanced CPP would not come at the expense of the young
Small and mid-size employers continue to walk away from sponsoring workplace pensions. Today less than 40% of private sector workers have any workplace pension at all and less than 20% have Defined Benefit pensions that experts agree are the best way to guarantee retirement income security.
Health system costs not incurable but preventable
The tsunami metaphor is more and more often used in commentaries about the effect of aging on health care spending in Canada. It musters up images of devastation and irresistible strength submersing any levees the system might try to mount to oppose it. It is a powerful but misleading metaphor.