The Silver Tsunami That Isn’t
Canada’s population is aging. The proportion of the population aged 65 and older will almost double during the next 20 years (at an average growth rate of 2.3% annually). This demographic shift has been triggered mostly because baby boomers—who were born between 1946 and 1962 and make up a substantial proportion of the population—are aging (Thompson, 2010). Fertility rates also play a part. Since the baby boom generation, the number of children born per 1000 people dropped from 28 to 10.5 in 2004 (Statistics Canada, as cited in Thompson, 2010).
Many political commentators have speculated that population aging threatens the financial sustainability of Canada’s healthcare systems (e.g., Robson, 2001; Siegel, 1994). This speculation is based on several real facts. Population aging reduces the amount of personal income tax revenue, which accounts for approximately 30% of government income. Per capita healthcare costs increase with age (see more in section 2.0). As well, an aging population increases demand for (potentially expensive) health services such as long-term care (Ronald et al. 2008).
Based on these facts it may seem as though aging will break the health system’s bank; however a plethora of research evidence indicates that aging does not pose a major threat to the financial sustainability of Canada’s healthcare systems (e.g., Barer et al., 1995; CHSRF, 2002; Denton & Spencer, 1999; MacKenzie & Rachlis, 2010; Evans, 2010).
How could this be? In part, it’s a question of numbers. The aged are only a small part of the Canadian population: in 2006 only 13% of Canadians were 65 years or older. So if this 13% increases by 2% that year, this translates into a very small (0.3%) increase in the number of elderly relative to the total number of Canadians that year. People have always gotten older, and have always needed more healthcare as they have got older. But it is only the relative size of the increase in the older population that will directly affect health care needs and that increase is a small percentage of a small percentage―i.e. a relatively small number.
Holding factors such as inflation constant, recent projections estimate population aging will increase healthcare costs in Canada by about 1% annually from 2010 to 2036 (OECD, 2010). This result replicates many others demonstrating that population aging accounts for only a small proportion of increased cost for particular services (e.g., hospital services, physician services, drugs; e.g., Health council of Canada, 2009). Although a 1% increase in healthcare costs due to aging is still a significant increase, factors such tax revenue on pension and RSP withdrawals, and cost savings from the reduced need for public funding related to services for the younger and working age population such as education and workers compensation, are predicted to be able to offset some of the added expense (Denton & Spencer, 1999; Infrastructure Canada, 2008).
As indicated by the figure below, the financial impact of population aging will be more pronounced in some provinces than others, from a low of 0.7% in Manitoba to a high of 1.9% in Newfoundland and Labrador, with well-above-average impacts in all three of the territories (MacKenzie & Rachlis, 2010). Thus, some provincial governments are faced with stronger pressure to prepare for the aging demographic (Robson, 2001).
References
Barer ML Evans RG, Hertzman C. Avalanche or glacier? Health care and the demographic rhetoric. Can J Aging 1995;14(2):193-224.
2002: Canadian Health Services Research Foundation. Myth: The aging population will overwhelm the healthcare system. — Accessed March 8, 2011
September 23, 2010: Canadian Obesity Rates Climbing: OECD report. CBC News. — Accessed December 8, 2010.
1999: Denton FT, Spencer BG. Population aging and its economic costs: A survey of the issues and evidence. QESP Research report, SEDAP research paper No.1, McMaster University, Hamilton, ON.
Evans RG. Sustainability of health care: Myths and facts. — Accessed September 15, 2010.
2009: Health council of Canada
2008: Infrastructure Canada. Population aging and public infrastructure: A literature review of impacts of demographic aging. — Accessed March 8, 2010.
August 2010: Mackenzie H, Rachlis MM. The Sustainability of Medicare. Canadian Federation of Nurses Unions. — Accessed August 27, 2010.
2001: Robson WBP. Will the baby boomers bust the health budget? Demographic change and health care financing and reform. CH Howe institute commentary. — Accessed December 7, 2010.
Ronald LA, McGregor MJ, McGrail KM, Tate RB, Broemling AM. Hospitalization rates of nursing home residents and community-dwelling seniors in British Columbia. Can J Aging 2008;27:109-15.
Seigel S. Plotting the Source: Individual aging and population aging in the West. Gereontologist 1994;34:3.
2010: Thompson V. Health and Health Care Delivery in Canada. Toronto, ON: Elsevier Canada.
