The Future of Health Care – Will that be One Tier or Two?

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In this week’s Governing Past the Next Election, the IOG’s Brad Graham examines the future of the Canadian health care system. He notes there is a large and looming fiscal pressure coming which could undermine the very principles on which the system is based. However, the future of medicare does not appear to be on the political agenda during the election.The federal government’s leadership was crucial in establishing medicare, and it will be crucial again if we are to save one of Canada’s most cherished institutions.

The Future of Health Care – Will that be One Tier or Two?

By: Brad Graham, Vice President, Toronto Institute of Governance

Justice Emmett Hall’s landmark Royal Commission on Health Services provided the framework for Canada’s national health care system. His 1964 report argued that the many who are well should provide for the few who are ill. That premise and the Report’s recommendations spoke to reducing the fear of illness, the compassion of a nation, and the basic economics of insurance.

As we enter the 2019 federal election, most national health care debate will focus on the proposed new national pharmacare program. Political parties will not be talking about the future viability of our health system. Yet as Canadian baby boomers enter their senior years, a never before seen fiscal pressure will be brought to bear on our health system. In terms of Justice Hall’s eloquent predicate, the many will become fewer, and the few, many more.

Managing health care costs and ensuring the system’s affordability has been a constant since the introduction of national medicare. In order to accommodate population growth, expanded coverage and the increasing cost of new drugs and technologies, provinces have introduced health reforms, efficiencies and ever-tighter budget controls.

Despite these continued efforts, Canadians see hospital bed shortages, “hallway medicine,” longer wait times, doctor shortages, temporarily closed emergency rooms, undersupply of home care and inadequate mental health services.

Canadians are worried about their health future. According to an Ipsos study, nearly 60 per cent (58) of Canadians feel people will delay retiring so they can afford health care. Ipsos also reports that 65 per cent of Canadians are worried that cuts to health care will be made in order to balance budgets, and over half (56%) worry a great deal that they will eventually have to pay for their health services. Canadians are also worried about longer wait times (62%), shortages of health professionals (60%) and increasingly crowded hospitals (59%).

At the same time, Canadian medicare remains a strong source of pride for Canadians. It has improved our health outcomes in terms of life expectancy, infant mortality and lower deaths due to lack of timely and effective medical care. By these measures we fare much better than the US (but not as well as our European peers).

The looming fiscal challenge arises from two simple facts — health care costs increase as we age and as a population we are aging.

For those under 65 years of age, health consumption is relatively stable. The slight exception is the relatively high cost of being very young. According to the Canadian Institute for Health Information (CIHI), in 2016, the average health care costs for those younger than age one is $11,973. After our first year, our health care consumption drops considerably. For young Canadians aged one to 14 years, the average annual cost of health services is just $1,539. For Canadians of working age, those aged 15 to 64, the average increases to $2,883.

As we age, health care consumption increases dramatically. Young seniors, those aged 65–69, consume $6,481 in health care. Those aged 70–74 consume $11,081 in health care on average, growing to $20,397 for those 80 and older. None of this is news. Humans are of a certain design and despite tremendous advances in health care technology and life expectancy, we tend to require more health care services as we age.

If this has always been true, why should we be concerned? The difference today is that the Canadian population as a whole is aging significantly.

The baby boom generation, those born between 1946 and 1965, currently make up about 30 per cent of the population. Starting in 2011, baby boomers began turning 65. Today, about 17 per cent of Canadians are seniors. This will increase to 20 per cent in 5 years, and exceed 25 per cent by 2036.

So, what will this mean for our health system? Consider the current impact of age on health spending. As mentioned, Canadian seniors currently constitute 17% of Canada’s population; however, they consume almost half (45%) of total provincial and territorial health spending. As the share of seniors increases the impact becomes obvious.

Are we on an irreversible path? The simple answer is no and the answer can be found in medicare’s past.

National medicare is the product of positive and enduring federal-provincial cooperation and acceptance of its goals and importance (which is not to say there haven’t been tensions over the years). While the provision and management of health care is a provincial/territorial responsibility, medicare would not have been possible without the support and positive intervention of the federal government.

Saving medicare will require a shared commitment and sustained effort to maintaining the system’s viability as well as a financial investment by the federal government and the provinces.

While election debates around establishing some form of national pharmacare are important, we need to have an open discussion around the future of medicare itself. The federal government was central to establishing national medicare. Its role in ensuring its future is no less crucial.

One thing is clear. If we do nothing the slippery slope toward privatization will become steeper and even more slippery. Most recently, a report for the new government has called for Alberta to cut health care and increase privatization in order to save money.

If a new funding arrangement does not shore up the system, wait times will increase further, access will continue to decline, and those who can afford private health care will demand it in increasing numbers. The unravelling of our health system will not come from the small minority of those who may favour private health care as a matter of philosophy, but by Canadians who value our system but who want better access and can afford to pay for it. This would be a tragic result for one of the most enduring Canadian institutions and a fundamental touchstone for what it means to be Canadian.

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This article is the first in the Governing Past the Next Election series with Ipsos Canada. You can visit the series webpage here.

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About the author

Brad Graham

Brad Graham

Vice President, Toronto

Brad Graham is Vice President of the Institute on Governance (IOG), Toronto. He is also a Senior Fellow at the Munk School of Global Affairs and Public Policy at the University of Toronto. An economist, Brad spent 25 years in the Ontario Public Service including as Assistant Deputy Minister in the Ministries of Public Infrastructure, Municipal Affairs and Housing, and Research and Innovation. He held other senior positions in the Ministries of Health and Finance. Brad Graham was awarded Ontario’s Amethyst Award for excellence in public service.

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