Something to Sink Your Teeth Into

After reading up on recent health care debates, I have found that the sustainability of our current health care model is a reoccurring theme. There is a lot of talk about the impact of the aging baby-boomers on both health care expenditures and the structure of our current critical care system. I have decided to look into the predicted effects of the aging baby-boomers on our health care system. 

As the baby-boomers age, the proportion of Canadians who are seniors will increase. The percent of the population over the age of 65 is predicted to rise from 14% in 2010 to 23% in 2025. This only becomes an issue when we realize that per capita health care expenditures also increases steadily with age. From a low of $1223 at age five, health care costs increase to   $3772 at age 65, $8425 at age 75, and $16821 at age 85. 

In his November 2010 article, Stop Blaming Seniors for Soaring Health Costs, Globe and Mail writer Andre Picard discusses the cost drivers behind our health care expenditures. He points out that the $105 billion increase in health care spending in the 30 year period between 1979 and 2009 can be attributed to four main factors- population growth (7%), inflation (19%), increased utilization (59%) and aging of the population (14%). Surprised to see inflation and increased utilization ahead of the aging population? I was too. But according to Picard, increased utilization is the main driver of health care spending by a long shot. But couldn’t an increase in utilization still be due to the aging population, since per capital spending increases with age? Picard thinks maybe. Although the cost of hospitalizing seniors has remained stable, the Canadian Journal on Aging finds that healthy seniors are using more health services than ever before. As a result of these four factors, it is estimated that in the next 30 years our health care costs will increase by 84%. This number seems staggering. How will we be able to handle this? Picard is optimistic- he says that “in that same time period, 2009 to 2039, GDP will grow an estimated 87 per cent, meaning that, economically, we can easily handle the increased expense in health spending attributable to demographics”. But we may not be in the clear yet. If the trend of increased utilization continues, this will add another 191% to our health care costs. It is this trend of increased utilization that will be the real threat to the sustainability of our health care system, not grandma and grandpa.