Tsunami or glacier? The answer is neither. The question is: can our publicly funded health care system survive the pressures it will soon face as boomers begin to retire and draw down on their lifetime of accumulated investment through taxes to pay for publicly-funded, medically necessary health services?
In June 2011, Premier Christy Clark engaged the Select Standing Committee on Health to address this challenge and I was asked to lead the bipartisan team to find a conclusion. The committee's first report is now complete and available on my website: normletnickmla.ca.
I extend my gratitude to the individuals and organizations who provided valuable input, including staff at the Ministry of Health, the Michael Smith Foundation for Health Research, UBC's Dr. Kimberlyn McGrail, KPMG's Giles Newman and Paul A. Tambeau, as well as members of the
academic community, the public and other stakeholders, who provided hundreds of submissions to the committee.
A number of themes emerged during our investigation. First, we noted that when assessing the sustainability of our health-care system, other elements beyond financial concerns should be included. Elements such as outcomes, access to care and services, and patient satisfaction should also be considered when measuring and defining sustainability.
We received many submissions that argued that popular characterizations of the burden of an increasing number and proportion of older adults on health-care costs are overstated.
Various federal organizations and national research bodies project annual cost increases due to population aging to be approximately one per cent per year.
In 2010, the federal Office of the Parliamentary Budget Officer estimated annual health-care cost increases due to aging to be 0.9 per cent.
This figure, it predicts, will increase to 1.2 per cent annually by 2030, at which point would come a sharp decline.
This conclusion is also reflected in a 2011 study by the Canadian Health Services Research Foundation, which found that the effect of cost increases due to population aging "is small relative to other cost drivers."Â
A study by Chappell and Hollander also provides key insights as to why the implications are exaggerated.
In their analysis of policies for integrated systems of care delivery, they point out that increases in costs due to population aging "should also be mitigated by offsets from savings related to the decline in the proportion of young people in the population and, possibly, reductions in cost pressures related to the compression of morbidity."
To clarify, compression of morbidity is the theory that if the age of onset of illness is postponed until later in life, the costs associated with care will be lowered due to a shorter period of chronic illness, despite a generally aging population.
The committee also relied on provincial data. One study by Marc Lee projects that population aging will add 1.1 per cent annually to costs in order to maintain current levels of health-care services.
Similarly, the Urban Futures Institute anticipates that "if our economy follows its historical trends in growth â€¦ demographic change will not cause provincial government health spending to crowd out other economic activity, nor will it become so expensive relative to our ability to pay as
to not be sustainable in the current form."
The committee knows that to estimate how much health-care costs will increase and how much of the budget they will take up, we need to understand how much our budget will grow as well.
In the short term, GDP is projected to grow at about four per cent a year between 2012-13 and 2014-15. We don't have enough provincial data to make estimates of growth in the long run, so the Committee used the C.D. Howe Institute's base-case projections of GDP growth for Canada instead, which project nominal GDP growth of about four per cent a year between 2012 and 2031.
From this extensive research and consultation process, the committee produced a series of conclusions on the projected financial impact of an aging population.
Health-care cost increases due to population aging will be approximately one per cent annually for the next 25 years; other cost drivers include: population growth (1.4 per cent), health-related inflation (0-0.7 per cent), general price inflation (two per cent) and increased utilization of services (0.9 per cent).
Combined cost drivers will result in a cost increase of approximately 5-6 per cent annually; long-term projected annual growth in nominal GDP for our province will continue at approximately four
The committee's conclusion is that the implications of demographic trends alone, such as an aging population, will not in and of themselves undermine our health-care system's sustainability.
However, at roughly a one per cent
increase per year, accounting for approximately 17 per cent of currently projected health-care cost increases, it has the potential, if ignored, of adding an additional burden to the goal of sustainability.
I recognize our health-care system is the top priority for many of my constituents. Maintaining and improving it is a top priority for me as well. Over the years, our government has invested heavily in the Central Okanagan, expanding health infrastructure and programs. We've accomplished a lot so far, but we have more to do.
The committee will next seek to identify strategies for improving B.C.'s health-care system, addressing the cost drivers listed above to reduce their potential impact on our goal of sustainability, and making the system better for British Columbians today and those to follow.
Norm Letnick is the MLA for Kelowna-Lake Country, and a PhD candidate with UBC in health economics.