CONVERSATION ON HEALTH: Aging population not a demographic time bomb

Contrary to the Chicken Little sky-is-falling scenario painted by Finance Minister Carole Taylor, an economist with the Canadian Centre for Policy Alternatives says in a study published today that British Columbia's health care system is sustainable.

The study finds that population aging is only a small contributor to pressures on the health care budget, and that the system can be maintained and enhanced without breaking the bank.

-There is no demographic time bomb waiting to go off in our health care system," says Marc Lee, Senior Economist with the CCPA and author of Is BCs Health Care System Sustainable? A Closer Look at the Costs of Aging and Technology.

-If we are going to have a rational ‘conversation about health care in BC, we should start with the facts," says Lee. -British Columbians need to know that our health care system is financially sustainable."

The study finds that:

From 1995 to 2005, the impact of population aging on provincial health care spending was only 0.9% per year. To keep current service levels and accommodate future population increases, aging and inflation, health care expenditures must rise by just under 5% per year. This is very affordable in the context of reasonable economic growth.
Even at that 5% rate of increase, provincial health care spending as a share of the provincial economy (GDP) will fall over the next 25 years.

Health care spending as a share of GDP is currently at 7%.
If the province maintains that level, not only will there be enough money to pay for existing services (even after population growth, aging and inflation), there will still be enough for modest expansion of services.

-Population aging will peak around 2031," says Lee. -We have a long time to plan for changing demographics. But the toughest cost challenges will be from technology, including new surgical techniques, diagnostics, prescription drugs and end-of-life interventions. As a province, well have to decide how to weigh the benefits of new innovations against their costs. And those decisions are best made in the context of a public system."

Lee rejects Finance Minister Carole Taylors prediction that by 2017 health care costs will consume more than 70% of the provincial budget.

-Its very misleading. The Finance Minister assumes huge increases in health care spending and low-balls revenues. Shes also measuring the wrong thing. What matters is how much we spend on health care compared to the size of our economy, not as a share of the provincial budget."

Download the CCPA study here.

Download the four-page summary here.