 | | Matthew Stewart
Senior Economist
National Forecast |
The current focus of all levels of government is constrained to shoveling infrastructure stimulus out the door fast enough to prop up an otherwise weak economy. However, as the economy exits recession, governments will begin to turn their attention to digging their way out of deficit. Provincial governments will find this a particularly daunting task as they will also face considerable cost pressures from sustaining the level of public health care in the face of an aging population. The big question is: will the provinces have the resources to sustain an adequate public system and limit demand for increased private care.
Provincial governments have faced huge deficits before and as they struggled to balance their books the quality of public health care did not come away unscathed. When in the mid 1990s the federal government slashed transfers, provinces looked for savings. Despite an effort to protect health care, the largest category of provincial spending could not remain completely immune. In fact, provincial governments were forced to constrain health care spending for six years with the result that per capita spending on an inflation adjusted basis actually fell by 7 percent from 1992 to 1996. One of the casualties of this decline was medical school spots. By 2000, Canadian medical school positions were down 10 per cent from where they were 10 years before. Consequently doctor-to-population ratios dropped, affecting access to care. The effort to repair the damage done to the health care system has spanned several years—and despite absorbing 50 percent of provincial spending increases over the last ten years, it is unclear if significant progress has been made. Wait times for many critical procedures remain at unacceptable levels and nearly five million Canadians are without a family doctor. Even the Supreme Court weighed in with a controversial ruling: given the long wait in Quebec for essential procedures it was unconstitutional to prevent citizens from purchasing private insurance. The ruling has placed further pressure on the provinces to improve care.
To get an idea of the stress that will be put on the health care system by our greying population we can look to the diseases that absorb the majority of physician time and predict how the aging of the population will affect their burden on the health care system. The top five overall disease categories with respect to physician time are mental health diseases (primarily depression), diseases of the circulatory system, diseases of the musculoskeletal system, neoplasms (primarily cancer), and diseases of the respiratory system. Together, these five categories of disease account for 54 per cent of family physician time and 57 per cent of all specialist time and four out of the five categories, with the exception of mental health, are heavily linked to aging.
For example, let’s take ischaemic heart disease a subcategory of circulatory disease and one of the largest diseases with respect to physician time. According to the Conference Board’s new model of physician demand, 21.6 per cent of males in Ontario over the age of 65 reported having this condition. This compares to just 7.1 per cent of males 45-64. Consequently, even if the prevalence of risk factors for this disease remained relatively constant, the aging of the population will drive up the overall prevalence for this disease. Not only that, can we really expect the prevalence of these risk factors to remain the same? Obesity is one of the main risk factors for this disease and over the last several years it has continued to rise. Among men the obesity rate rose to 18.3 per cent in 2008, up from 16.0 per cent in 2003, and obesity among woman rose to 16.2 per cent, up from 14.5 per cent just 5 years ago. Nevertheless, if we make the optimistic assumption that risk factor rates are held flat, the aging of the population would still substantially drive up the overall prevalence rate of this disease. For Ontario, where population aging is not as drastic as in many other provinces, the overall prevalence of ischaemic heart disease would still increase to 7 per cent of the male population up from 5.4 per cent in 2005—A 30 per cent increase. This large increase in the prevalence rate means that the overall number of patients with ischaemic heart disease will rise by almost 80 per cent by 2030 placing a huge burden on the public health care system—a pattern shared by many other diseases heavily linked to aging.
At the same time, as the overall prevalence rate for many diseases are rising, provincial revenue growth will be contracting as aging baby boomers leave the workplace. With slowing labour force growth, average GDP growth is expected to fall by more than one-third making it tough on provincial revenue collectors. Health care spending growth has averaged an unsustainable 7.1 per cent annually over the last five years and 7.5 per cent over the five years before that. Yet, despite the rapid spending growth, wait times and access to care continue to be a problem. So what is the likelihood that provinces are able to balance their books, and continue to improve health care? The only solution is if provinces finally manage to improve productivity in the health care system. Otherwise, provincial government will be balancing on a high wire—juggling the undesirable options of higher taxes, increased wait times or rationing of care.