B.C. may cope with aging better than most

By Don Cayo, Vancouver Sun

British Columbia has been “almost uniquely successful among Canadian provinces in mitigating the impact of aging on its health care budget,” with annual growth of its health spending down from seven per cent before the recession to five per cent last year, and headed – the government hopes – to three. But this doesn’t mean the mounting costs won’t hurt, says a new province-specific study from the C.D. Howe Institute.

Given middle-of-the-road assumptions for economic and population growth, and for aging and life expectancy, the percentage of B.C.’s GDP that will be needed to maintain our health care system will rise from eight per cent this year to 12.2 per cent in 2035, and to 16 per cent in 2062. And the expected savings on youth-oriented programs like education and family benefits (which are forecast to result from having a smaller proportion of young people) won’t be enough to significantly counter-balance these increases.

Which raises some obvious questions about inter-generational fairness. The big bulge of baby boomers like me will certainly lose a lot of earning power – and thus much of our tax liability – as we age. With the current pay-as-you-go model for health care funding, our children and our children’s children will be left with ever-bigger bills to pay for elders’ care – even as these younger generations come to represent a shrinking percentage of the province’s population.

British Columbians might take some comfort in knowing that, thanks to our reasonably strong growth projections, this province is in a better position than most others.

Indeed, our estimated total of $91,474 per capita for what the Howe study calls “implicit liabilities (for) demographically sensitive programs” is the lowest in Canada. And the proportion of GDP this amount represents – 192 per cent – is bettered only by Saskatchewan, with 131 per cent.

B.C. also leads the pack in limiting the annual growth of per-capita spending on health care with a 20-year average of 1.5 per cent. Our per-capita cost, $3,652 a year, is just a shade higher than Quebec’s, the most frugal province.

Most of the savings in this province seems to be on care for those nearing the end of life. The cost of treating younger people has, in per-capita terms, inched up over the last decade or so. But for seniors it has dropped, and dropped sharply for the oldest age groups. For those aged 90-plus, for example, it is down from about $31,000 in 1998 to about $19,000 today.

The paper says most of these savings on elder care stem from reduced public costs for nursing homes and residential facilities, and a change about a decade ago from age-based to income-based eligibility for B.C. Pharmacare. It doesn’t delve into the impacts of these changes, and many British Columbians will no doubt have their own views on that. But the better-than-they-could-be financial numbers do leave us with a little more wiggle room than other provinces when it comes to figuring out what to do about the substantial challenges ahead.

A finding that surprised me is that B.C. spends less than other provinces on such things as hospitals and drugs, but more on public health measures such as food and drug safety, health inspection and promotion, and community mental health programs.

“Perhaps,” the study speculates, “British Columbia’s generally low health costs per person reflect value from its investments in public health that other provinces can emulate.”

On the other side of the ledger, it spells out a number of efficiency measures – such things as more non-institutional care, and teams of lower-cost professionals to do some of the work of higher-cost physicians – that B.C. could learn from some other provinces.

But the most significant recommendation, in my view, calls for a shift toward some degree of pre-funding – that is, setting aside money today to help meet the inevitably higher costs of care tomorrow.

It doesn’t spell out how much should be set aside, or what the mechanism should be. But done right, it says, it would mean “baby boomers, rather than their inadequately numerous children and grandchildren, pay some of the higher costs that loom.”

Sounds fair to me – and I’m a boomer.