Canada’s universal healthcare system is putting enormous pressure on provincial and federal treasuries at a time of fiscal deficits. Healthcare costs are rising as a percentage of GDP due to our aging society and healthcare inflation. Our existing health coverage is both unsuited to our country’s current health needs (focused on acute rather than chronic care) and uneven across the country.
Seven years ago, our country’s first ministers gathered in Ottawa with the intention of achieving an accord that would fix healthcare “for a generation”. Sadly, this ambition remains unrealized. What progress there has been has taken place on the “production” side of our healthcare system: wait-times for targeted procedures have improved (albeit at considerable cost). On the negative side, there remain significant cross-country disparities in coverage for prescription drugs, home and long-term care. Attempts to improve accountability have fallen short of expectations.
Maintaining a high quality healthcare system in the current era of slower economic growth and greater healthcare demand will be a huge challenge for Canada. The task of addressing and managing this challenge falls largely to public sector decision makers. Such decision makers must cope with the combined effects of two key factors: (i) an aging population and higher dependency ratios but also (ii) the vast number of new healthcare interventions, both diagnostic and in treatment, and the seemingly boundless public appetite for these. It is not aging per se that is the problem but aging in the context of increased healthcare options.
Well before the great recession of 2008, Canada’s healthcare system was sending out signals that it had a financing problem. Healthcare costs in Canada have outpaced growth in tax revenue and gross domestic product (GDP) for much of the past few decades. While there have been times of faster and slower growth, on average between 1980 and 2006 the annualized growth in healthcare expenditures was 7.5%. The average annualized growth in GDP over that same period was 6.1%.