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Les Leyne: Aging boomers won't crush health care

Dec 01 2012

The down-scaling of the alarm over the prospect of the silver tsunami overwhelming the health system has been underway for a while.

For several years, it was the rage to dwell on the dire consequences of all the baby boomers reaching the costly senior years at about the same time.

It was an easy-to-understand, looming problem. The over-65 cohort consumes a lot more health spending than any other. The postwar population boom started reaching 65 in 2011 and will be well into old age over the next several years.

Therefore, according to the theory, a big increase in the number of seniors needing expensive treatment would send health budgets soaring beyond any sustainable limit.

The prospect generated a lot of anxious speculation and became an officially certified imminent crisis for a time.

But experts have been disputing the idea over the last while, and a recent report from the legislature standing committee on health debunks the concept.

The committee was instructed to take a close look at the demographic issue and after due consideration, it concluded recently it's not the big problem it was made out to be. It collected all the current thinking from health economists and has concluded the worries about the aging impact on health costs are overblown.

"Research received by the committee emphasized that the popular media characterizations of the effects of an increasing number and proportion of older adults on health care costs are overstated."

The best estimates now are that the aging population will contribute one per cent to the total increase in cost over the next 25 years.

The finding agrees with one of the points in Jeffrey Simpson's Chronic Condition, a recent book about Canada's health system. The aging population is an expensive challenge, "but by no means a fatal one."

The committee agreed with research that concluded the added expense due to aging is increasing, but "certainly not at a rate that could be characterized as a looming crisis."

Respected outfits like the Conference Board of Canada and the Parliamentary budget officer agree. They peg the cost of the aging population around the one per cent mark.

Provincial studies concur. One found that the aging population added 0.9 per cent a year to B.C. health costs, which may grow to 1.1 per cent in the years ahead.

A detailed rationale for dismissing the problem wasn't available, but it has to do with the gradual nature of the growth in costs. People get to old age one year at a time.

The health ministry briefed the committee last summer and outlined how its budget goes up five to six per cent a year. The breakdown looks like this: General inflation, two per cent; population growth, 1.4 per cent; aging, one per cent; utilization,0.9 per cent; and health-related inflation, 0.7 per cent.

The big problem is that the growth in the health system's budget every year runs ahead of the economic growth rate. So health care "has gradually eaten up more and more of the provincial budget."

In theory, if health-spending growth could be curbed by 1.5 per cent so it grows at the same rate as the economy, "then a stable system would be achievable."

In reality, the system's appetite for new money is so voracious that any turning of the taps creates big problems. Premier Christy Clark proposed capping the increase during her run for the B.C. Liberal leadership and was roasted by some of the other candidates, and others.

The bipartisan committee concluded: "It is clear that demographic trends alone will not compromise the financial sustainability of B.C.'s publicly funded health-care system."

But if all the cost drivers are allowed to increase as projected, the pressures may intensify.

It's a weakly worded conclusion, in that all those drivers will certainly be allowed to increase, because they always have. And the resulting pressures will intensify, because they have for years.

The next job for the MLAs is to outline ways to mitigate the impact of the baby boomers on the system, and then later to identify levels of acceptance for the alternatives.

They've examined one small sliver of the health-care cost problem, and pronounced that it's not as pressing as was once portrayed.

But that doesn't mean the bigger problem is going away any time soon.


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