Thursday, March 09, 2023

Picking Up Our Tab

There are a lot of us aging baby boomers around. Unfortunately, the young are being left to pick up our tab. Paul Kershaw points to the recent healthcare deal between Ottawa and the provinces:

Federal and provincial leaders just agreed Ottawa would increase its spending on medical care by $196-billion over the next decade. No mention was made of a plan to pay for this new investment, nor was there any consideration of its financial implications for different generations.

So I ran calculations from my lab in UBC’s School of Population Health. Here are the main take-aways: The new health money is a win for the personal finances of retirees. But it’s a different story for younger residents, who must pay an ever-growing amount in taxes for the medical needs of our aging population by comparison with what baby boomers paid for retirees when they were younger.

These divergent generational impacts require more attention from elected officials – something more likely to be forthcoming if governments appoint high-ranking officials responsible for generational fairness.

Such an official could draw attention to the fact that over the 10-year period, the $196-billion will pay for an extra $12,000 in medical services for every Canadian over 65, $4,400 for every resident 45 to 64 and $2,900 for every person under 45.

This information is readily available, because the Canadian Institute of Health Information annually publishes data about how medical spending per capita breaks down by age. When multiplied by Statistics Canada data showing the number of Canadians in each age group, it reveals that seniors receive 45 per cent of medical spending, even though they represent 19 per cent of the population. Retirees consume three times more medical spending than do those 45 to 64, and four times more than those under 45.

The demand for healthcare among the elderly shouldn't be surprising. Getting old isn't easy. We simply don't function the way we used to. The problem is that we have not replaced ourselves as readily as we once did:

As birth rates dropped after the baby boom, everyone knew that the ratio of retirees relative to workers would eventually grow, and dramatically so.

And that’s exactly what has happened. There are now fewer than four workers for every retiree. Without dramatic increases to immigration, soon there will be fewer than three.

This is a big deal for the personal finances of younger Canadians. They now must pay 10 per cent of their total taxes for a retiree’s medical care – twice the percentage boomers paid.

It also has real implications for their wallets. A young person with an annual income around $25,000 pays about $200 more per year in income taxes for retirees’ medical care by comparison with taxes paid by a young boomer with the same income (after adjusting for inflation). A middle earner with income around $50,000 pays $650 more. A young worker earning in the top quartile (around $75,000) pays approximately $1,400 more. A worker in the top 1 per cent of her generation (earning over $200,000) pays approximately $7,000 more for retirees’ medical care by comparison with the boomer who was in the top 1 per cent when young.

Alas, young people’s additional tax payments often aren’t enough to balance government budgets. No party in the last federal election promised to balance the budget in a first term in office. Nor did any party in Ontario’s last election.

It's a question of fairness -- a question that our political leaders are making no attempt to answer:

The absence of any real discussion about how to raise revenue fairly between generations is a primary reason that governments routinely run deficits when our economies are not in recessions. This is especially so when political dialogue steers clear of asking affluent members of the aging population to pay a fair share for the additional public investment in their generation’s medical care.

They won't answer the question unless those of us who put them in power force them to answer it.

Image: You Tube


Cap said...

That will never happen, Owen, so long as "those of us who put them in power" equals those of us who fund political campaigns, think tanks, and lobby groups.

Owen Gray said...

It's true, Cap. Big money calls the shots -- until things fall apart.

Trailblazer said...

When discussing health care funding, then and now, we have to take into consideration the expectations of then and now!
Only the older readers of this blog will remember the early days of universal healthcare which did not cover a fraction of todays system.
Todays patient demands the very latest pills and potions , cosmetic surgeries etc whilst living unhealthy lifestyles.
But; fret not , we the baby boomers will in the not too distant future be gone and unless the powers that be press on with encouraging growth those still alive can practice steady state economics!
Am I alone in saying that the healthcare Canada enjoys is still quite good or have we become a nation of whiners?

Anonymous said...

The government could make boomers more responsible for the costs of their own health care. After all, they are the ones who have benefited the most from the irrational increase in housing costs. AN

Karl said...

Once again, an article that pits generations against each other to distract from calling out the real leaches of our society and country. So, tax the rich, tax wealth, tax corporations, collect royalties, stop subsidies to oil and gas and other corporations, strengthen unions and labour laws, tax profiteering, etc and etc.

Owen Gray said...

We have problems, TB. But we still are very lucky to have public healthcare. The problem -- as always -- is how do we pay for it?

Owen Gray said...

True, AN. Those of us who own -- or used to own -- property have benefited enormously from the real estate boom.

Owen Gray said...

The old saw still holds true, Karl. The wealthy must pay their fair share.

Trailblazer said...

Comparing the cost of yesterdays health care with todays is folly.
Todays are costs are higher in part due to modern technology and patients demand for it.
One MRI unit would use up the budget of yesterdays hospital.
There are also competing demands from competing unions and professional / specialist organisations.

Owen Gray said...

Precisely, TB. Healthcare has changed enormously -- and the costs have changed, too.

Northern PoV said...

Japan seems to have figured out the upside-down-population-pyramid thing.

Everyone else still following classical economic growth-worship like lemmings off the cliff.

e.a.f. said...


We pay now or we pay later, but we as a society will pay. After governments not looking towards the future, they didn't plan for doctors, nurses, other health care workers retiring. Canada simply hasn't trained enough doctors and nurses, etc. over 15 years ago I asked my doctor when he thought he'd retire. He's still working, but at the time he advised medicine would be in trouble when the aging baby boomer started retiring.

Yes today's new hospital equipment is more expensive because its highly sophisticated and expensive to build. Not only do patients demand the latest equipment, so do the medical professionals. The new equipment saves lives. MRIs and such, allow doctors to havve a good look inside of a body without cutting it open. that actually saves money.

It was rather funny to see adn hear the premiers carry on with demands for more money from the federal government. If they needed money so badly they could have raised provincial taxes,

Its a good thing Trudeau has insisted the provinces account for the money they are given for health caare because at one time, they didn't have to. Ottawa sent money for health care to the provinces but the provinces were free to use it as they pleased and not always for health care.

Corporate taxes couuld be increased as could some executives salaries. The news advised at the start of the year that some executives would make in the first 3 hours of the year more than a lot of people made in a whole year.

In the U.S.A. 80% of people loosing their homes is because they re mortgaged them to ppay for health care.
The easiest way to save money in health care is to "front load" when children are born. We have huge mental illness issues in our country and drug addiction. It mgiht be so much less expensive if children were tested for a variety of medical issues when in grade one or even younger so they could be dealt with sooner than later. How many children are undiagnosed for ADHD, autism, depression, anxiety. They grow up, develop other problems and viola you may wind up with a drug addicted homeless person.

Forcing aging baby boomer to pay for their own health care because they allegedly made momey in real estate. Give your head a shake. It was the baby boomers parents who did the real cleaning up. Baby boomers are now retired, or most of them and they're actually pensioners. a few years ago an article informed us that in Ontario the biggest group of people declaring bankruptch were seniors, retired people. Many people don't have pensions anymore so their houses are what they rely on

Our government can afford our health care. Its a matter of priorities.

Canadians live longer than Americans and we have a much lower mortality rate for babies and their mothers pre and post natal. In some areas of the U.S.A. the syphilis rate has gone up 400% in new borns. Yes, new borns because their mothers dont' get adequate pre natal care and aren't tested for it.

WE can bich adn complain but we do have a decent health care sytem in this country.

Owen Gray said...

That model doesn't work, PoV -- despite Milton Friedman's attempt to revive it.

Owen Gray said...

That statistic about syphilis in newborns ii shocking, e.a.f.

Anonymous said...

I find it ironic that the European countries (who continually rank higher than Canada in health care analysis) have a two tier system. We continually compare ourselves to the Americans in order to feel smug and superior. Yet we should be comparing ourselves to the best systems, not the worst. Isn't that the way to improve? AN

Owen Gray said...

Canadians are always peering south, AN. That's always where the boogeyman has lived.