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Saving medicare for the next generation

by John Richards and Colin Busby


In their contributions to this section, both Gregory Marchildon and Stefan Ackerby insist on the value of universal single-payer health insurance. Also, they are sanguine that the politicians and administrators responsible for managing Canadian and Swedish health systems will, over the coming years, make reasonably wise cost-benefit decisions for the system and that taxpayers will agree to pay the requisite taxes.

In terms of equity and efficiency, the case for a well managed single-payer health insurance system is strong. It overcomes a variety of market failures associated with private health insurance, and assures equitable access to a crucial service. But – and this is a major qualification – success ultimately rests on the quality of the managerial and political decisions undertaken. There are powerful pressures on government to avoid cost-effective decisions. We are less confident than Marchildon and Ackerby that good decisions will prevail. Hopefully they are right and we are wrong.

Trends in health care spending

In the context of population aging, simply extrapolating the status quo into the future will result in substantial increases in health care spending. In this article we project the magnitude of these shifts in spending trends, and look briefly at some of the politically controversial reforms that will probably be necessary to “save medicare.”

Canada is a relatively young country; it has a smaller over-64 population share than all but two other G8 countries. However, it is aging, and doing so at an accelerating rate (see figure 1). While the over-64 share increased by only three percentage points between 1990 and 2010, on the basis of our projection (details discussed below) it will rise another nine points by 2030. A second demographic trend will also have adverse fiscal implications: the population share in the active working age years (18–64) is shrinking. For this cohort, which pays the overwhelming majority of taxes, we project an eight-point decline in population share between 2010 and 2030.

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About the Author

John Richards
John Richards is co-publisher of Inroads and an economist at Simon Fraser University in Vancouver.


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