It’s a common notion that young workers born in the mid-1990s to the early 200s are going to be stuck with the healthcare cost racked up by the aging post-World War II demographic.
But it’s probably useless trying to figure out how the millennials will be paying for the healthcare of baby boomers. That’s because they won’t. At least, “unless there is a major change in the way that care is delivered,” according to healthcare issues and management experts who recently wrote an article on the topic.
Millennials are “facing a double squeeze,” according to the article written by David Dodge, Brian Golden, and Tiff Macklem. Dodge, is a senior adviser at Bennett Jones and former deputy minister of health; Golden is vice-dean of professional programs at the Rotman School of Management and the Sandra Rotman Chair in health-sector strategy at the University of Toronto; and Macklem is dean of the Rotman School of Management. Their article, Millennials can’t pay for boomer healthcare without productivity gains, was published in the Globe and Mail.
On one side, Canada’s economic growth over the next 20 years or so is projected to be just 1.5 per cent a year (half of what it used to be). The slowdown is largely being caused by the declining labour force due to the retirement of the boomer population.
On the other, the efficiency of Canada’s healthcare system is fueling an increase in healthcare spending by as much as 3.5 per cent a year.
Health-care spending for the typical senior ($20,000 at age 80) has averaged about five times that for the typical person under 65 ($4,000 a year on average), according to the article. Furthermore, the ratio of seniors to the labour-force-aged population will increase from 25 per cent in 2010 to 50 per cent in 2035.
“This double squeeze has millennials with almost stagnant incomes facing ever-increasing taxes to pay for aging boomers’ care. At some point, millennial taxpayers will not be willing to accept this burden,” the article points out.
Canada needs to improve economic productivity and its healthcare system.
“We need relentless focus from government, labour, and business on raising overall productivity in Canada,” the trio suggests. “Our best shot is a four-pillar growth strategy anchored on innovation, talent, trade and infrastructure. But truth be told, policy levers on overall productivity have proven elusive.”
While Canada’s healthcare systems is a source of national pride, Canada’s provincial systems deliver less and cost more when compared to many developed countries such as Great Britain, Australia, the Netherlands, Germany and New Zealand.
The writers said the government can provide economic incentives to healthcare providers in the public system to boost efficiency and effectiveness of delivery. This would mean allocating more money to caregivers and organizations that provide the most healthcare value to citizens.
The government can also explore bundled reimbursements.
“This involves payments to “consolidators” (hospitals) of a fixed fee for a bundle of services, based on outcomes. A hospital could receive a dollar amount for treating a patient in need of a hip replacement, and that hospital would purchase or provide the operating-room time, labour (surgeons, nurses, physiotherapists, home care) and medical equipment,” the article said. “…The consolidators that find ways to provide quality care for below the set price earn a margin.”
Read the complete article here.