Canada is sleepwalking into a long-term care funding crisis and urgent policy action is required to ensure baby boomers will have access to the long-term care they need.
Canadians are living longer, which is a good thing. But, as a result, they are increasingly likely to be managing a chronic disease through old age which, in many cases, will mean they will need some form of long-term care support. The challenges of a rapidly aging population for Canada’s retirement savings and public healthcare systems are well understood. It makes good sense then that there is significant policy work being undertaken to address these issues. Unfortunately, there is another very significant social policy challenge that is flying below the radar from a policy perspective: how to ensure that Canada can provide adequate long-term care support to baby boomers as they age.
What is long-term care?
Long-term care is properly seen as a continuum of care that starts from the point where an individual requires regular assistance with aspects of day-to-day living through to formalized institutional care. Long-term care can include assistance getting to and from appointments or buying groceries to more formal housing, medical, nursing, social or therapeutic support.
How significant is the challenge?
The Canadian Life and Health Insurance Association (CLHIA) was the first organization to publish a macro-economic estimate of the expected future costs of providing long-term care to the baby boomer generation. What we found was shocking, although not altogether surprising.
The cost, in current dollars, of providing long-term care to the baby boomer generation over the next 35 years is anticipated to be $1.2 trillion. While there are government programs currently in place to support long-term care, they are far from adequate. Indeed, it is estimated that, at current funding levels, government programs will only cover about $595 billion, or half, of the total cost. As a result, Canadians currently have an astounding long-term care funding shortfall of about $590 billion or roughly $54,000 for each baby boomer in Canada today.
How to address this issue?
The first step to resolving this problem is to acknowledge the scale of the issue and to move forward with meaningful reform in the short-term. While there has been some modest movement in this regard provincially, the pace and magnitude of change is not adequate to address the impending increase in demand for long term-care and the associated costs.
Addressing the funding shortfall will require a mix of structural reform to lower costs as well as new measures to raise revenues for long-term care. On the structural side, there is clearly scope in Canada to provide more home care and to do a better job of transitioning individuals out of hospitals and into long-term care facilities. Not only would this be more cost effective, it would provide better and more appropriate care to many Canadians. While it will not be adequate to close the entire funding gap, we estimate that such aggressive structural reform would generate savings to governments of approximately $140 billion in current dollars.
The savings from structural reform can be re-invested in long-term care policy initiatives to further improve patient care and address the funding shortfall. In particular, the CLHIA recommends:
- encouraging Canadians to save for long-term care by creating an RESP-type product dedicated to long-term care or government subsidization of the purchase of long-term care insurance;
- promoting a patient centered approach to long-term care to improve the patient experience and create value for services by aligning incentives for providers to innovate to meet patient needs;
- restructuring the siloed long-term care system to one where individuals seamlessly transition along the continuum of care as their needs change;
- ensuring sufficient capacity of long-term care by leveraging the private sector to increase the supply of long-term care facilities, health professionals, informal care and volunteerism; and
- supporting more health and wellness promotion policies and providing more direct assistance as a means to encourage healthy aging of Canadians.
Time for reform is now
Given the magnitude of the challenge, urgent action is required to ensure that Canadians will have access to the long-term care they will need. There is no one solution to this issue. Rather, we need a mix of structural reform, increased revenues, better pre-funding and active collaboration of the public and private sectors. As with any long-term financial challenge, the sooner we take action the better.
Stephen Frank is vice president of Policy Development and Health for the Canadian Life and Health Insurance Association.