Se­niors mi­grat­ing to prov­ince drive up health bill

The Province - - EDITORIAL - Ash­ley St­ed­man and Jason Cle­mens

Canada’s health care sys­tem has lots of prob­lems in­clud­ing its com­par­a­tively high cost, long wait­ing times and mid­dling per­for­mance among uni­ver­sal health care coun­tries.

One prob­lem, which has been largely over­looked, is how Canada’s fi­nanc­ing of pub­lic health care fails to ac­count for in­ter­provin­cial mi­gra­tion of se­niors. As a re­sult, prov­inces such as Que­bec ben­e­fit (through lower health care costs) when se­niors leave the prov­ince while prov­inces that at­tract se­niors, such as Bri­tish Columbia, in­cur in­creased costs.

The un­der­ly­ing cause of this cost — or ben­e­fit — from se­niors mi­gra­tion is that tax­a­tion (the re­sources used to pay for pub­lic health care), and the con­sump­tion of health care, fol­low two dif­fer­ent pat­terns.

Peo­ple pay very lit­tle tax un­til they be­gin work­ing, with their con­tri­bu­tions typ­i­cally peak­ing dur­ing their peak earn­ing years. Their earn­ings then de­cline when they re­tire. For ex­am­ple, al­most three-quar­ters (73.4 per cent) of Canada’s to­tal tax bur­den is paid by the work­ing-age pop­u­la­tion (24 to 64).

Health care, on the other hand, fol­lows al­most the ex­act op­po­site pat­tern.

Cana­di­ans con­sume quite a bit of health care in their first year of life, then health con­sump­tion drops markedly un­til about the mid-50s. In­deed, the ma­jor­ity of health care con­sump­tion typ­i­cally takes place post-65. For ex­am­ple, the av­er­age an­nual spend­ing on health care by gov­ern­ment on peo­ple be­tween the ages of one and 59 is $2,188. This amount al­most triples, on av­er­age, to $6,424 for Cana­di­ans aged 65 to 69. The av­er­age per per­son spend­ing for those over 70 is $13,797.

Con­se­quently, when se­niors mi­grate from one prov­ince to an­other, they are highly likely to have paid most of their life­time taxes in one prov­ince while con­sum­ing most of their life­time health care in an­other prov­ince.

In a re­cent study, the mi­gra­tion pat­terns of Cana­dian se­niors and health care spend­ing over a 36-year pe­riod start­ing in 1980 to 2016 were an­a­lyzed. Dur­ing this pe­riod, B.C. gained a net to­tal of 40,512 se­niors. In con­trast, Que­bec ex­pe­ri­enced a net loss of 37,305 se­niors dur­ing the same pe­riod.

The es­ti­mated cost to B.C. for health care ex­pen­di­tures re­lated to th­ese se­niors was $7.2 bil­lion. Que­bec, by com­par­i­son, likely saved about $6 bil­lion dur­ing the same 36-year pe­riod from se­niors mi­grat­ing out of the prov­ince. Of course, taxes paid by mi­grat­ing se­niors mit­i­gate th­ese costs or sav­ings. The study es­ti­mates that up to 36 per cent of the cost to B.C. could have been off­set by taxes and up to 19 per cent of sav­ings to Que­bec could have been re­duced.

To be clear, the prob­lem is not that se­niors are mi­grat­ing be­tween prov­inces. But mi­gra­tion of se­niors across pro­vin­cial borders brings to light an em­bed­ded prob­lem within cur­rent gov­ern­ment fi­nanc­ing of health care.

All gov­ern­ment fi­nanc­ing of Canada’s health care sys­tem is done on a pay-as-you-go ba­sis, mean­ing there’s no pre-fund­ing of ex­penses. Rather, an­nual tax rev­enues fi­nance an­nual health care spend­ing in the same year. As a re­sult, there’s a mis­match be­tween the prime earn­ing years of most Cana­di­ans and the years they are most likely to con­sume health care ser­vices.

The mi­gra­tion of se­niors is just one prob­lem with Cana­dian health care, which is fraught with broad sys­temic de­fi­cien­cies.

There­fore, sim­ply in­tro­duc­ing a Band-Aid mech­a­nism to solve this par­tic­u­lar is­sue would miss the larger op­por­tu­nity — and in­deed need — for broad re­form of our health care sys­tem based on suc­cess­ful real-world al­ter­na­tives in other coun­tries that, like Canada, main­tain uni­ver­sal­ity.

Ash­ley St­ed­man and Jason Cle­mens are an­a­lysts at the Fraser In­sti­tute and co-au­thors of The Im­pact of In­ter­provin­cial Mi­gra­tion of Se­niors on Pro­vin­cial Health Care Spend­ing.

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