The rising cost of long-term care

As baby boomers age, long-term care will become a ballooning part of provincial health-care costs. Now is the time to plan for that eventuality.

 C.D. Howe Institute, in a recent commentary entitled Long-term Care for the Elderly: Challenges and Policy Options explores the issue of providing care for those who can’t care for themselves — “people who have health problems that make it difficult or impossible for them to perform the basics of daily living: dressing, eating, getting around, toileting, hygiene” — and looks at the policy alternatives for shouldering the costs of care.

According to authors Ake Blomquist and Colin Busby, there are two major policy questions:

• Should the principle of universal coverage, as currently applies to physician and hospital services, apply to long-term care?

• How can governments fund long-term care more efficiently, to get better value for the increasing amount of money they allocate to long-term care and to reduce costs in the health-care system?

Certainly the aging of the population presents challenges. “On average,” say the authors, “in member countries of the Organisation for Economic Co-operation and Development (OECD), the proportion of those who need institutional or home care for chronic conditions is about 7% at age 65 but rises sharply to about 50% for those aged 80 or older. Canada will see its share of the ‘oldest-old’ population — those age 80 and over — increase to 10% by 2050 from roughly 4% in 2011.”

The cost? Estimates suggest that over the next 35 years Canada’s price tag for caring for the elderly will be $1.2 trillion. The issue is balancing the care needs of an aging population with the ability of future taxpayers to shoulder the financial burden.

“This is a thorny challenge,” the authors acknowledge. “But policy-makers should tackle these tough issues now, before the first wave of baby boomers begins to draw heavily on long-term-care programs in about 15 years’ time.”

The commentary recommends the provinces subsidize long-term care for those who lack the means to pay for it, but that subsidies diminish with individuals’ ability to pay. “In designing the targeting rules,” the author write, “provinces should find ways to treat assets flexibly for elderly couples when one spouse has high long-term-care needs and the other spouse remains in the community. Further, so as not to unduly discriminate against middle-income seniors with accumulated savings, the provinces could establish a more gradual scale to reduce the size of public subsidies, one that does not reduce the subsidies by one dollar for each additional dollar of private income or assets.”

The authors also encourage private long-term-care insurance to reduce the need for public subsidies.

“Perhaps most important,” they conclude, “governments must aim to get good value for the money they spend on long-term care, and on this score there are many opportunities to improve efficiency in the sector.”