The quest for better health care is a national obsession in many countries, and an important issue for Canadian seniors. When it comes to spending money on health care, Canada is doing well compared to other developed countries.
Charts measuring spending per capita generally show Canada falling in the middle, a rank that would be higher if the figures were age-adjusted. (Health care costs rise rapidly as people age and most European countries have older populations than Canada, so they should be spending more.)
But what are Canadians getting for those health care dollars? When it comes to medical technology, such as MRIs and CT scans, Canada ranks dead last, below countries that spend much less per capita, including Slovakia, Croatia and Turkey.
If we’re not spending on technology, then where is the money going? Is it going toward better access to emergency care, major medical procedures, hospital beds or family doctors?
While that question deserves a deeper dive, I can provide my own initial observations.
The first is that Canada spends a disproportionate amount on end-of-life care, more than the United States and many European countries. A 2021 C.D. Howe Institute study found we spend nearly double on end-of-life hospitalizations compared with England and the Netherlands. Yet, there’s little to show for it in terms of higher life expectancy or quality of life at advanced ages. And even though they spend less than Canada, I would guess that Europeans do not believe they are any less compassionate toward their elderly.
Another potential factor relates to a trend identified by economist William J. Baumol known as Baumol’s cost disease. His theory noted that salaries in any given sector will rise higher along with the rest of the economy, even when there are no productivity gains within that sector itself. When additional public funding becomes available, a disproportionate amount gets spent on raising salaries rather than on productivity improvements, infrastructure or technology.
Retirees probably have a greater say than younger Canadians in changing this country’s approach to health care. They are the biggest users of health care and they are more likely to vote. But when it comes to health care, charts like these show they should be voting for smarter spending rather than just more of it.
Frederick Vettese is former chief actuary of Morneau Shepell and author of the PERC retirement calculator (perc-pro.ca)