Originally published as Paul Kershaw's personal finance column for The Globe & Mail.
Our universal medical care system is as much a part of Canadian identity as the Maple Leaf. When news reports consistently outline how this system is “in crisis,” there is understandable angst.
Fixing the crisis requires that we recognize how personal finances – yours, mine and others – are deeply implicated. To slow the flow of illness into hospitals and clinics, governments need to grow investments that will ease the squeeze on the finances of Canadians – especially younger Canadians – more urgently than they add money for medicare.
This may sound counterintuitive, since Canada created universal medical care in part to solve a financial problem: namely, that too many people were going bankrupt after getting sick.
Financial hardship fell primarily on older Canadians, because we use the bulk of our medical care in our later years. In the mid-1970s, before medicare was fully established, one in three retirees were poor. Today, those over age 65 report the lowest rates of low income of any age group. Medicare spending is an important contributor to this success story.
While medicare undoubtedly reduces some financial stress, we will only address its current crisis if we acknowledge the roots lie in policies governing three other pocketbook issues.
Physician pay is growing as a share of public medical care spending
Doctor burnout is real. And there are pay inequities among doctors that incentivize many to leave family practice – inequities that play out in gendered and racialized ways.
We can and should address these inequities, but not by amplifying the decades-long trend that physician remuneration has been growing. As I’ve reported in the Canadian Journal of Public Health, physician pay increased from 19 per cent of total public medical spending in 1976 to 22 per cent in recent years. This change may not sound like much, but it amounts to an extra $5-billion annually.
That’s about half the cost the $10-a-day child care system will cost Ottawa once fully rolled out. Imagine how much faster we could have built a quality child care system if doctor pay hadn’t risen as a proportion of medical spending. When wage demands from my physician colleagues are insufficiently nuanced, increases to their remuneration risk diminishing funds available to invest in social policies that we know promote well-being – such as housing, child care, poverty reduction, etc.
Governments didn’t ask boomers to pay enough taxes to pay fully for the care they now want
It’s an unfortunate reality that the taxes today’s retirees paid for medical care throughout their working lives were not at levels that cover their own usage of the system now. That’s because we did not account for the baby boomer demographic bulge.
When today’s aging population started out as young adults, there were seven workers for every senior. Now there are fewer than four workers. So even though many retirees will rightly point out that they worked hard and paid taxes throughout their working lives according to the rules of the day, they are still leaving unpaid bills.
Decades ago we knew that demand for family physicians, emergency rooms, long-term care and pharmacare would grow as boomers retired. But we didn’t plan for this eventuality by asking boomers to contribute more while they were still working. So now in retirement, we are asking their kids and grandchildren to pay more instead.
In multiple academic articles, I have shown that younger Canadians already pay 14 per cent to 62 per cent more for medical and income supports for seniors than did those same seniors when, as young adults, they were paying for services for their parents and grandparents. If we don’t redesign revenue strategies to support the current generation of retirees to pay a fair share to fix the medical care crisis, their legacy will be higher debts and increased costs for their kids and grandkids.
Medical spending crowds out policy to ease the financial squeeze on younger Canadians
Medical care was never designed to create health. It was designed to treat illness after people become sick. So long as Canadians – often younger Canadians – can’t access safe homes, good incomes, quality child care, and a healthy environment, our medical care system will never be enough to foster well-being or prevent people from dying prematurely. COVID made it clearer than ever that we can’t thrive without the things we need for good health – most of which isn’t found in a hospital or clinic.
If the finances of younger Canadians were on par with past generations, it might not be a problem that physician remuneration risks crowding out social spending, or that our tax policy asks younger generations to pay more for retirees’ medical care. But that’s not the case.
Younger Canadians are squeezed by lower incomes, more student debt, higher housing costs, less time at home when raising kids, and growing climate risks – compared with boomers when they were young adults. This squeeze causes stress, which sets in motion biological responses that create physical and mental illness, accelerating our demand for medical care now, and in years ahead.
We all want a good mechanic when our car breaks down, just like we want a good doctor when we’re sick. But what we want even more is to stay out of the repair shop.
So it is with creating health. We have to invest where well-being is created – the conditions into which we are born, grow, live, work, and age. Not only will such investments ease many young people’s financial squeeze, they will prevent people from dying prematurely, help us live happier, productive lives, and eventually save governments money on our medical bills.
Dr. Paul Kershaw is a UBC policy professor and founder of Generation Squeeze, Canada’s leading voice for generational fairness. You can follow Gen Squeeze on Twitter, Facebook, Instagram, and subscribe to Paul’s Hard Truths podcast and videos.