February 27, 2013 – Newfoundlanders carry a $75 billion fiscal burden, or about $150,000 per person, to pay the higher tax bill for increased healthcare costs over the next half-century – and should prepare now for the coming demographic squeeze, says a report released today from the C.D. Howe Institute. In “Healthcare for an Aging Population: Will Demographics Push Newfoundland and Labrador into a Fiscal Deep Freeze?” authors Colin Busby and William B.P. Robson recommend that the province prefund selected healthcare services and benchmark against other provinces that get better bang for their bucks in some areas.
“Publicly funded healthcare’s claim on Newfoundland’s economic resources has not shown the same upward trend evident elsewhere in Canada, but that will change,” said Colin Busby. “Our projections show the share of demographically sensitive programs, including healthcare, education and other age-based programs, doubling from 12.4 percent of provincial GDP today to 24.5 percent over the next five decades. Meeting these demands from its own resources would require the St. John’s government to raise the tax bite it takes from Newfoundlanders’ incomes by 60 percent,” added Busby.
The study projects the province’s population and the impact of demographic change on government revenues and programs. Among its recommendations:
- Prefunding: finance some healthcare services similarly to the Canada Pension Plan, which converted from pay-as-you-go to a model in which a portion of premiums collected from participants today prefunds their own benefits in the future.
- Benchmarking best practices: Newfoundland and Labrador spends less than most provinces on “other professionals,” which includes dental, vision, chiropractic and other therapist costs. But it spends more on hospitals and “other institutions,” which includes nursing homes and residential care facilities.
“If Newfoundland and Labrador brought its hospital costs in line with the national average, it would spend some $410 million less annually,” noted William Robson. “Comparing bang-for-buck in such areas could improve quality of care while ensuring that demographic change does not put healthcare on a collision course with Newfoundland and Labrador’s other fiscal priorities,” he added.
Click here for the full report.
For more information contact: Colin Busby, Senior Policy Analyst, or William Robson, President and CEO, C.D. Howe Institute; 1-416-865-1904; email: cdhowe@cdhowe.org.