Impact of Aging Population on Healthcare Financing Needs in Canada

Abstract

With rapid aging of the population in Canada, healthcare policies need to evolve to ensure sustainability of a free and universal healthcare system in the country. As population ages, the need for more medical interventions and physician care results in an increase in cost of delivery in healthcare. While provinces and territories (P/T) are primarily responsible for financing and delivery of these services, the Federal Government plays a critical role in financing healthcare delivery through the Canada Health Transfer (CHT) fund. In this report, I use historical healthcare expenditure data and available projections for population growth to estimate the per capita healthcare costs for different P/T between 2022 and 2043. Results highlight that healthcare expenses in Canada are expected to rise significantly in coming years. I also show that the rate of growth and distribution of seniors demographics is not consistent between different regions in Canada, which means despite an overall increase in healthcare costs, the future funding needs to support the healthcare system will be unique for each region. Finally, I propose four recommendations based on the results with a focus on the role of Federal Government in financing healthcare system to meet P/T financing needs in coming years.