Health Care Costs

The widely repeated claim that the growth in aging Canadians as a proportion of our population will drive up health care costs is not supported by the evidence. Empirical evidence suggests that the aging population is not a major cause of increased costs. According to the Canadian Institute of Health Information:

“Analyses of the drivers of increases in public sector health expenditures over the last decade showed that the contribution of aging has been relatively modest. To date, system – level cost drivers such as inflation and increased utilization have played bigger roles in health spending increases.”

– Health Care Cost Drivers: the facts, CIHI, November 2011

In fact, according to the Council on Ageing in Ottawa, the aging population contributes less than 1% to the growth in public health costs.

The largest single driver for increased health care costs are pharmaceutical drugs. The simple truth is that pharmaceutical companies can charge a price far above the real cost of manufacturing the drug. A survey of the 30 top drugs from 11 commonly prescribed drug classes showed the following: for the same drug the cost of a brand-name drug was $13.60, for a Canadian generic $3.40, and for a New Zealand generic $1. That’s right — Canadian pharmaceutical brand name drugs cost $13.60 when the same drug under New Zealand generic laws came in at $1.

All too often prescription drugs are over-prescribed. Some drugs are approved that actually will harm more people than they help. While seniors are wrongly seen as the reason for increasing health care costs, the reality is that seniors are particularly vulnerable to the excess use of prescription drugs.

The solution is a national pharmacare programme. Canada is the only industrialized country with a universal health care system in the world that does not provide for universal coverage of prescription drugs. Coupled with a more rigorous review, in which the pharmaceutical industry is barred from any kind of influence, we can have a fairer, safer, more economical system.

10% of seniors account for 60% of all public health care expenditures for those 65+. A coordinated focus on chronic illness can provide better care and reduce costs.

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