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Assessing Alternative Financing Methods for the Canadian Health Care System in View of Population Aging


  • Doug Andrews


The cost of the Canadian health care system is approximately 10% of Gross Domestic Product (GDP). Survey-evidence suggests that Canadians do not wish to have additional funds spent on health care but believe that the system should be able to deliver better quality care. Due to low fertility rates and increasing life expectancy, the Canadian population is aging. Over the next 25 years, the dependency ratio will increase, primarily due to the aging of the “baby boom generation” 2. This will place twofold cost pressures on governments responsible for maintaining the health care system: 1) As a consequence of increased life expectancy, on average, Canadians will have a longer period of health care consumption. Although age-specific cost may not increase, with an aging population aggregate annual health care expenditures are expected to increase. 2) The dependency ratio is a proxy for the ability of the population to support itself. The increasing dependency rate may result in a slowdown in GDP growth, given constant technology. In Section I, this paper attempts to quantify these factors. A single measure combining cost and quality is developed to demonstrate the magnitude of the challenge. In Section II, this paper examines a number of different approaches to health care financing including user fees and alternative compensation methods for physicians. The paper highlights documented information from Canada and international experience on the implementation issues involved. The paper evaluates the desirability of implementing these approaches in Canada.

Suggested Citation

  • Doug Andrews, 2007. "Assessing Alternative Financing Methods for the Canadian Health Care System in View of Population Aging," Social and Economic Dimensions of an Aging Population Research Papers 224, McMaster University.
  • Handle: RePEc:mcm:sedapp:224

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    References listed on IDEAS

    1. Bruno Théret, 1999. "Regionalism and Federalism: a Comparative Analysis of the Regulation of Economic Tensions between Regions by Canadian and American Federal Intergovernmental Transfer Programmes," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 23(3), pages 479-512, September.
    2. repec:cup:apsrev:v:98:y:2004:i:02:p:243-260_00 is not listed on IDEAS
    3. Daniel Béland & John Myles, 2005. "Stasis Amidst Change: Canadian Pension Reform in an Age of Retrenchment," Chapters,in: Ageing and Pension Reform Around the World, chapter 12 Edward Elgar Publishing.
    4. Hall, Peter A. & Taylor, Rosemary C. R., 1996. "Political science and the three new institutionalisms," MPIfG Discussion Paper 96/6, Max Planck Institute for the Study of Societies.
    5. repec:cup:apsrev:v:96:y:2002:i:04:p:697-712_00 is not listed on IDEAS
    6. Jacob S. Hacker & Paul Pierson, 2002. "Business Power and Social Policy: Employers and the Formation of the American Welfare State," Politics & Society, , vol. 30(2), pages 277-325, June.
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    More about this item


    Alternative physician reimbursement models; Capitation; DALE; Disability Adjusted Life Expectancy; QAHE; Quality-Adjusted Health Expenditures; QAHE Index; SID; Supplier-Induced Demand;

    JEL classification:

    • I19 - Health, Education, and Welfare - - Health - - - Other

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