Together We Stand

Our country’s competitive labour advantage has traditionally relied upon the value of the Canadian dollar and the comparatively low cost of our social healthcare system. But our defences are buckling and the great Canadian healthcare safety net is being challenged by increased demand, longer wait times, pressures on hospitals and medical staff, and ever-increasing costs. These stresses on the healthcare system have an impact on employer health costs, employee absenteeism, workforce productivity and, ultimately, on our economy.

Of course healthcare is not the only strain on our future prosperity. Canada’s population is aging, baby-boomers are retiring, birth rates are falling, and a labour shortage is widely predicted. It will take the combined efforts, focus, and creativity of the public and private sectors, formally working together, to maintain Canada’s favourable position on the world stage.

The big picture

Canada’s place in the global economy is affected directly by a number of factors. Perhaps most notable is the number of dependent seniors in the population and their health status, now, and in the future.

Statistics Canada projections estimate that seniors will account for roughly 25% of our total population by 2031. This is almost double their current proportion of 13%. Together with longer life expectancy, and lower birth rates, the demographic dependency ratio will continue to rise over the next 24 years. We must also factor in the increased cost of seniors’ healthcare and the loss of intellectual capital when older workers leave the workplace. These factors all contribute to added strain on the active workforce.

As a nation our best defence is to focus on the productivity of actively employed Canadians, the health status of our senior population, and the financial sustainability of our healthcare system. Employers are committed to these goals. So is our government. The public and private sectors share these common objectives and concerns. Now we need to work more collaboratively to achieve the best possible outcomes.

Economics 101

Fundamentally, all healthcare is funded by taxpayers. Whether it comes from general tax revenues, health premiums, or a payroll tax on employers, funding is generated by the same pool of the working population. And we need this funding pool to continue expanding. That not only means healthy and productive employees to keep the system working, it means ‘business-savvy’ legislation, public policy and strategies in the areas of immigration and education as well as healthcare, to name but a few.

Healthcare demands and expenditures are also shared within the same pool of governments, employers and employees. The system is organic. The actions of all parties are linked.

Under the current system it is not always clear that changes made to a government plan result in overall healthcare improvements or cost savings. In fact, it could be argued that often these shifts in the cost burden only further degrade Canada’s healthcare system and our international status.

Public and private sector policies must align to achieve long-term cost effectiveness and competitive advantage.

Market forces

Many factors are conspiring to increase the strain on both public and private healthcare plans:

• Canada’s aging population
• Increasing demand for healthcare, coinciding with declining health
• Delays in access to diagnostic services, diagnosis and the subsequent therapeutic intervention
• Increasing cost of therapies and healthcare services, including catastrophic drug costs
• Shortage of healthcare professionals, and the overall labour shortage
• Challenges to the spirit and application of Canada’s Health Act, a needed asset in attracting skilled immigrants to our country

Also, current data released by The Canadian Institute for Health Information reveals that 18.2% of Canadian physicians are over the age of 60, and of these, 5% are over the age of 70. Over the next decade we can expect at least a reduction in hours, if not full retirement, from this group of medical professionals. It is estimated that each year approximately 930 too few physicians are filling vacated positions.

We lack a national strategy for handling these exposures in Canada’s competitive position.

Advocacy works

Employers, as a group, must play a more active and distinct role in sharing best practices, and in designing the solution to escalating healthcare costs. Some employers have taken a lead role in pushing for innovative programs along with a higher professional standard from pharmacy, pharmacy benefit managers and insurers. This behaviour needs to be the norm, not the exception.

Strength in collaboration

Individual employers and the provincial, territorial and federal governments need to pool their ingenuity, knowledge, experience and collective purchasing power to improve healthcare for all Canadians. Employers need the government to develop forward-thinking healthcare policies that increase productivity and promote employee engagement. Government could benefit from the wealth of empirical data and analysis performed by private plan sponsors into health, productivity and the cost effectiveness of drug plans.

Looking ahead there is a substantial list of approaches, and innovations, that present excellent opportunities for public-private collaboration…and potential cost savings.

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In the second part of her column, Sandra will explore the potential for collaboration when adopting new initiatives from inside and outside of Canada. It will be published on BenefitsCanada.com on September 19, 2007.

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