Is Universal Public Insurance the Answer to Long-Term Care Crisis?

Are Canadians financially prepared for the possibility of part-time or even long-term care? If you’ve been too busy working for a living, or the last thirty years have slipped by all too quickly, you’re not alone. Baby boomers have begun reaching retirement age with Generation X to follow; that means the senior demographic in Canada is expected to double in numbers by 2036.

The looming question now is whether seniors needing assistance either at home or in a care facility, will have the funds for services over and above the basics? Many feel that ensuring seniors of tomorrow have access to long term-care should be a top priority of government.

Report on aging and recommendations for the future

Advocate for health requirements of seniors and Director of Geriatrics at Mount Sinai Hospital, Dr. Samir Sinha, presented ‘Living Longer, Living Well,’ a report on aging, to the Health Minister in the province of Ontario in 2012. In the report Sinha details what the future of long term care in the province should look like. Along with accessible transportation options, and an income based system for home care; the report stresses the importance of all seniors having access to long-term care if required.

Research findings from IRPP

Financial options available to Canadians today include private savings plans and private health care insurance paid for wholly by the individual or shared with an employer. A study from the Institute of Research on Public Policy, looks closely at ways in which Canadians may prepare for their personal future health needs and the feasibility of universal public insurance. In addition to personal savings and private insurance, one possibility is a medical savings plan similar to an RRSP for the specific purpose of future medical requirements. Another option is a reverse mortgage, however, this is not the best option as relatively few homeowners have sufficient equity to cover costs of long-term care. The recommendation in the IRPP report is universal public insurance.

The IRPP report cites examples of countries funding universal public insurance for aging populations. Germany provides excellent data as their senior demographic accounts for more than 20 percent of the population with five percent being aged 80 and up. Public universal coverage is set up similarly to the Canada Pension Plan. All citizens are participants in the plan with employers contributing amounts equal to that of the employee. Unemployment insurance covers the cost of payments for individuals that are unemployed.

The intent of LTC Insurance is in providing a baseline level of care, and German citizens may purchase private coverage to supplement the basics. More than 1.5 million German residents have purchased supplemental coverage since 2009.  Countries that also provide universal coverage include Japan, Korea, the Netherlands and Luxembourg.

According to the life insurance industry, government programs in place today in Canada will only cover approximately one half of the estimated cost projections for providing long-term care to aging baby boomers.

Public universal insurance may not be a feasible solution due to the impact that the cost would have on personal and corporate taxes at all levels of government. Today’s health programs vary by province; they are generally income-based, and long-term care is not included under the Canada Health Act. Canadians need to be aware that in many circumstances, they will be responsible for the costs of their own future health needs particularly the possibility of long-term care.

Written by Alice Lucette
Image by kennethkonica of Flickr


Reference: Globe and Mail, Long-term care crisis looms: insurance industry

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