Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology

Issue 3 - Evidence

The Standing Senate Committee on Social Affairs, Science and Technology met this day at 11:05 a.m. to examine the state of the health care system in Canada.

Senator Marjory LeBreton (Deputy Chairman) in the Chair.

[English]

The Deputy Chairman: Honourable senators, may we start?

Today, as you know, the order of business for this committee is our health care study, and we are at the beginning of phase two of our hearings. We have three witnesses today as a panel. Each will be asked to speak for approximately 10 minutes and then we will proceed to questions.

First, we have William Robson, who is Vice-President and Director of Research at the C.D. Howe Institute. In a paper published this past February, Mr. Robson discussed the pressures of demographic changes on the health care budgets of the provinces.

Dr. William Dalziel is head of the Division of Geriatric Medicine at the University of Ottawa and of the Regional Geriatric Assessment Program of Ottawa-Carleton. He recently published an article entitled: "Demographics, aging and health care: Is there a crisis?"

Next is Byron Spencer, who is a professor of economics at McMaster University in Hamilton, Ontario. His area of expertise includes demography, forecasting methods and health economics. He has written extensively on the impact of demographic aging on health care costs and other social programs.

We will start with Mr. Robson. I ask that when you are speaking you bear in mind that we have simultaneous translation, and sometimes we tend to run ahead of the translators.

Mr. William B. P. Robson, Vice-President and Director of Research, C. D. Howe Institute: Honourable senators, I appreciate the invitation to be here today. I am impressed with the work of this committee, and I wish you every success in asking, and possibly answering, some of the difficult questions about Canadian health care.

Some of you may have read my piece for the C.D. Howe Institute. It is always a temptation, as I am sure you know, for an author to run through every detail of what has been published, but I do not intend to do that today.

With your permission, I would like to give a quick summary of the results of some of these projections. People do seem to like to see scary numbers. I want to describe some of the problems that I see with the politics of dealing with this situation in Canada. I will conclude with what I hope will be useful suggestions about ways that we might improve our position in dealing with them.

Let me start with the scary numbers. There are many forecasts possible and lots of uncertainty about how future patterns of public health spending may differ from today's. The broad directions are clear. In the coming decades, the older population, who are more intense users of health services, will grow quickly. The younger working population, who participate in the workforce and generate government tax revenue, will grow relatively slowly or even shrink.

When you summarize this in a manner that has become fairly familiar -- for example, looking at the number of people over 65 years of age per 100 in the working age population -- you can see that on a countrywide basis, that ratio of seniors to working age people will more than double from the year 2000 to the year 2040.

This chart shows from 1980 forward in 20-year increments. The national average of Canada is on the left, then the provinces from Newfoundland to British Columbia as we move from east to west, and the territories are on the right. I will point out that when you look across the country, the prospects vary quite a lot from province to province.

If you overlay the chart with some economic assumptions about the use of health resources, the costs and the growth of output per person in the broad economy, you can come up with some implications of these projections for provincial health budgets.

I will show one summary indicator of health spending in each province, scaled to that province's own-source revenue -- the money raised through its own taxes. For example, using the type of projections shown on the chart and some middle-of-the-road economic assumptions, if the provinces continue to tax the same share of their economies as they do now, you can see a substantial increase in the share of health spending of the provincial budget, and a great deal of variation across the country. I truncated the vertical scale in this chart so as not to suppress too much detail. The figure for Newfoundland in 2040 is actually over 100 per cent in this kind of mechanical projection, and it is considerably higher than that in the Northwest Territories.

Running through the numbers there is one summary indicator that is useful. Think of the increase in health spending as a liability that we could compare to other kinds of government finance figures with which we are more familiar. Imagine that our health care system is an implicit promise to all Canadians that they will continue to receive the same health care service and on the same terms throughout their lives. You can then look at that increase in health spending in similar terms to what we have done, for example, with the Canada Pension Plan, and express it as an actuarial liability.

On the chart, I compare the light bars, which represent the health liability calculated in that kind of quasi-actuarial sense, with the current net debt of the provinces. Compared to some of these familiar figures on fiscal liabilities, it is a very substantial one. To repeat the general point, there is much variation across the country. Some provinces face large burdens in terms of future health care spending and are not well positioned to meet it when you look at their ordinary debt. As for others, they are in a little trouble in both respects.

Now this is one way of expressing this liability. Its ultimate size is uncertain, and I will happily answer questions about some of the assumptions after my prepared remarks.

For now, I wish to emphasize that this liability's implications for the quality of health services that we receive, and for the taxes that we pay to finance them, are also uncertain. There are many decisions that we will make over the decades ahead that will determine how happy we will be with that balance. It is the environment in which those decisions will be made that I wish to talk about briefly, because I see awkward politics arising from this situation.

To recap, the pressure across the country is intense and uneven. Under those circumstances, it seems to me likely that the federal government will pick up a substantial part of the tab, one way or another. On the recent evidence, the likeliest way for that to happen is through ad hoc increases in transfers, such as the CHST or equalization payments. This prospect worries me because ad hoc increases of this kind create a bad environment for health policymaking. There are three related reasons for that. First, ad hoc increases undermine the stable framework that formula-driven block funding, as in the CHST, is supposed to provide. Instead of an environment where money is predictable over time, the provinces trek annually to Ottawa with the begging bowl in hand. This turns block grants into tied funding and it blurs accountability for health services.

The second reason is that ad hoc increases provide strong incentives for each province to shift the cost of its programs to taxpayers elsewhere in the country. It is not a zero sum game, but actually a negative sum game, because when the provinces are engaged in that activity, by definition they are not focusing on their health programs as they should.

The third reason for my worry is that it is hostile to the budget surpluses that we ought to be running in order to prepare for this higher health spending down the road. The most vivid example of this occurred after the CHST supplement in the 1999 budget -- $3.5 billion that was supposed to be drawn down by the provinces over three years. As soon as the money was in the arms-length account, the provinces continued to complain about lack of federal support for health programs. The immediate rebuttal by the federal government was that the provinces essentially were cheating the sick by not spending every cent of that money the moment that it was available, in order to make the case for more funding. The message is clear -- spend as much as you can and as quickly as you can. That is not a good environment for running the sort of budget surpluses that we ought to see.

I wish to submit, for your consideration, a couple of ideas for moving in the direction of a policymaking environment that is the opposite of the one that I just described. It would be one where we can look forward to stability, where the incentives are neutral, and where we would have a better environment for fiscal prudence.

I know that this committee has had some discussions before about the CHST, tax, and cash. If I could wave a wand and turn the CHST into tax room instead, that would certainly solve a lot of the incentive problems and it would be helpful for fiscal prudence. However, it would not be stable because the pressure is uneven across the country. The federal government would cave into that pressure, and we would see this annual trek to Ottawa commence all over again.

There is an alternative, and one way to think about it is to make Ottawa's transfers to the provinces more responsive to the pressure of aging populations on health budgets. I would suggest that we convert part of the CHST into a grant per senior, which I call the "seniors' health grant."I will not run through this in detail, but for illustrative purposes, we could replace part of the CHST with a new grant, set at $3,000 per senior, and initially offset the grant with matching decreases elsewhere so that it is cost-neutral in the first year. Over time, we would allow the grant to escalate at the same rate per capita as other grants relative to the general population, but being geared to the seniors' population, it would grow more quickly. In that way, you could accommodate some of the demographic pressure on the federal transfers.

The liability that I described earlier is indicated by the blue bars on the chart, and the white bars show how much each province sees its liability decrease as a result of the transfer from Ottawa. The national figures that I show on the left are from the province's perspective. Therefore, from the federal government's perspective, there is an increase in the burden; it is a transfer from the provinces to the federal government. I submit that it is not simply a neutral transfer, in the sense that it creates a more positive environment.

In this type of arrangement, the transfers would be more stable over time because it is a block-funding formula that grows over time. It takes care of two of the concerns that I had.

The final point is on fiscal prudence. The challenge is a familiar one in general terms. We have a liability that we ought to try to offset as time goes by. That can be done by accumulating assets or by paying down debt.

The challenge politically, though, is also a familiar one by now. When a Finance minister runs a budget surplus, there is always the danger of being accused of allowing patients to die in hospital corridors by not spending dollars on health care directly. One way to approach that problem is to take some of these surpluses and, essentially, put the money in a piggybank and stamp it with red letters that say "health care." That will help people to understand that a budget surplus is not a competitor with health spending, but is actually an enabler of health spending -- something that will let us take on this task in the future.

The parallel that I would submit as helpful is the Canada Pension Plan model. There was a liability that we needed to try to cover, and essentially, we compromised. We did not fund it fully. We adopted a target for a long-term funding ratio. It was a compromise between a desire to more fully fund and having a contribution rate that was politically acceptable in the short run. In a moment of marketing genius, we decided that 9.9 per cent was an attractive number for the payroll tax.

Let me suggest that we think about the health care liability in similar terms. We have the possibility of establishing something like a senior's health account. The challenge is to pre-fund part of this future liability that we know is out there. I am indicating that, like the Canada Pension Plan model, we should think about funding it over time, aiming at a similar ratio to the Canada Pension Plan. Relative to the additional annual cost of the seniors' health grant, we would want a fund about five times larger.

What would it cost to do that? Using projections like those for the Canada Pension Plan -- 4 per cent real returns, 2 per cent inflation -- if we were to put money aside right away, it would cost two thirds of 1 percentage point of GDP. That is, it would cost $7 billion in today's money, escalating over time.

What would that do? Relative to spending on seniors according to the projections that I have mentioned, the investment receipts from this account would, similar to the Canada Pension Plan, provide extra funding over time that would make the burden on future taxpayers less. By the mid-2020s, when the pressure from the retirement of the aging baby boomers is becoming most intense, the receipts in this account, and the pay-outs from that account, would cover a sixth of the cost of health care for the elderly.

Over the long run, like the Canada Pension Plan, the boomers' children and grandchildren would have to decide whether to keep this account running indefinitely. For the present, it makes sense to think about some arrangement that might meet that final requirement to protect some of our current budget surpluses for this future liability.

Let me conclude by saying that the baby boomers will strain health budgets. I have shown the scary numbers for a substantial liability that we face. That liability is quite uneven across the country, so there is a political challenge.

Going through a system of ad hoc increases that will be unstable presents problematic incentives. It is unfriendly to budget surpluses. I therefore submit a couple of ideas for your consideration.

You may want to consider a re-jigging of the Canada Health and Social Transfer in order to accommodate the demographic pressure. You could put more stability into the transfer system and provide better incentives for policymakers. Working on the Canada Pension Plan model, you could think about a way of pre-funding future health spending to protect the next generation of taxpayers from the full brunt of this burden.

Thank you very much. You have seen the numbers and heard my concerns and suggestions. I welcome your comments and criticisms.

Dr. William Dalziel, Associate Professor, Division of Geriatric Medicine, Ottawa Hospital and University of Ottawa; Chief, Ottawa Regional Geriatric Program: I apologize because I do not speak slowly, especially when I am teaching, but I do speak slowly to seniors because of their hearing problems.

I put my credentials up there, but I wish to focus on the fact that I have worked on the front lines for 20 years as a geriatric specialist. I would like to give you the perspective that I hear from seniors as things move forward.

A geriatric specialist does four years of internal medicine after medical school, and then two years of specialty training. There are about 150 geriatric specialists in Canada.

I would like to focus on three basic areas: the model, the manpower, and the money. I apologize for using "manpower" for brevity purposes, but it is human resource power. Even more so, it is "woman power" because most of the geriatric specialists in the country are female.

I will start from the perspective of what seniors want. Seniors do not want to live for ever. They want to stay healthy and independent as long as possible. Seniors say that it would make them feel old if they were dependent on other people.

How do you keep people healthy and independent as long as possible? There are three basic answers. One answer is support services; another is successful aging; and the third is specialized geriatric services.

Seniors live in three countries. There is the country of the well, which is 80 per cent of them, the country of the frail, which is 15 per cent, and the country of nursing homes, which is approximately 5 per cent -- but as high as 10 per cent in some provinces.

The greatest risk factor for almost every disease is age. If you are old, you will have multiple diseases. Those diseases need to be addressed, as well as the disabilities that arise from them.

The biggest action point for geriatrics is the frail elderly. That group is hanging on a knife-edge. They are either dependent on others for activities of daily living, or at high risk to become dependent. That is where the action is. If you do the right stuff with that group, you can move them back to being well, or keep them frail without increasing dependence and having them go into nursing homes.

If we look at how the model currently works, we are moving back to the warehouse. We are building more nursing home beds, and we are creating "little nursing homes" with home care services. The current mentality seems to be that if you have seniors who are having trouble doing things, you put in homemakers as a solution. If seniors are having greater trouble doing things, you put them in a nursing home.

We do not look at optimizing the person before considering any aspect of services. Services for seniors are very long term and very expensive.

I suggest to you that, as we look at seniors going from well to frail to institutionalized, we note that the arrows are two-way between well and frail. It is well confirmed in Statistics Canada studies that a large part of the frail population from year to year can go to well or back to frail again.

Geriatric assessment and treatment services work to optimize the health of the frail by diagnosing, treating and optimizing diseases. We cannot make the diseases better, but we can improve the disabilities. We can make a person more independent and less in need of human help, which is where they want to be. Only after the person has been optimized should you look at support services.

Our model of care is to put seniors with problems into a nursing home, which does not work. Successful aging can work at all three stages, because if people do things themselves, they will be as healthy as possible.

At this stage, my medical students are usually falling asleep, so I put up a cartoon. This is on the influenza injection, which is a wonderful intervention. It decreases morbidity, mortality, and hospital use. An American study found that it saved $139 per vaccinated senior.

The key to staying healthy is exercise, and I will tell you of two studies. There have been over 100 studies done on exercise and aerobics and heart and lung fitness.

Elderly women training two times a week for six months were made five years younger in terms of heart and lung capacity. Over an eight-week strength training program for women in there 90s living in nursing homes, it was found that they increased their quadricep muscle strength by 174 per cent. People stopped falling. They threw away canes and walkers. Those are two examples of the many things to be done in terms of successful aging.

I run specialized geriatric services. There is a range of these services available, both inpatient and outpatient. Our "technology" is a team of professionals working together, looking at diseases and disabilities and how to improve those.

One of our major challenges is that some ways of thinking are very wrong, and we deal with that. The fundamental premise that we work under is that much of the disease, the disability and the dependency in old age are due to preventable, treatable, or manageable conditions. That is not a commonly held tenet out there.

The seniors with complex health problems have unique needs and present specific challenges. I explain it to doctors by saying that seniors do not read the medical textbook, so they do not know that when they have depression, they must be in a sad mood. The disease is missed, not treated, and the person goes way down. There are many problems with accurate diagnosis.

The next slide is from the leading medical journal in Canada, from two days ago in the Toronto Star, which dictates health policy in Ontario. I can tell you that for sure. William Molloy is a renegade Irish geriatrician from Hamilton who was quoted as saying that he is "just plain fed up" and he is "about ready to call it quits."

Like many doctors who specialize in caring for the elderly, he is frustrated by long hours, poor pay and constantly banging up against a brick wall.

My second element of "people power" has two aspects. The first aspect of people power is generalist; we must make sure that every health professional has a core knowledge in care of the elderly, because that is where most of the work is done. The second is specialists like myself, who are rarer in number and are only referred to when there are special problems.

How are we doing in medical schools? The medical school curriculum is about 8,000 hours over four years. These figures are from surveys that I did over the last two decades to measure the amount of time spent on geriatric education. We have one survey being returned now that shows we were at 10, 31, and 65 hours. The trend is up, but the problem is that we are far less than 1 per cent per year of the curriculum. That is despite the fact that family physicians who graduate today will spend two-thirds of their clinical time caring for elderly people. There is a dangerous mismatch in terms of knowledge.

Back to The Toronto Star. David Hogan, who is the current President of the Canadian Geriatric Society, stated in this article that only seven physicians in Canada are entering programs to become specialists in geriatric medicine this July. Four in Quebec, because they are generally ahead of the game in geriatrics. Thus, there are three in the rest of Canada, which is just unbelievable. What will happen in the future? The recommended ratio is one per 10,000 people over 75 years of age. That is a U.K. recommendation. In Ontario we have done studies that show the expert opinion here gives roughly the same ratio. We are way short of that. We have 144 now and we need 640 -- 500 short. If we go to the year 2016, which is when there will be many more elderly, we will be shorter still, at the current rates of production. There is nothing being done to increase the training slots. I have residents coming to me to ask why they should do two more years' training in geriatrics so that they can earn 30 to 50 per cent less money. The fee-for-service system does not work. The situation is worse for clinical nurse specialists in the system.

Turning to what little I know about money, the likelihood that a 65-year-old will reach age 80 is huge. The figures are 73 per cent for women and 58 per cent for men. At 80 years, seniors start to use up much more money in terms of the services required. Seniors as consumers of the Ontario health care budget now are eating up 44 per cent. One thing that is not well recognized, especially among acute hospital CEOs, is that the major client is the elderly. When I talk to CEOs, they are shocked to find out that 50 to 60 per cent of hospital days are taken up by elderly people. The hospital of the future will be a small ICU for middle-aged and young people, and the rest of it will be for the elderly.

One of the key costs on the increase is medication. As you get older your health care costs go up. It is interesting to hear that seniors are consuming so much money. I spoke to a colleague in Sweden who asked why we are spending so much money on middle-aged people because they are supposed to be healthy.

Back to my last quote, from The Toronto Star, from Dr. Michael Rachlis:

The impact alone of the aging population has been overblown. The elderly are getting healthier than ever$the real increase in costs appears to come from the intensity of service, not increasing numbers of elderly.

However, the studies show a 1 per cent increase per year in costs from the numbers alone. That is probably sustainable, but expensive. The real trouble is that Dr. Rachlis never talks about how the intensity of service is changing, and how the next generation of seniors will be much more demanding.

There are numerous examples of where we are drastically under-treating seniors in terms of cardiac care and hypertension, which is being controlled in only 16 per cent of seniors. There is a condition called atrial fibrillation that predisposes to stroke. If that is treated with blood thinners, the risk of stroke goes down 70 per cent per year, and yet only 20 per cent of elderly people who should be treated are treated. The intensity of services is very low.

In fact, I think it is almost "ageist" in nature in terms of how we do not do enough for seniors in terms of their health care.

The next topic is osteoporosis. After a fracture of the hip, how many elderly women are tested in hospital for osteoporosis? Only 10 per cent. That is another example of under-intensity of services.

Health care costs will go up and that is fact. How much they will increase I do not know. Some of the choices that we do have include how we spend our money. It is very clear that if we keep spending the money the way we are now, we will be in big trouble. The good news is that there is so much more to be done that will decrease the costs of health care in the future. We have no concerted effort around health promotional activities for successful aging in seniors. It is no wonder they do not receive their health vaccinations, and they do not do their exercises or strength training. Those things have huge potential to decrease services. Increasing education amongst family physicians, and all physicians in general, holds tremendous potential to save money. Developing more specialized geriatric services to make the person better, rather than throwing services at them, again has the potential to save more money.

The last three slides speak to the similarity between the seniors boom and the Y2K phenomenon. There are ways that it is similar, in that Y2K was a big crisis that we could see on the horizon, just as we see the seniors' boom. Little had been done until almost too late. With Y2K, we did a tremendous amount right at the brink. We see in the paper every day something about seniors or Alzheimer's, but if you look at what has been done to make changes in the last five years, it is stunningly little.

We recognize the huge impact of Y2K and of seniors, and we recognize the dollars that most of them require -- some aspect of multidimensional solutions. The second-last slide shows what the differences are. This is what really scares me in terms of meeting the future -- Y2K was technology dependent, thus making the solutions much easier.

The issue of the seniors boom is people dependent. To train a geriatric specialist takes six years after medical school. To make a change in a medical school curriculum probably takes a century, because the deans all have "curriculursclerosis."

You can work on Y2K with a flurry of late action, but the seniors boom needs a long planning and action horizon. That is part of the problem. Politicians and governments rarely have a long planning and action horizon. The action needs to take place now, even though the seniors numbers will not go up dramatically for another 10 years.

There are tremendous opportunities to make meaningful changes now that will not only make seniors healthier, but also cost less.

Dr. Byron G. Spencer, Professor of Economics; and Director, Research Institute for Quantitative Studies in Economics and Population, McMaster University: When I was asked to come here, my topic was to be population aging and its economic impact on the health care system. I felt that was fairly broad, especially for 10 minutes. It corresponds to a graduate course that I give that takes a full term. I will present a distillation of such materials into 10 minutes.

The first item is population aging. There certainly is no question that the population is aging, and that we can expect a much older population in the future than we have observed in the past. This is typical of developed countries, and I think it is important to look at the situation and make comparisons internationally.

On this slide, Canada is the red line here and this mark is the elderly dependent. This is from an OECD publication. Elderly is defined as 65 years of age and older. It is relative to the population of those 15 years of age to 64 years. That is a loose definition of the provider group, if you like.

According to this graph, Canada has a low ratio here. At present the ratio has been rising, as we realize, but not significantly. The projection is that in 2011, when the beginning of the baby boom generation reaches the age of 65 years, and for the subsequent 20 years as the generation becomes progressively all over the age of 65 years, this proportion will rise significantly.

As it rises, we will note on this chart that it still is not high by international standards. It is high by historical standards, but not compared to other developed countries. It will remain, in this particular projection, about the same as the U.S.It will remain below the European Community and well below the level projected for Japan.

The dependency ratio is a measure that is often used to describe how important aging is. I would like to show you on this slide a measure of the dependency ratio that is different from a previous slide. It is the ratio of population per member of the labour force. This ratio was very high when the baby boom generation was young. It is now, and has been for many years, very low.

The Canadian dependency ratio is very low, and it will remain very low until 2011, after which it starts to rise. I would emphasize that it rises gradually. The ratio of population to labour force rises to about 2 when the baby boom is fully in retirement, as compared to the historical point when the baby boom was young, at which time the ratio of population to labour force was about 2.8.

Consistent with some comments made earlier by Mr. Robson, this ratio varies a great deal across the country. It is important to realize the fiscal implications of this, particularly for health care, and certainly for other things as well.

The Canada numbers are shown on this slide, along with the two highest and the two lowest numbers. Newfoundland and New Brunswick stand out as having very high dependency ratios. Ontario and Alberta have low dependency ratios.

What does that imply for costs to government budgets in particular? This slide has some projections that look at this. What would be the implication for health care costs, and for other elements of government costs, if the same delivery of services were provided in the future as in the past to individuals of each age and each sex?

This graph gives a projection in which 1986 is taken as a reference year. The population projection looking ahead to 2031 is 50 per cent higher. Health care costs go up 100 per cent over that period. This is one of those scary numbers, as previously mentioned, although I do not regard this as being terribly scary.

Population increases 50 per cent over that period. Health care costs over that period are double that increase.

This slide shows the scariest numbers in terms of expenditures. Social security expenditures in the same reference period increase more than threefold. There is a 200 per cent increase, as compared to the 50 per cent increase in the population, who must sustain the social security system, including OAS, GIS, CPP and QPP.

At the same time that all that is happening, in consequence of population change alone, education costs go up slowly. Population increases by 50 per cent during that period; education cost over that period goes up 10 per cent in consequence of population change. Those costs are going up, but they are going up slowly relative to the population.

This graph shows a figure that brings everything together. Health care and social security together account for 25 per cent of government budgets for all levels in total. Health care accounts for another bit, but collectively they are under 40 per cent of government budgets. Other costs account for 60 per cent of services which are mostly not used by older people.

If we consolidate all of the different categories of expenditure, not just the areas where there is an age-related potential crisis, the impact is, in a series of progressions, that government expenditure increases in consequence of population change and the aging of the population at very much the same rate as the population as a whole. Government expenditures would increase approximately 50 per cent over that period, while the population increases 50 per cent over that same projection period.

I think that is quite a remarkable finding, and not widely acknowledged. People who have looked at it closely are convinced that that is the case.

That suggests to us that the main problem with prospective population aging is not in the aggregate impact that the aging of the population will have on government expenditures, but rather will be in an allocation form.

The total GDP is increasing and government expenditures are also increasing. It is an allocation matter. Education expenditures will not go up as much as social security and health care. There is an allocation adjustment, not a crisis, associated with the overall response to the aging of the population.

I will turn specifically to one dimension of health care requirements and population change. There is a reference to population change and the requirements for physicians. I will illustrate this with the case of Ontario, drawing on a recent paper.

These are age profiles of the use of physician services. Across the chart you can see age, going from youngest to oldest. These are dollar figures, but the shape is all that matters. This is general practice, internal medicine, anaesthesia et cetera -- there are 19 different categories of physician specialties -- and then all categories combined.

It is important to look at the shape indicated on the chart. I emphasize that the general shape is, not surprisingly, that utilization, as represented by fee payments per capita, increases with age. That is certainly true of general practice. Looking at the various specialties, the expenditures often peak before we reach the very oldest group, and then they fall. That is typical. There are some specialties for which expenditures and utilization decline well before that. For example, in paediatrics, psychiatry, obstetrics and gynaecology, where the expenditure patterns are different. Overall, we see expenditures and the utilization of physician services increase with age.

The question arises: What will the future requirements for physicians look like in consequence of the changing age distribution of the population as all of this happens? We can take this set of profiles and use them to look ahead and to try to answer that very question, using different assumptions about how the population will change.

I will just quickly mention that the total population, starting from 2000, is projected to increase by about 20 per cent in Ontario by 2020. Incidentally, I should also say that the reason for using data from Ontario, rather than all of Canada, is that in Ontario, the payment of fee-for-service physicians accounts for 98 per cent of total billings in the year that I will use. We have a comprehensive set of physician services covered here. That is not possible for any other province, and thus we use data from Ontario, although we initially attempted to use all of Canada.

I will now discuss what the projections tell us about history and the future. The history of projections suggests that the index of requirements for physicians went up, if we take year 2000 as being at 100, from 71 to 2,000. The five-year growth rate fizzles with increases of 8.6 per cent and 12, 3, 7, 8, 7 and 4 projected total growth rates and requirements for physician on the assumption that age utilization profiles are maintained.

The point of this paper, which I wish to emphasize, is that historically, most of that increase in physician requirements was the result of population growth, not the result of population aging. Looking at this graph, we see that this is the component attributable to population growth and this is attributable to population aging. The aging component is in the order of one-sixth or one-fifth of the total, historically, over the five years.

The total requirements for physicians to provide the same services, as the population grows and ages, under the standard projection would grow by 30 per cent from 2000 to 2020, while the population grows by 20 per cent. Most of that growth, however, is slower overall, but again, most of that remains attributable to the size of the population and not to population aging.

That is most important to understand and emphasize -- that the increase in the demand for health care services, and physician services in particular, which we have observed in recent years, and which so much of the commentary in the popular press is suggesting is a result of population aging, is not. Most of that increase is attributable to population growth.

I will conclude this component of my remarks by saying that there is a broad range of projections under alternative assumptions about where the population is going. It is the same result, whether the population grows in the future more or less quickly than the standard projection, or whether mortality rates are higher or lower. The component in increase of requirements for physicians attributable to population aging falls short of the component attributable to population growth.

What is the implication of all that for the types of physician services that will be required in the future? Dr. Dalziel might find this aspect of some interest.

These are the same specialties that we identified earlier -- 19 of them -- comprising general practice, medical and surgical specialties, and laboratory medicine. This shows both the projected and the earlier requirements for physicians in each of these categories, based on actual population historically, and on the standard population projection for the future.

The overall increase, you will recall, was 30 per cent for physicians in the aggregate as compared to a 20 per cent increase in the population. This breaks down differently, depending on the physicians' specialties. For GPs, the increase is in the order of 28 per cent. There are bigger increases for thoracic and cardiovascular surgery, at 30 per cent, and urology at 50 per cent. Some of the increases are noticeably smaller, as in obstetrics-gynaecology and paediatrics.

The bottom line is that there are predictable consequences for the health care system from demographic change. One is most certainly the specialties of the physicians who will be required to provide services to this population. It would be highly desirable if this type of information got through to medical schools, along with more training of geriatricians.

This takes us from our current position into the future. In addition, we might want to remedy the problems that we have. That would exaggerate the changes that are projected as being appropriate responses to demographic change.

The Deputy Chairman: Honourable senators, Dr. Spencer did send us his presentation by e-mail, but unfortunately it did not come through. We will make copies and provide them to you, because it is comprehensive.

Colleagues and witnesses, lunch is available as we continue to meet. Feel free to help yourself. I know that it is difficult for the witnesses to be running for lunch and answering questions. You are free to do that, but lunch will be available afterwards as well.

Senator Roche: If I am the first, permit me to express our compliments on, and our thanks for, three fascinating and stimulating presentations.

Dr. Dalziel, who emphasized the benefits of exercise programs for aging people, made me feel virtuous, as I swim every day.

He pointed to the need for more physicians for the aging. I do not understand, as I am not a physician myself, why the medical schools are not doing more to train geriatricians, since it is so obvious a problem.

Dr. Dalziel said that many young doctors do not wish to get into this because the fee-for-service system is not working. In other words, they cannot get paid sufficiently to make up for the time they must spend to prepare themselves. Why do physicians feel that if they concentrate their practice, or a significant part of it, on dealing with the aged, they will suffer financially?

Dr. Dalziel: It is simply time. I can run a middle-aged person through my office, usually a with simple problem, without dealing with a backdrop of five other problems and taking six drugs, in 15 or 20 minutes. The average consultation for a senior would take an hour to an hour and half. In most provinces, you are paid exactly the same amount for each patient. It is the same for family physicians, if not worse. They get paid exactly the same, despite the fact that the time they spend maybe three or four times longer with an elderly patient.

If I were a family physician, I would put my office up three flights of stairs with no elevator. They cannot possibly provide good care to the elderly, or they would be making less than the checker at Loblaws.

Senator Roche: Thus this touches on the larger topic of fee for service. It is a separate question, but affects the aging issue.

Did I understand correctly that it takes six years after medical school to specialize in geriatrics? Why such a long period of time?

Dr. Dalziel: The base discipline is internal medicine, which requires either three or four years. Two additional years are required for geriatric training.

That is not out of line. It takes an additional six years to become a cardiologist.

Senator Roche: I have a basic understanding of all this. I can understand the time needed to become competent as a cardiologist because I am digging around in the heart. However, why is it so complicated for a physician dealing with an aging person?

The aging process includes deterioration and vulnerability. I hope you will not be offended by this question, because I do not mean it that way. You are a specialist in geriatrics, but why do you need to be a super specialist in dealing with aging in order to be a good doctor for those who are getting old?

Dr. Dalziel: You might want to consider becoming a dean at one of the medical schools, because they do not understand it either. I will try to explain it to you, as I do to them.

One must have a very solid foundation. That foundation would allow a good general practitioner or a good internist to take care of 80 per cent of the problems of the elderly. As a specialist, I am looking at a small segment of the elderly, perhaps 10 per cent, whose problems are especially complex.

If you had an unusual heart rhythm, a regular cardiologist might be able to do the job, but it could get to a level of complexity or unusualness where you would want to go to someone more experienced with the elderly.

A classic example is depression. It affects approximately 10 per cent of the elderly. Using the information that doctors get from their textbooks, they would diagnose 1 per cent of those. That is the classic sad, blue, crying, suicidal, does not want to eat, cannot sleep, depressive. There is an entire other 90 per cent of depression that presents atypically. It may be non-specific decline, chronic pain syndrome, or anxiety.

If you are elderly and you tell a doctor that you are anxious, you will be treated for valium deficiency syndrome. The underlying problem of depression does not get better.

There is an extra body of knowledge that is expanding dramatically. It is only in the last 10 or 15 years that countries other than Canada have started to spend money on research to learn what is different about the elderly. The additional knowledge has increased in the last 10 years..

Senator Roche: If a guy like me can understand the points that you are making, why cannot the deans of medical schools?

Dr. Dalziel: You are smarter. There is more politics in medical schools than anywhere else. They need to be pushed, because they will not listen.

Senator Graham: I am fascinated by all of this too. It almost sounded like General Motors versus the Chrysler Corporation. You as a geriatric specialist might spend an hour and half with a patient, as opposed to a general practitioner, who might spend 15 minutes. It raised in my mind -- and I know this would be horror of horrors for medical practitioners to think of -- the concept of salaried practitioners. What do you think of that concept?

Dr. Dalziel: I am on a alternate payment plan.I am salaried because I could not pay my mortgage if I were doing fee for service. It is the only solution for this area. We cannot attract people, even with a salary. We are at the lowest end. That is the difficulty. If the salaries were higher, not for my purposes but to attract physicians to the field, it would be a totally different situation.

Students know how much people make. The young residents know what dollar signs are attached and it is a significant deterrent now. We have been on an alternate payment plan for 10 years. We were the first in the province, because it was a matter of survival. That plan has not changed in seven years, either in increasing salaries or in allowing for an additional geriatric specialist in Ottawa. We have the same number that we had seven years ago.

Senator Graham: Among the groups that appeared before us was the National Advisory Council on Aging. Dr. Michael Gordon was the spokesperson. He was asked to compare the health care system in Canada with that in the United States. Even before he was asked, he offered the opinion that the health care system in Canada was much better.

As a matter of fact, he said that he was born in the United States, came to Canada, practised here for 25 years, and that really, there was no contest between the two systems. We hear a great deal about the "brain drain" in the medical and nursing professions to the United States. Do you have comments to offer on that point?

Dr. Dalziel: I can take three countries -- Canada, the U.S., and Great Britain. If I needed medical care as a member of the general population who was not wealthy, I would definitely want to receive it in Canada. The British system is underfunded, and the American system can provide the best care in the world if you are wealthy.

Geriatrics, however, is a different story, because the Americans are putting a great deal of money into that area. They are much more successful in terms of establishing additional teaching slots, reviewing remuneration, and lobbying different levels of government to make forward strides in geriatrics. We in Canada have been unsuccessful in that. The Americans are moving up. However, their background system is terrible, so they will end up with little oases of geriatric excellence, if you can get to them.

The British system does geriatrics much better than the other two in terms of being an organized delivery system where the groups work more closely together in an integrated fashion. One of our problems is that although we accomplished some goals in the 1980s up to about 1990, we have done virtually nothing since then. We said that it was enough and we left it alone for a decade, Thus, we are losing that head start.

Senator Graham: I am familiar with a doctor from Antigonish, Nova Scotia, who went to California to study geriatrics. He returned to Nova Scotia to continue his practice.

One of the witnesses yesterday was from the Canadian Institute of Actuaries, Dr. Brown, who was a member of the Task Force on Health Care Financing. He said something surprising, in that he did not think that we had to spend more money on health care, but that it really depended upon achieving efficiencies and how the system was delivered.

Mr. Robson: That is true, but I do not know how useful it is as a piece of information.

Senator Graham: It is useful in the sense that it tells me that there is a mass of money that is provided by various levels of government, but that there is something wrong with the delivery system.

Mr. Robson: I focused in my remarks on the environment in which these decisions are made because one of the enormous difficulties is achieving those efficiencies in what is largely a command economy. Markets have ways of sorting things out, sometimes with a lot of friction and unpleasantness. However, the price mechanism tends to steer resources into uses where the payoff is greater.

That kind of pressure is absent from the health care system and it is enormously difficult to figure out how to reproduce those pressures. This is a partial answer to your question. I focused my presentation on trying to produce a more neutral environment. Very often, the interaction between the federal and provincial levels of government is unhelpful to efforts to achieve those efficiencies.

I have heard, especially in the wake of publishing these studies, from provincial officials who said that new federal funding was causing them to de-integrate systems that had previously been integrated, so that they could shift programs and develop a direction that would attract federal funding. They might otherwise have chosen not to do that. It strikes me as important, when thinking about the federal role, to concentrate on the way in which federal funding may or may not encourage more efficiencies in the system. It certainly is true information.

During the period of the fiscal crunch, we saw innovative approaches to health care in the provinces that succeeded in holding the line on costs. However, we know how much political discontent there was as a result. We also know how quickly, now that the fiscal situation has improved, health care systems are absorbing vast amounts of new resources. It is a constant struggle, and for any progress in improving the environment so that health care systems can make efficiency gains, every one-quarter of an inch matters.

Senator Graham: The presentations were excellent. I have one final question. What will happen when the baby boom generation passes on?

Dr. Spencer: Do you mean in terms of the size of the age distribution of the population?

Senator Graham: Yes, that is what I mean.

Dr. Spencer: The population will have, depending on what happens to mortality rates, a lower portion over the age of 65 than currently. It will remain high, but will be stable rather than fluctuating, if the mortality rate remains slow.

If I can pick up on the response to the previous question, I agree with the answer. However, we have a health system in Canada which, by its nature, is being publicly funded. If it is not publicly managed, then it is not managed at all. It must be managed and planned by a public agency if it is to function well.

I believe it is important to bring information about the existing inefficiencies to bear and try to correct them. One of the areas of particular importance has to do with drugs and medications. A good fraction of hospital days, for example, are demonstrably the result of inappropriate medication. That is my clear understanding. That can be solved in reasonable ways, perhaps by having pharmacists more actively engaged in the prescription business and by looking at the overall combinations of medications that older people, in particular, are receiving. That is one of many instances. That happens to be one area of high cost and also the area where costs are rising most rapidly.

Senator Graham: I said yesterday that I worked with the then minister of Health when the medicare program was being developed. I recall returning home to Cape Breton when the Cape Breton Development Corporation, which is now being shut down, was being established. I explained to the people what medicare meant and what it would mean to the community. I explained what its function would be, and I talked about the need for efficiency. In my explanations, I talked about efficiencies in steelmaking and coal mining and greater production per person. However, I extended it to education and hospital care. I talked about this small community, small by comparison with major cities. There were two hospitals in Sydney, two in Glace Bay, two on the north side, one in new Waterford, and one in Point Edward. In all, there were eight hospitals serving some 130,000 people.

When I talked about efficiencies, I said that the last time I looked there was no such thing, because it was a Catholic-Protestant public hospital. I observed that there was no such thing as Catholic cancer, Protestant polio, or Jewish jaundice, and that we had to look toward having a super hospital that would serve the whole community. It took a long time, but we finally got it. Those are the kinds of inefficiencies which may still be rampant in the country.

Perhaps you would like to comment on that.

Dr. Dalziel: There are many things that we are doing wrongly that we could do correctly. The average medical student might get one hour of instruction on prescribing drugs for the elderly. We conducted a survey of family physicians in Ottawa and learned that 30 to 40 per cent considered their ability to prescribe drugs for the elderly to be poor or fair.

With regard to hospital care, the most common person in hospital is an old person wearing a daring Christian Dior blue gown with a slit down the front or the back which is guaranteed to keep them in bed. People lose 5 per cent of their muscle strength every day they are in bed, so it is no wonder that when they try to get up two weeks later, they cannot walk and the length of their stay is prolonged. If we had volunteers helping to walk patients, we would cut length of stay tremendously. We do many very inappropriate things, in education and in care.

Senator Callbeck: Why is there not more emphasis on having volunteers walk patients?

Dr. Dalziel: One reason is that unions will block and frustrate those efforts, although you can sometimes get around that. However, staffing could be changed, and you could pay someone at a much lower rate to do just that. We have changed the staffing mix in our geriatric unit at the Ottawa Hospital to meet some lower-level service needs. It is hard to get people to volunteer to work with the elderly, as opposed to working in ICU or the ER. It is just like me trying to get money for the geriatric unit versus the ICU or the heart institute. I will not win any battles because it is not sexy enough.

The Deputy Chairman: In response to Senator Graham, you talked about the U.K. and California, and Senator Callbeck added to that.

It was very clear from your presentation that the key to successful aging is exercise and an emphasis on wellness and health. From a public policy point of view, what could the government do to encourage seniors to participate in these programs for their own well-being, and to encourage their families to ensure that they do? In that way, perhaps we could solve some of the problems with which you are dealing.

Dr. Dalziel: They should roll out that old Swedish guy again -- Participaction. That was all rubbish when they introduced it, but they need to roll out that kind of campaign and they need to publicize the information. When I talk to seniors about some of these things, they are stunned. They do not know that such a small amount of intervention can make such a difference. A study published yesterday states that when middle-aged women walk for one hour a week, cardiac disease decreases. We are not disseminating that knowledge and we do not have the facilitators. Some people mall walk, for example, and many things like that can be done to promote successful aging.

The Deputy Chairman: We just need someone to take the lead in promoting it.

Mr. Robson: To pick up on the earlier point, we can see across the country a tendency for provinces with relatively large elderly populations to spend a little less relatively on their care. There are benign interpretations of that. There are scales of economy there.

I also look forward to the possibility that when there is a much older population, the bulk of which is considerably more healthy and better educated than has been the case historically, much of the available help in taking care of the elderly will come from other older people, who may be better able to encourage the sorts of behaviour that enabled them to stay healthy.

Going back to an earlier point, the difficulty with looking at that pattern of relatively old provinces spending relatively less is that as the population aged through the course of the 1980s and into the mid 1990s, if we can believe the data from Health Canada on relative spending by age group, the ratio of spending on the people who were 65 and older relative to the younger population did not change. It stayed very much the same, despite the fact that over that period we had an elderly population that was becoming more healthy, more well educated, and so on.

What we do in terms of servicing will be critical, as was said earlier. There you get to the question of what the baby boomers will demand and expect.

Senator Cordy: I want to thank you for your presentations, which were very interesting. Like Senators Graham and Roach, I was interested in your comments on fee for service and the detrimental effect that has on attracting students to specialize in geriatrics. I am from Nova Scotia, where that has certainly been a topic for discussion, although not specifically for geriatrics. Fee for service discourages doctors from practising in rural areas. That may be a topic that we could discuss separately.

Dr. Dalziel, you talked about the three groups of seniors: the well, the frail, and the institutionalized. You mentioned briefly the idea of home care. I thought you said that sometimes we are too quick to provide home care, that it causes people to stay in the frail group for too long. Would you expand on that?

Dr. Dalziel: The perfect example is someone who has a fall or two. Home care gives them a walker and they use it. As a result, Parkinson's is not diagnosed for two years.

We are doing things that are supportive in nature without finding out what the underlying problem is and seeing whether we can do something about it. When people are having more trouble doing things at home, we throw in a homemaker instead of finding out whether they have depression or early dementia, or whether their arthritis is very bad. We almost use home care as a band-aid approach. Home care is the flavour of the month right now. Who can say anything bad about it? However, a lot of wasted money is wasted. The services are not well organized or well integrated with specialized services in the rest of the system. They can be very territorial.

Home care is not a solution, just like building more nursing homes is not a solution. It is a solution of sorts; it is just not the right solution.

Senator Cordy: Therefore, the idea of home care is very good, but it has similar effects to over-prescribing when it is not determined why home care is needed?

Dr. Dalziel: That is right.

Senator Morin: Yours were extremely interesting presentations.

Madam Chair, it is an excellent idea to have two economists and a clinician, because they balance each other.

Mr. Robson, I read your paper on the Internet. There was a very good write-up on it in the Globe and Mail and various other newspapers.I do not know whether you talked to each other about this, but if not, it is amazing how similar your ideas are.

Other countries have tried various other things. For example, Germany, France, Japan, and Austria have insurance for long-term care. The difference between that and your recommendation is that yours is more for general care for the elderly, if I understand correctly.

The Clair Commission recommended that it be capped. In Germany, it has been in existence since 1994 and is capped. You have to pay for whatever additional services you require. The problem is that expenses will not remain stable. To use Dr. Dalziel's example, the intensity of services will increase. Expectations are going up. I realize that there are two types of technology and some technology may be resource saving, but when you think of dialysis, bypass surgery, et cetera, there is no doubt that technology use will increase. Drugs are increasing by 15 per cent a year.

On the matter of salaries, as this is a monopoly, as soon as you throw money at the system, the first thing people want is an increase in salary. Dr. Dalziel is no exception. The first thing he said was that the officials should have more money. If we had a nurse here, the nurse would say the same thing. They do this because it is a monopoly. The market does not influence the resources or the salary scale, so there is always a demand for more. There is no doubt that health expenses for the same number of people will be increasing.

Mr. Robson, how do you fit in the foreseen increase in costs for the elderly?

Mr. Robson: If I understand the question correctly, you are making a distinction between systems that are somewhat along the lines of the Canada Pension Plan, where there is a notional individual account with contributions and benefits that are linked, versus something that is a good deal more open-ended. It is essentially like a medicare lock box in the United States, where you are simply setting something up in the government budget and anticipating expenses, but you are not sure what they will be. There is no attempt to link them through to the individual.

My suggestion is very much in the latter category. The Toronto Star immediately called me, convinced that my $3,000 figure was a medical savings account, which shows the importance of the expectations you have when you pick up a paper.

It is quite possible that there is room for that sort of thing in Canada, because certainly, as with pensions, where there is a disability component, there is a foreseeable risk, if not a definite expense, for which each individual could be considered to have a duty to take responsibility. I am being far less ambitious than that. I am simply trying to create an institutional structure that would make it easier for governments to resist the short-term pressure to pump money into the system that will apparently be transformed into an increase in costs. Instead, we need to produce a more controlled disbursement of money over time as, based on current patterns, we can expect expenditures related to aging to increase.

Without attempting to be prescriptive in terms of the individual categories, it seems safe to say that we can anticipate some pressure on the budget. Given the state of our knowledge, particularly from the federal government's point of view, I would that say it is probably better not to try to link these expenditures to particular items such as drugs, home care, and so on. That is recreating the environment that we need to try to get away from, one that involves a lot of tied funding, and in which a lot of provincial priorities are being set in accordance with what the federal money might be available for. On the whole, I do not think we are wise enough to manage a system of tied funding in a way that will work out well on the ground.

Senator Morin: Do you think that the provinces will say that $3,000 per senior is not enough, and that next year they will ask for $4,000, then $6,000? Maybe they have good reason.

Mr. Robson: That is clearly a risk. Any formula that you create will only be as robust as the political circumstances allow over time. When I talked about progress in terms of quarters of an inch, I meant that very seriously. There are proposals for needs-based formulas for equalization, for example, or you could imagine reformulating the CHST in ways that would be far more sensitive to various indicators of need.I am very concerned that we not go down that road because it creates all sorts of problems on the recipient end with what you are subsidizing at the margin versus what you are not subsidizing.

My proposal here would go nowhere near to covering the total costs of expenditures on the older population, and I think that is probably a good thing. At the margin, you still want the provinces to be spending 100-cent dollars. This is a way of trying to accommodate the pressure so that we do not have to raise it year after year.

It is a tiny increment in moving us toward a solution and takes nothing away from the importance of all the other things we would need to do.

Senator Morin: Dr. Dalziel, I fully agree with your recommendation for changes in medical practice and medical teaching. You will understand that as a past dean of medicine, I do not agree with everything you have said, but that is another point. I do not want to go into that.

With regard to increased resources, do you have any idea how much that would cost?

Dr. Dalziel: Which specific item are you referring to?

Senator Morin: You recommend that we increase the intensity of services to the elderly population. How much will that cost?

Dr. Dalziel: One of the problems is that we look at silos of costs. We look at one expenditure and cannot tie it to another silo of saving. That is a big problem with drugs, for example. I am talking first and foremost about successful aging, educating the population, which is generally not very expensive.

The second item is on changing education for physicians. Again, changing the curriculum will not be very expensive.

Senator Morin: I think you are putting too much faith in hours of lectures. Should we have two-thirds of the curriculum on geriatrics?

Dr. Dalziel: I am not suggesting that at all, and I am certainly not talking about lectures. At the University of Ottawa, family residents spend one month on geriatrics. They say that we do things much differently from the regular medical services. I am not putting any faith in lectures. I put faith in practical experience, learning how things are done differently, and how successful you can be doing that.

It is relatively cheap to increase the number of geriatricians. Then the question becomes whether they save the system money or cost the system money.

There has been a fair amount of research on geriatrics because it is such a new specialty. We have had to prove that we can do stuff and that we can be cost effective. There are far more studies on geriatric units than there have ever been on cardiac care units, and those studies only show that they improve the quality of life.

You would have to look at those and ask what the upfront costs are versus downstream benefits. We did a study here showing that when people who were referred for placement to nursing homes were assessed, 17 per cent more people were at home two years later rather than being in nursing homes. That is a fairly large saving, considering the cost of nursing homes, because the intervention can be fairly short.

Senator Morin: Are you saying that there are no resources required and the net result is positive?

Dr. Dalziel: I think that the upfront costs would be mostly mitigated by downstream savings.

Senator Morin: You referred to a friend who wants to leave the specialty because of lack of resources. That is not really a major problem here, is it?

Dr. Dalziel: I think it is a major problem.

Senator Morin: What resources are required, in terms of dollars?

Dr. Dalziel: We are short of 500 geriatricians. If they got a reasonable increase, they might make $170,000 a year. You can cost that out. You can say the same with regard to geriatric nurse specialists. However, the biggest change is in the generalist side of things.

If you can educate, in the broadest sense, your frontline nurses to get a patient up and walking, the savings in length-of-stay can be very significant. The cost of a hospital day of stay is tremendous.

You need only look historically at what we used to do with heart attack patients. They were in bed for a week or more. Now they are up the next day, and the difference in length-of-stay is outstanding.

If we did things differently, many of the upfront costs would be mitigated.

Senator Morin: Mr. Spencer, did you take into account that the elderly population is getting older? You may have read the paper by the provincial ministers of health from a year ago on health costs. They did not take into account the fact that the population over 85 was getting older, and that actually doubled costs. As Dr. Dalziel just said, after you reach the age of 85, your health costs double.

Did you take into account the aging of the elderly population?

Dr. Spencer: Yes, that is taken into account. The projections reflect the whole of the population, including projected increases in life expectancy at all ages. Yes, the population is not only aging, but the oldest end of the population is aging particularly rapidly.

Senator Morin: That is very important and is often not taken into account.

Dr. Spencer: I agree. It is important, but it is taken into account in what I told you.

The Deputy Chairman: Mr. Robson, your scary numbers suggest that the aging population is the cause of significant growth in public spending. Yet Professor Spencer is of the view that public spending is manageable and that the growth of the population has more of an impact than the aging population.

Do you use different sets of data to get to those apparently divergent views?

Dr. Spencer: I am not sure that we really differ. The projections to which I referred show substantial increases in health care budgets in consequence of population aging alone. The difference is that Mr. Robson was focusing specifically on health care costs and not on all of government budgets. It is important to note that if you are concerned about the overall impact of population aging, it makes little sense to focus on one area in which costs will go up and say there is a crisis, without also focusing on other areas in which costs will not go up or may even go down. For example, the residents of penal institutions are mostly young. In that area there would be noticeable cost savings. Older people do not receive Employment Insurance, yet that is a very large component of government expenditures, et cetera.

Mr. Robson: While the consensus that the impact of aging on health costs has been in the order of 1 per cent growth per year seems to be quite strong, there is a huge divergence as to whether that 1 per cent a year is significant. I tend to think of it as being fairly big. I am impressed with the way 1 per cent a year multiplies as you go forward a few decades. I think it does make sense to compartmentalize to a certain extent, just as we do with pensions, in that this is an area in which you can predict certain broad patterns with some confidence. Certainly it is difficult to be confident about the magnitudes when you get down to the decimal places, but the overall shape of the direction is clear. When we are going through a demographic shift such as the present one, for comparable reasons as with pensions, it is awkward for us to imagine a future in which the descendants of the baby boomers say to them, "You could see this coming and yet you did nothing about it." I would prefer to be able to say to them, "We saw it coming and, to the best of our limited ability, we tried to accommodate the pressure, and now, yes, the rest of it is yours to deal with." We could strike the intergenerational bargain on that basis.

To touch on a couple of key points, on the projections versus 1986, I would be interested to see -- and although I do not know what the answer is I have some suspicions -- what happened to the education budgets relative to what would have been predicted on the basis of demographics from 1986 forward. We did not foresee at that time that the reduction in the growth rate of pupils in elementary and secondary school would be offset to the extent that it was by lower pupil/teacher ratios and by higher costs elsewhere in the system. We did not foresee the explosion in demand for post-secondary education, and that is an area where, as the population continues to upgrade its skills more regularly through life -- which is a fair prediction -- we may see a continued enormous demand for increased resources.

If you take the view that education spending is very largely for teachers rather than for pupils, you can tell that story even more strongly.

It is one thing to point to the possibility of savings in principle; it is another to actually say that we should be cutting spending on education in order to make room for health care. We need to be careful about that.

On a final point about the other side of the budget, what is often neglected, not by Dr. Spencer but by others, is the implications of the more slowly growing population of labour force age for the tax base. Some people argue that there will be offsetting impacts; for example, when the retirees are drawing on their pension plans and their RRSP money. I assume constant tax rates here. Implicitly some people are saying no, that those aggregate tax rates will go up, that governments will tap into that flow of income to a much greater extent than we anticipate.

That may be true, but the people who have that retirement savings set aside are probably not anticipating that these overlapping claims on it exist.

It is also important to think about what will be operating on the revenue side. If the population retires later, if the population is healthier and is working longer, if productivity growth is higher, then clearly the scenarios that I am portraying here will not come to pass and we will be much better off. However, we will have to work to make that come about.

Senator Cook: I want to thank you for a very complex presentation.

I come from Newfoundland. I look at your charts and I find myself at the top of the list. What solutions will there be for my aging population with a relatively poor growth rate? I certainly appreciate your option with regard to the CHST grants. I was very impressed by that. What is will be. We are here, and if we are fortunate, we will age, hopefully in a decent manner.

With the amalgamation of hospitals in Newfoundland, I have a vision of a community clinic; a storefront that would take care of the basic needs of the people who live in the geographical area, be they young or old, but for now I will talk about the aging population. There would be exercise, diet and nutrition programs and basic diagnostic services. I see a role for a nurse practitioner there. This community clinic could be a hub into the tertiary or next level of care.

Do you see that as a very simple, workable model that would help take care of me? Because I am it.

Mr. Robson: Newfoundland's situation does look uniquely awkward when you do these kinds of mechanical projections. I will point out the extraordinary sensitivity of the results to the assumptions that people make about interprovincial migration. Newfoundland, though relatively young in the past, has seen disproportionately large numbers of young people move out of the province. More recently, we have seen signs that that might be reversed. If we rerun these numbers with the assumption that Newfoundland becomes a more attractive place than it evidently was in the past, and that young people stay, come back to it, and maybe even move into it from the rest of the country, that bleak picture turns around very dramatically.

I do want to emphasize the point with regard to Newfoundland and the speed of the transition from relatively young to relatively old.

On community clinics, I will defer to Dr. Dalziel. I want to make a strong statement about the fact that I do not know -- that it is important that I do not know. Reforms of the kind that you are talking about are almost certainly a large part of the answer.

I repeat that it is necessary that the federal government not direct tied funding to various types of activities that might prevent the kind of integration you are talking about. I even worry about the possibility that increases in federal funding might be tied to increasing moves towards capitation systems and rostering. We strongly suspect that that is a large part of the answer. However, even in that area, I am not so confident that I can stand here and advocate it as a large part of a thrust the federal government should be making.

I like the possibility of a fee-for-service component for primary care physicians because I personally want someone who will be my agent -- my advocate -- in the system. I do not want the frontline person that I encounter to be one who has a vested interest in keeping me out.

There is an institutional structure there that we often point to now as part of the problem. Undoubtedly, there are problems associated with it, but we have to be very cautious in assuming that if we move on a large scale in another direction, we will not possibly end up with a worse situation. Thus, although I am sympathetic to the vision you present, when it comes to the federal government's role -- and I apologize for repeating myself -- we must be cautious about directing the funding in a way that will steer the provinces in certain directions that we may only find out afterwards we do not want.

Dr. Dalziel: Every human being has multiple dimensions. The idea that you look at those different dimensions with multiple professionals is probably appropriate in terms of organization. One fact we have not touched on at all is that one-third of Canada's elderly live in rural areas or towns of 10,000 people or less. Those people are, essentially, completely disenfranchised from receiving specialized geriatric knowledge and intervention. We must develop models that will tackle that.

I spent quite a lot of time in Timmins, Ontario, working with family physicians to gain more expertise in geriatrics and the care of the elderly, and also training people who work for home care as multi-dimensional assessors so that they can look at physical, social, and psychological factors across the board. They gain the knowledge about drugs to work with family physicians as a dyad -- working together to try to address the problems of the elderly. There are different ways in which we can maximize what physicians do well and maximize what other professionals always do well. I am really worried about rural areas and Canada's elderly.

Senator Cook: Do you see a role for a volunteer in a rural clinic?

Dr. Dalziel: There has been much work done, particularly with peer counsellors and other seniors involved in counselling about medications, exercise and other issues. That is a capacity that should be utilized.

Senator Callbeck: Mr. Robson, when I look at the figures for a population of 65 plus per hundreds of working age people, it certainly concerns me greatly. If my eyesight serves me properly, it looks as though Prince Edward Island and New Brunswick, for example, were, in 1980, about the same as Ontario. However, in 2040, if I am reading this properly, New Brunswick will have 55 people over 65 relying on 100 working people, whereas in Ontario there will only be 38 over 65 relying on 100 working people. Why is there such a difference in that 40 years between Atlantic Canada and Ontario?

Mr. Robson: I am not sure what a demographer would use by way of terminology here, but what we are seeing is a different height of the crest of the baby boom. Then we see different speeds at which fertility rates fell off afterwards. Certainly, in the Atlantic region, generally speaking, there is a more dramatic shift there, and one where a relatively young population becomes relatively old in a hurry. To repeat the points I made earlier, interprovincial migrations make a difference, younger people being relatively quick to move.

In my base case projections, for the sake of avoiding making strong assumptions, I simply zeroed it out after five years and decided that we would assume the migration essentially stops after that amount of time. The capacity for a growing economy that attracts young people to improve this type of outlook is colossal. In fact, in many respects, it is the most important thing you could do in trying to turn this situation around. When people talk about a strong economy being a strong basis for a health care system, I can only say that I absolutely agree.

Essentially, and on the speed of the demographic transition, if we were feeling very ambitious as social engineers, we might think about pro-natalist policies and that type of thing. There is a debate as to whether they work and whether it is even appropriate to think about things like that. I stay away from it. Rather, I look at the migration. To the extent that it is possible to do something about that, I think that it points to the pressures that might require the federal government to step in with something that would accommodate the demographic pressures and make it easier for the provinces that are on the wrong end of the deal to cope with the situation. That can be done to an extent that is not going to cause Prince Edward Island, or any other province, to start to re-jig its programs in ways that will be disruptive and perhaps counter-productive over time. That depends on what the Department of Human Resources Development, for example, in Ottawa thinks is appropriate in a given year.

Dr. Spencer: A big part of the reason in the projections for the difference between the Atlantic provinces and Ontario is that Ontario is a major recipient of immigrants from the rest of the world -- very few go to the Atlantic region. It is worth emphasizing in this context that almost all of the growth of the future population, and especially the labour force, in Canada is from international migration.

Senator Morin: Returning to Mr. Robson, the provinces that have the largest elderly population tend to spend relatively less. They are the poorer ones, and you would expect them to spend less.

Mr. Robson: I refer to the ratio of spending on those 65 and over.

Senator Morin: Yes, but they have fewer resources. Ontario, Alberta, and the richer provinces have a lower ratio of elderly population for the reasons you have just mentioned.

Mr. Robson: I was referring to the ratio in each province and what the ratio of spending per person who is elderly to the younger person is. There is nothing that would automatically suggest that if a province were poorer, they would spend proportionately less on everyone. It does happen to be the case, although it is not a very strong correlation. For example, in Saskatchewan, where the population already does tend to be older, they spend relatively less on elderly people. There are both benign and not so benign interpretations of that. I was suggesting some benign interpretations.

Senator Cohen: I do not think I will complain any more about my medical care, because the future at the moment does not look too rosy in view of the predictable changes and alarming statistics that we have heard about this morning. In your opinion, what special measures should the federal government take now, immediately, to cope with the aging population and the many problems that have been forecasted? What attacks should begin instantly and on what front?

Mr. Robson: I will mention just one thing, and let me be appropriately humble about how well this responds to the desire of Canadians generally to see better-quality health care.

I will simply focus on the fiscal angle. Canadians have shown, when debating pension systems, and when confronting the very recent fiscal problems, a very strong capacity and desire to think ahead and to arrive at systems that are sustainable.

I would ask that we contemplate trying to protect a little of the federal surplus in the short run, so that in the longer run we will have lower debt and greater capacity to fund the health programs that we want.

It is only one small answer, but one of the difficulties that we are facing in the short run is that, as the economy has gone through a bit of a boom and now appears to be softening, we have seen federal finances improve dramatically.

We are seeing a lot of money being pushed out the door in response to the desire for better-quality services in the short run. I think that Canadians are also ready to have a reasonable discussion about the need to make some longer-term plans and would respond well to a federal government proposal that some of the money in those current federal surpluses ought to be set aside so that it will be there to draw on in 10, 15 or 20 years.

Dr. Spencer: I would be happy to pick up on the notion of planning for the future that has just been identified.

Specifically in the health care area, what cries out for attention is that the system requires planning. It is a publicly funded system, and if it is not planned for by public authorities in an integrated way as a system for the improved health care of the population, it is not planned. Report after report has identified this as being an important problem. There is no coherent plan on the part of any current provincial government for the ongoing delivery of health care, how many physicians should be trained and in what specialties, how many nurses should be doing this specialty, and so on. That whole range of issues is simply not, as a matter of practice, part of the planning focus of any provincial government in the country.

Dr. Dalziel: The assistant deputy minister of Health in Ontario told how health care was planned in this province. He got up at 4:00 o'clock when The Toronto Star hit his back door and read it. He then decided what he would do about health care in Ontario.

Senator Cohen: That is a sad commentary.

Dr. Dalziel: I would echo that most planning now is reactive. All provinces are different in terms of whether or not they pay attention to the health needs of their elderly population. If a signal can be sent, and if anyone can get the provinces to start paying a lot of attention to this as opposed to just dealing with the ICU or emergency room issues and so on, it would be welcomed. Planning for seniors' issues is completely at the bottom of the totem pole.

Senator Cohen: How do we shake up these deans who seem to be stuck in a time warp?

Dr. Dalziel: I was being facetious about deans. Some of them are good friends of mine. They do not have a lot of power to change the curriculum either. They can only make a few changes and then the knives are pulled out. There is a vested interest in keeping the curriculum the same, but it has not kept up with societal needs. Look at the areas of nutrition and alcohol. It is not just care of the elderly that is not being addressed properly. That entire aspect needs to be looked at.

Senator Cohen: You were not so facetious. You did make a strong point.

Dr. Dalziel: Education done the right way -- meaning that it changes the behaviours of physicians or other health care professionals -- is powerful. The problem is that we are not good at educating to actually change behaviours.

Dr. Spencer: To elaborate on one other aspect of this, I think it is important not to plan just for physicians. I would like to emphasize the importance of an overall, integrated look at the health care system as a system, so that substitution of one type of personnel for another, or the question of care in hospitals versus in the community, and all the rest of it are also considered. That is very important. There is much scope for saving costs by moving towards best practice, where that is being demonstrated repeatedly in all sorts of studies. There are better ways of doing things, yet we seem to have a system that does not readily accommodate this information as it becomes available.

Senator Cohen: Someone used the expression "promoting successful aging." It caught my imagination. It could be a mantra that the government could use in perhaps revisiting this entire Participaction era from many years ago that was so successful. I wrote that down because it caught my imagination. Promoting successful aging is another area that we must look at.

Senator Graham: I was going to use my last few seconds to defend Dean Morin, but he is perfectly able to defend himself, as he proves time and again.

My final question is a general one. Are we abusing or overusing the health care system? Are we taking our children or our so-called "loved ones" to the doctor or to the neighbourhood clinic or to the outpatient clinic too often? Has the rate of visits to the doctor, to the clinic, to the outpatient clinic increased in recent years? Are we depending too much on prescriptions? Are we sending Johnny or Mary to the doctor or getting a prescription for a sniffle or two when just waiting two or three days would solve the problem and whatever it was would go away anyway?

Dr. Dalziel: I would say there is a lot of use of the health care system for what are limited health problems that, as you say, will go away. I do not think we have done a good job of educating the public about how they should respond to illness and what their expectations should be. It is only recently that we have really tried to educate them about antibiotic overuse, which has become a huge problem with the emergence of resistance. We need to do a better job of helping people to recognize whether or not they should go for help. Many family physician visits are still for conditions that are self limiting and will go away.

Senator Graham: I suspect that millions upon millions of dollars are spent unnecessarily in that respect.

The Deputy Chairman: I would like to thank each witness for an enormously helpful and informative presentation. It was absolutely excellent.

The committee adjourned.