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By Bonnie-Jeanne MacDonald, Samir Sinha, Alyssa Brierley

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A latest editorial within the Globe and Mail proposed the creation of a nationwide long-term care (LTC) insurance coverage program just like the Canada or Quebec Pension Plans (CPP/QPP). Though it is a well-intentioned and doubtlessly worthwhile coverage possibility, it’s necessary to clear up some frequent misconceptions. Such an answer won’t resolve the instant clear and current hazard for LTC in Canada: the upcoming and mounting fiscal pressures dealing with Canada’s quickly growing old inhabitants with its struggling LTC programs.

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Understanding the context

Throughout the peak of the pandemic in 2021, when the systemic challenges in our LTC programs had been laid naked, the oldest child boomer had simply turned 76, an age at which the vast majority of Canadians don’t require care. This disconnect in public perceptions will change into more and more evident over the approaching decade, as child boomers age into their 80s and start requiring general ranges of care which have by no means been seen in our historical past.

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Utilizing a fancy inhabitants microsimulation mannequin to mission Canada’s future LTC prices — together with nursing houses and residential care — we on the Nationwide Institute of Ageing (NIA) at Toronto Metropolitan College discovered that if Canada continues on its present monitor, the price of publicly funded LTC will greater than triple in 30 years (in at present’s {dollars}). A mixture of different components, such because the rising worldwide labour scarcity for health-care staff, will drive these figures up additional.

Like LTC, the CPP/QPP may also have dramatically escalating prices over the following three a long time as our inhabitants ages. Nonetheless, the CPP/QPP is supplied with a checking account of greater than $500 billion, together with a well-planned persevering with influx of contributions.

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The important thing to the CPP/QPP’s success is that these packages had been arrange six a long time in the past, which means the newborn boomers who helped pay into the CPP/QPP whereas working may also be paid out from it whereas retired (in any other case often called a “partially pre-funded” pension program).

LTC, nevertheless, is financed out of normal tax income — there isn’t any devoted fund to cowl the prices. Even when a nationwide LTC insurance coverage program had been arrange at present, it will take a long time for this system to be “totally mature” and pay out totally funded advantages to new retirees, too late for the newborn boomers who will want them.

Attempting to have our cake and eat it too

Alternatively, if we create a nationwide LTC insurance coverage program that asks the youthful era to right away fund new LTC advantages to older individuals (i.e., those that haven’t paid into it), there will likely be a significant concern of intergenerational equity, significantly on condition that this youthful era may also be known as on to supply important ranges of voluntary care to older Canadians.

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Thus far, grownup youngsters have been the spine of the particular provision of LTC in Canada. Analysis by the NIA has discovered that 75 per cent of all care within the house, amongst these receiving government-funded house care, is being offered informally by shut members of the family and mates.

Nonetheless, together with being the biggest era in historical past and having the longest life expectations, child boomers are additionally the primary era to have comparatively few youngsters. Based mostly on the demographics, the NIA estimates unpaid members of the family would wish to extend their efforts by 40 per cent simply to maintain up with the rising care wants of their growing old dad and mom. And never solely will every individual have to do extra, however many extra individuals might want to cut back their working hours or go away their jobs altogether to supply that care, because the variety of seniors needing assist greater than doubles.

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Wanting forward

We already know that as child boomers transfer additional into retirement, an increasing number of working-age grownup youngsters may have the burden of getting to decide on between caring for his or her older family members, or looking for the present and future monetary curiosity of themselves and their youngsters.

Creating a standard nationwide LTC insurance coverage program that makes an attempt to finance the care wants of child boomers will solely make the pressures on this working-generation even heavier by imposing on them a brand new double payroll tax: they might pay right into a program to assist an unprepared growing old inhabitants, whereas additionally being compelled to pre-fund the care wants of their very own retirements. There must be a greater interim financing resolution.

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The monetary elephant within the room is a fancy, excessive stakes downside that may have an effect on us all. We on the NIA are dedicated to tackling the query of ample and sustainable LTC financing, together with taking classes from nationwide LTC insurance coverage packages from around the globe. However as we transfer ahead, it’s crucial that our options are evidenced-based and designed for a future that’s going to look very completely different than the previous.

Bonnie-Jeanne MacDonald is the director of economic safety analysis on the Nationwide Institute on Ageing (NIA) at Toronto Metropolitan College, a fellow on the Canadian Institute of Actuaries, and resident scholar at Eckler Ltd. Dr. Samir Sinha is the director of well being coverage analysis on the NIA; and the Director of Geriatrics at Sinai Well being System and the College Well being Community in Toronto. Alyssa Brierley is the manager director on the NIA.