The aging crisis is upon us. We weren’t ready before the pandemic, and we are even less ready now. The cost will be high, and the young will pay.
A report this week from the Canadian Institute of Health Information (CIHI) revealed that health care spending in 2020 increased by almost 13 per cent, mostly due to COVID-19.
But the CIHI report also stated that spending was increasing by four per cent annually, well above the rate of inflation, in the years before the pandemic.
A decade ago, seniors accounted for 14 per cent of the population. Today, that figure is 18 per cent. By 2030, it will be around 23 per cent. By then, all the baby boom generation (those born between 1946 and 1965) will be 65 or older.
“As the population continues to age, decision-makers face the challenge of determining the level of care...for older Canadians that balances access to...care with the cost of care,” the report states.
Optimists point to the years after the Second World War to show how a society can grow its way out of debt. The federal government borrowed heavily to fight the war, but quickly brought the books back into balance afterward, thanks to strong economic growth and low interest rates.
But Canada was a young nation then; now we are old. The mean age in 1950 was 27.7 years. In 2020, it was 41.1 years.
“Supporting and caring for a larger number of older Canadians will be a primary theme of the 2020s,” predicted a Royal Bank report published last year before the arrival of the pandemic. The report said the ratio of working-age Canadians, on the one side, to seniors and children, on the other, would shrink from 2.3 in 2010 to 1.7 in 2030.
“All levels of government will feel pressure from a shrinking tax base,” the report stated.
Canada’s debt-to-GDP ratio increased by 36 per cent last year, reaching 118 per cent. That still leaves room to manoeuvre but, with federal and provincial governments adding more debt each year, that room will shrink.
At the root of the problem: We don’t make babies like we used to. In 1959, when the baby boom peaked, the total fertility rate (the average number of children a woman would have in her lifetime) was 3.9. Today it’s 1.4.
High levels of immigration reduce the impact of societal aging, but can’t reverse it.
The pandemic revealed weaknesses in the elder-care system that will only grow worse. Nursing homes rely on overworked and underpaid support workers, who are going to demand better working conditions and pay as labour shortages caused by retiring boomers tempt them to look elsewhere.
The pressure on the long-term care system will only increase as the boomers age.
Remember too that, while life expectancy is increasing, quality of life doesn’t necessarily increase as well. Little progress has been made in preventing or treating dementia, for example. We can look forward to a future in which more and more of the frail elderly are warehoused in nursing homes, receiving inadequate care, even as the cost to the taxpayer goes up and up.
Seniors want to live independently for as long as they can. Governments will be under intense pressure to spend whatever it takes to keep older people in their homes. Home care is expensive, so debt will increase, even as other program spending is cut back on everything from education to welfare to defence. (Fortunately, societies that must spend heavily to look after old people, and that have few young men, are less likely to go to war, a phenomenon known as the geriatric peace.)
Societal aging could seriously undermine efforts to combat global warming through infrastructure investment.
Politics is the peaceful competition for scarce resources. Because there are so many boomers, they will win that competition, at least for a while, but intergenerational conflict could define our future.
The good news, if you can call it that, is that in 30 years or so the boomers will be gone and the financial pressures of caring for the elderly will ease.
But the next few decades could be very unpleasant. Demography is destiny, and the destiny of this aging society isn’t pretty.
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John Ibbitson