After discussing Canada’s latest census figures at the end of last week, I’d like to talk about some more news coming out of Canada today (hopefully this won’t be considered a Canadian overload…if indeed there can possibly be such an affliction).  This latest news is about the cost of an ageing population on the cost of healthcare.  According to Maclean magazine, the major driver of spiralling healthcare is not the ageing of the population, but the cost of health technology:

“As a recent report by the credit rating agency Standard & Poor’s argues, your grandmother’s visits to the doctor aren’t the key driver of health costs. Health technology, however—encompassing anything from drugs to diagnostic imaging—is becoming the great burden on the health systems of G20 countries…

Despite the popular rhetoric about the “gray tsunami” continually bandied about by politicians, there are some three decades of research showing that aging alone is a marginal and predictable driver of health-care cost increases, in the order of about 0.5 to one per cent per year. Most recently, a report by Canadian Institute for Health Information noted that population aging contributed an annual average growth of only 0.8 per cent.

Politicians, on the other hand, too often neglect to address the drain on public coffers from technology-related costs. According to the CIHI report, spending on prescription drugs grew at an annual average rate of 10.1 per cent between 1998 to 2007—a rise that was caused by both increased utilization and a change in the mix of drug types.”

According to Kimberlyn McGrail, assistant professor at the University of British Colombia, not only is health costing more, but we are all (no matter what our age is) using it more:

“There are new drugs and new conditions that they treat, there are new tests that can be done, and new recommendations for who should receive those tests and how often they should be getting them. There are new surgical procedures and better ways of doing older procedures that make surgery better and safer, but also means that a larger pool of people are considered ‘eligible’ to receive those interventions.”

According to the Maclean article, since health care is costing more due to technology, and not the ageing population, this makes the problem more amenable to “sound policy responses”:

“Instead of demographic determinism, ‘The real cost drivers are increased utilization, across all age groups, technology, and labour costs,’ explains Canadian health-policy analyst, Marcus Hollander. ‘We have a policy and management challenge.’

Thus, the question is value for money, are we using our health resources in a prudent and sensible manner?  Instead of blaming the rising cohort of elderly health users that they can do little about, politicians can instead be focussing their attention on getting the best health bang for the taxpayers’ buck.  This is especially important since with a rising cohort of elderly, there are less people in the working age bracket to provide those taxpayer dollars.  That is where the real cost of an ageing population comes in and affects the health service.

Marcus Roberts is a Senior Researcher at the Maxim Institute in Auckland, New Zealand, and was co-editor of the former MercatorNet blog, Demography is Destiny. Marcus has a background in the law, both...