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19 Methodology Total Long-term Care Costs Long-term care costs were calculated over the period 2012 to 2047 based on the forecasted life expectancy of baby boomers. Total estimated costs consist of long-term care provided through: a) hospitals, b) long-term care facilities, and c) home care. These components were calculated as follows: a) Care in Hospitals = number of seniors receiving care * cost * inflation. b) Care in long-term care facility = number of seniors receiving care * cost * inflation. c) Home Care = number receiving care * cost * inflation. Each component was calculated as the sum of future cash flows over the expected time period and then discounted to provide costs in current dollars. The three components were aggregated to provide a total estimated long-term care cost of roughly $1.2 trillion. Public Expenditure and Funding Shortfall Public expenditure on long-term care costs was calculated as including the current level of government support provided to long-term facilities and home care. We also included costs of long-term care treatment being provided in hospitals. We assume that this level of support would increase at the rate of inflation over the time period examined (i.e., without any new programs or any significant increases in funding). This provides total estimated government funding of $595 billion. The funding shortfall of roughly $590 billion is the difference between estimated total long-term care costs of $1.2 trillion and government funding of $595 billion. Savings from Structural Change In order to calculate savings from structural change we assume that long-term care will not be provided in hospitals. These patients are assumed to be transitioned to more appropriate long-term care treatments (i.e., in long-term facilities and home care), which would save the system approximately $77 billion. We assume that 20 per cent of the resulting individuals will be moved out of long-term care institutions and will receive treatment through home care, which would provide additional savings of about $62 billion. Together, these changes are estimated to save about $139 billion over the time period examined. Required tax increases to close the shortfall In order to estimate the required increase in taxes to close the funding shortfall, we calculated the funding shortfall per year between 2012 and 2047 as per above. We then estimated the total personal and corporate tax revenues for all levels of government in Canada using Statistics Canada data over that same period. The percentage increase in required taxes from all levels of government over that period was calculated by dividing the total long-term care shortfall by total forecast government tax revenues.