Issue link: http://clhia.uberflip.com/i/354914
5 Conservatively, it is estimated that over the next 35 years, as the boomer generation passes through their old age, the current long-term care liability facing Canadians is just short of $1.2 trillion. 12 To put this figure into perspective, this is roughly equivalent to the market value of all public and private retirement assets held by Canadians in registered pension plans in Canada in 2009. 13 There are a variety of government supports currently in place in Canada that provide coverage for long- term care (both institutional and home care). However, at current levels, support will fall well short of what is required. Indeed, we estimate that at current levels of coverage, all governments in Canada have programs in place that will cover roughly $595 billion of future long-term care costs over the next 35 years. Clearly, this is well short of what is needed and leaves a funding shortfall of just over $590 billion to be financed either through new government initiatives or individual savings by Canadians. Some may argue that the funding shortfall should be eliminated solely by an increase in government programs and spending. However, as illustrated in the Chart 2 below, the annual shortfall between the total expected future long-term care costs and projected government funding is expected to grow significantly over time. In order for governments to cover this shortfall there would need to be an immediate and permanent increase to both personal and corporate taxes, at all levels of government (federal, provincial and municipal), of roughly 6.4 per cent. 14 We do not view this approach as practical or desirable given the current economic and fiscal environment, as well as the significant additional burden that this would place on the younger working age population. The resulting negative impact on economic competitiveness, as well as intergenerational transfer of liability that this represents, suggests that a more balanced approach is needed than simply to rely on a tax funded pay-as-you go system. It is also important to note that given that the funding shortfall increases significantly over time, early action will be rewarded in addressing future funding of long-term care. 11 Canadian Home Care Association. Access to Quality Health Care: The Home Care Contribution. April 2011. 12 A summary of assumptions and methodology for this estimate is provided in Annex 1. 13 Statistics Canada, http://www.statcan.gc.ca/daily-quotidien/110509/dq110509a-eng.htm 14 Further information on how the tax increase was calculated can be found in Annex 1. 0 595 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 Total Long Term Care Future Cost Level of existing government support Shortfall in future funding Chart 1: Existing Funding Shortfall for Long-Term Care ($ billions) 1,185 590