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The future of public health in Canada: does this challenge interest you?

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By Micheline Dionne, FCIA
CIA President

Much is being written these days about the future of Canada’s private and public pension plans. Canadians’ savings rate is in freefall, and a number of proposals are being advanced to either require or encourage Canadians to plan better for their retirement. But this is just one area of concern. The next big public debate will be on health. There is no shortage of information on current health care expenditures, but data on the long-term costs are scarce. And yet, a longer-range outlook would facilitate better forecasting and better planning. To that end, we will need both a macroeconomic model and better tools to assess the benefits for Canadians’ future health.

Unfortunately, too few actuaries are taking this path. Unlike the case with pension plans, the area of practice of nearly 40 percent of our members, actuaries engaged in long-range, overall health care cost projections are few and far between. In group insurance, apart from the disability field, estimates are short-term—a few years at most. Post-retirement health care commitments by employers cover a longer period, but these models are not all-encompassing. Because they do not take public plans into account, there is no reason to assess the impact of prevention programs or to include hospital costs and the costs generated by most health professionals. This absence of actuarial forecasts can be explained by the preponderance of public health plans that employ few actuaries, if any.

There are two niches available to actuaries. One is to forecast future costs according to the current consumption mode and to estimate the growth of such costs as a percentage of the gross domestic product over the coming years. The basic principle is the same as for the exercise currently being carried out by the Canada Pension Plan (CPP) or the Québec Pension Plan (QPP). It is thanks to this exercise that we are more aware of the costs and intergenerational transfers and can assess the impact of the various demographic and economic scenarios. A similar exercise could be undertaken in the field of health: it could first be carried out on a very approximate basis in order to better understand the issues in question, but also to better explain the benefits that could be generated by a more precise estimate, which would eventually come under the responsibility of the concerned governments.

Another approach would be to examine the value of certain investments in health care, such as prevention, new technologies or home care, and to understand their impact on the future costs of health care and the additional revenues generated by a healthier and, hence, more productive population.

Health is a societal issue that concerns us and that moves us to work not only for the collective good but for the good of future generations. If health care questions interest you, and if you have time to spend furthering our knowledge in this field, please contact CIA resident actuary Chris Fievoli at the following address: chris.fievoli@actuaries.ca. We are in great need of volunteers. Whether you work in the health field, are familiar with forecast and discount models or have a talent for project management, we encourage you to let us know of your interest as soon as possible.

If you have any questions or comments, please feel free to write to me at president@actuaires.ca.

Micheline Dionne, FCIA, is President of the Canadian Institute of Actuaries.

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