IMF warns about Canadian Healthcare system

IMF warns about the Canadian Healthcare System and the aging population. The concerns are real but my strong opinion is that if we were to prioritize our spending on what is genuinely important to Canadians we would stop spending to solve the issues in other countries and take care of our children and our elderly


Governments at the provincial and federal level have not been honest with Canadians about rising health care costs that will someday swamp budgets, the International Monetary Fund warns. The organization, which is based in Washington, states that with escalating medicare costs and an aging population, Canada's health-care system is unsustainable.

Accordingly, provinces need to be more upfront with Canadians about the true nature of the costs and the best practices for ensuring service can be maintained in the future. The warning came as the IMF issued its end-of-year report into Canada, which was largely favourable compared to many other nations.

If the current model of absorbing costs silently continues, the IMF states that Canada will be overrun with health costs. Talk about cutting healthcare has been considered political suicide for decades, and discussion about a semi-private system has long been met with the pejorative "two-tier" moniker stemming from concern about different service levels. However, the IMF is not alone in its concern, as many think-tanks have issued similar reports in recent years.

But the IMF says that the current model of putting off hard decisions is wrong-headed. "(IMF directors) encouraged the authorities to increase communication about the attendant challenges to improve public awareness," says the report. "Increasing transparency and communication about these challenges and their long-run implications would help to increase public awareness and contribute to the debate about possible solutions."

In 2014, the current provincial-federal health arrangement expires, meaning a new agreement will need to be drawn up. However, the federal government has been criticized for suggesting that transfer payments to the provinces won't increase above the current rate, which is six per cent annually. In the short-term, however, the IMF said that Canada's economy was performing well relative to other countries.

However, a few "key risks" were identified by the IMF. "Risks are elevated and tilted to the downside with high household debt levels the main domestic risk, and a weaker U.S. outlook the largest external risk," the report says. A correction in the housing market, which is overheating, is also a possibility." That said, with most mortgages being 'rollover' mortgages with terms of at most five years, any future interest rate increases could put additional strains on already highly indebted households."