Friday, February 19, 2010

Watch out – an army of greedy geezers is coming

Are you going to have enough money when you retire? If you’re too young to worry about that, are you prepared to start paying big taxes to pay for better pensions and health care for all those boomers?

Federal budget officer Kevin Page reported this week that Canada isn’t doing enough to get ready for the impact of millions of retiring baby boomers.

I’d been looking at similar issues in B.C., prompted by the government’s pension review.

It’s fascinating — and very worrying — stuff (at least for a numbers geek).

Consider this. In 1971, there were 6.2 British Columbians of working age for every person over 65.

Today, the ratio is 4.3 to one.

By 2034, there will 2.4 people of working age for every person over 65. Basic public pensions — old age security and the guaranteed income supplement for those with little or no other income — come from current tax dollars.

So back in 1971, about six people of working age shared the cost of providing a basic pension for each retired person. (And for their health care.)

By 2034 — which is closer than 1971 — just 2.4 people will be picking the tab for each retired person. That’s a way bigger commitment.

It’s not quite that simple. Back in 1971 children — those under 18 — made up 35 per cent of the population. By 2034 they will be less than 18 per cent. People in the 1970s were paying for fewer seniors each, but more children. (And there were more stay-at-home moms in 1971.)

Still, you can calculate a rough dependency ratio. In 1971, about 56 per cent of the population was working age. The rest were under 18 or over 65.

The percentage of people of working age increased steadily over the last 29 years. That has benefits because people of working age pay the taxes and generate the economic activity that supports the young and the old. (Not entirely, of course.)

That also made the last few decades a good time to be in government.

The working-age population in B.C. is set to peak next year at 65 per cent and then start declining again.

By 2034 it will be down to 58 per cent.

Why does that matter? The more people in the working-age group, the lighter the individual cost of providing services for young and old. Better services are affordable. Or people can choose to pay less in taxes. Or they can choose and encourage governments to borrow against the future.

That’s another aspect of all this — the political clout of the baby boomers. It’s not that we’re selfish, necessarily. But there are a lot of us, so politicians pay attention to our interests.

When baby boomers were interested in schools for their children — the late 1970s and early 1980s — governments thought schools were important. When our hips and knees started going, waitlists for those operations became a health-care priority.

And pretty soon we’re going to worrying about retirement incomes and residential care.

Watch out, you young ’uns.

Again, consider the numbers. Back in 1971, people over 65 made up 14 per cent of the voting-age population. Today, they’re about 19 per cent.

And in 2034, people over 65 will make up 25 per cent of the voting age population.

Add in the fact that younger voters tend not to bother to cast ballots and the support of geezers is going to be critical to political parties. So if we want better health care and richer pensions, governments will look for ways to provide them. Even if that means higher taxes for those of working age or deficits and debt that will have to be repaid after we’re dead.

The changes are all predictable. Which makes it that much more surprising that we have done so little to prepare for them.

Footnote: Planning hasn’t been so great at the other end either. The number of school-age children has been declining since 2000 and the government pushed for school closures. But in three years, the numbers will begin climbing sharply. Within 13 years, the school population will be the largest in B.C.’s history.

Tuesday, February 16, 2010

Good care, cheap care and secret decision-making

It seems a simple choice.

If you have an abdominal aneurysm - a bulge and weak spot in an artery - there are two treatment options.

Doctors can cut you open from breastbone to hips, push your organs over and sew in a plastic tube to replace the weak spot. After a week or so in hospital, you face a long recovery.

Or they can make a small incision in your groin and insert a stent - a little compressed metal mesh tube - into the artery and then slide it into place and expand it. A day or two in hospital and you’re as good as new.

Personally, I’d like option two. That’s what Bill Clinton had last week and he was home the next day.

But for health authorities it’s complicated. And a dispute between vascular surgeons and the Vancouver Island Health Authority is opening the door on the world of health care rationing. It’s not pretty.

The surgeons want to do more of the stent procedures. The health authority wants to control costs so it sets a quota on the number on them - 38 this fiscal year.

The surgeons are supposed to manage so that about 100 patients get the traditional surgery and the 38 people at greatest risk of complications get the stent treatment.

The surgeons got so frustrated they went public. Patients who needed the stent surgery were being made to wait because of the quota, they said. Patients said they felt the authority was playing Russian roulette with their lives. An aneurysm can burst without warning.

And, the surgeons said, the costs are the same if you include the extra time in acute care beds required by patients who undergo the traditional surgery.

It gets interesting here.

VIHA costs the traditional open surgery at about $1,500. A nurse, anesthetist and surgeon.

A stent procedure, it figures, costs $19,500. The little mesh tubes, perhaps an inch long, cost about $13,000 each. The surgeons say you can’t just look at operating costs. As well as being better for high-risk patients, the stent procedure means about a week less in hospital, so the real costs are in the same range.

The authority’s response explodes a health care myth. We tend to think care is limited by hard factors — too few beds or nurses, not enough MRI scanners.

VIHA said the savings from having patients spend a week less in hospital aren’t real. Some other sick person would just occupy the bed and the money would still be spent.

The health authority, because of the funding from government, needed that sick person waiting at home, not getting care.

Logically, the correct response would be to do the stent procedure and then leave the bed vacant for a week. The cost would be the same and the patient would be better off.

But that wouldn’t happen. People could accept their child waiting for needed care because there just wasn’t a bed. But not to meet an arbitrary budget quota.

The health authority said the doctors were being unreasonable, perhaps unprofessional, in seeking to use the stent surgery when it wasn’t warranted.

The surgeons said they limited the use to necessary cases and the arbitrary cap was foolish and dangerous. They had tried to work with the health authority to come up with a rational approach and been turned down.

And the public got a jarring look at health care. Even if you don’t know who is right, this process looks ridiculous.

It’s not just VIHA. The Fraser Health Authority went through a similar dispute last year.

And it’s not just stents. A wide range of cuts and rationing are being made without clear rationale, the support of doctors or any public discussion.

Ultimately, that’s the biggest concern. The government sets a funding level and the health authorities make life-and-death decisions about service levels behind closed doors.

And the public is left far on the outside.

Footnote: Stents are gold for the companies that have the patents. As all this was being reported, Boston Scientific Corp. said it would pay Johnson & Johnson $1.7 billion to settle a stent patent dispute. The two companies sell about $2 billion worth of stents a year; globally it’s a growing $7 billion a year business.