Prediction: Canadians flock to private health care

As we enter 2012, Canada’s health care system continues to find itself in a demographic vise grip. The country is aging rapidly—fertility is down, life expectancy is up— and technological advancements can’t offset the cost of doctors’ swelling salaries and the rise in the number of procedures.

Finance Minister Jim Flaherty left little room for negotiation in December when he announced a 12-year funding plan for health care that made clear the federal government won’t write a blank cheque to cover mounting costs. He promised provincial health transfers will continue at 6% for the next five years, with the percentage being tied to GDP growth thereafter. With some provinces whining that the funding is inadequate, private, often for-profit, health-care options will increasingly become a necessity for the country rather than a political choice.

According to David Dodge, former Bank of Canada governor and deputy minister of health, now is the time to discuss implementation of private health-care options, particularly when it comes to tending to an aging population. “Our acute public care system is used to dealing with problems that could be paid for with more private programs,” he said in a recent talk. In fact, private home-care health services have already pretty much doubled in the past decade, swelling to $6.8 billion in 2011.

That trend isn’t just a resource necessity—boomers may actually be willing and able to spend more on care as they become wealthier. “Health care is a classic ‘luxury’ good to which individuals and society wish to allocate a larger share of their rising income,” economist Don Drummond said in a recent lecture. And that spending isn’t limited to nursing-home care. New technologies arrive on the market annually and some, like genetic testing, aren’t reimbursed by medicare yet.

For-profit diagnostics in particular will surge as patients jump the queue by using private clinics to perform tests such as MRIs. While some patients might feel contrite about professing a love for the Canadian public system and then paying for care, when it comes to their health, that’s a guilt many patients are willing to bear.