Insights (Essays)

Insights (Essays) January 2021

Canada’s Aging Population: Who Pays and Who Acts?

Don Drummond and Duncan Sinclair


Two questions frequently asked by readers of our report, Ageing Well (Drummond et al. 2020), were 

  1. Who will pay for the increased cost of meeting the needs of Canada’s rapidly growing and ageing seniors? and 
  2. Whose responsibility is it to make the policy and other changes needed to enable them to age better than they do now?   

In Ageing Well, we project that if the predominant policies that result in institutionalizing the elderly in long-term care (LTC) homes were to continue, spending on LTC could go from the current 1.3% of GDP to 4.2% by 2041. Some of the increase would immediately go to repairing staffing and other deficiencies in the current stock of care homes that made the prevention of the spread of COVID-19 (and other infectious diseases) among their residents and staff very difficult. The larger part, however, would go to vastly increasing their capacity. The total cost could be decreased somewhat by the adoption of alternative, lower-cost care options, such as expanding and improving home and community care. But the share of the country’s resources needed to enable the growing number of elderly people to age well will soar nevertheless. 

Who will pay the bill? The people of Canada will pay: as taxpayers, through premiums paid for LTC insurance, directly out of their savings and their families’ earned income and as donors to the charitable organizations that sponsor or subsidize support services for the elderly. The only issue in question is what the division will be among these several ways of meeting the bill. 

If the cost is borne largely through fees to LTC residents and those supported predominantly by home and community services brought to them, the current generation of elderly people and those associated with them, together with their insurers, will bear the brunt of the cost. The same is true (less insurance programs) for charities. If the cost is met predominantly through current public spending, it will be spread evenly across the whole population, including those of working age. If governments borrow the money to pay the bill, the bulk of the cost will fall on future generations of taxpayers, Canada’s young people. 

There is a common misconception that if the government pays for a service, whether federal, provincial or municipal, then it is free to Canadians. It is not! Governments are simply aggregators of taxes. Furthermore, it does not much matter from this perspective which level of government pays. There is only one taxpayer! 

There is also a notion that the overall cost would be lower if government runs much of LTC instead of sharing the responsibility, as now, with private interests. Municipalities and community associations, including charities, also play an important role. There are many pro and con arguments for greater government involvement, but lower cost is not likely one of the pros. If run by government, the private profit margin would go, but labour costs would go up as governments tend to pay higher wages and include benefits – arguably a good thing from many perspectives, but not from that of constraining the overall cost of enabling Canada’s elderly citizenry to age well.   

Health and healthcare services are provincial/territorial responsibilities; their governments bear the primary responsibility of addressing the challenges of ageing well. Competition with private sector service providers, both for and not for profit, is an important way to keep costs under control, with the important proviso that effective and rigorous regulation and inspections apply throughout to safeguard the quality and safety of the services provided by all operators. All of them need to put more emphasis on promoting health and ensuring that the elderly live in the most appropriate venue and are provided with support for their social, lifestyle, healthcare and personal support needs in accordance with their desires and capabilities. 

The role of the federal government is controversial. It could play a leadership and coordinating role. For example, if various forms of LTC were to be brought under the public-pay umbrella, the federal government could facilitate the development of common standards. In the 2015 election campaign, the Liberals pledged $3 billion for home care over 4 years. The economic and fiscal update of November 2020 (Government of Canada 2020) promised $1 billion for LTC split evenly over this year and the next. The controversy comes from the provinces’ and territories’ concerns about 

  • incursion into their jurisdiction, particularly with the stipulation that provincial spending plans must comply with the federal rules applying to the pledged LTC funding; 
  • the inconsistency of the federal offer of money for LTC but a continued tight lid on the rate of growth of the Canada Health Transfer, through which other, much greater healthcare costs are shared; and 
  • the short-term nature of the proffered support for what is, after all, LTC. 

No doubt, many dynamics will continue to play out over federal-provincial relations in healthcare and sharing the increased cost of caring for the fast-growing number of ageing elderly Canadians in particular. But, in the meantime, the responsibility will largely fall on provinces and territories to act quickly and decisively to meet the urgent need for transformational change that is now upon us.

About the Author(s)

Don Drummond, Stauffer-Dunning Fellow, Queen’s University, Kingston, ON

Duncan Sinclair, C.M., Distinguished Fellow, Queen’s University, Kingston, ON


Drummond, D., D. Sinclair and R. Bergen. 2020, November. Ageing Well. COVID-19 Health Policy Working Group, School of Policy Studies, Queen’s University. <>

Government of Canada. 2020. A Team Canada Approach to Fighting COVID-19: Supporting Provinces, Territories, Municipalities and Indigenous Communities. Retrieved January 11, 2021. <>.


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