Friday, December 20, 2013

Here is another reason to improve CPP - your health

...from Dr. Louis Hugo Francescutti President, Canadian Medical Association
OTTAWADecembr 20, 2013 /Canada NewsWire/ - So why would a bunch of physicians want to join the actuaries, accountants, politicians and all those others now locked in debate about the future of the Canada Pension Plan?
The reason is very simple. Poverty will make you sick.
Physicians have known for some time that social determinants such as housing, nutrition or income affect health outcome of their patients. It is worth repeating that of every five dollars we spend on health care, one can be attributed to social determinants or living conditions that affect people's wellness.
This is why an adequate and stable source of income for Canadians in their retirement years is so important for their own health as well as the health of our health care system. Your financial health affects your overall health, and both should be part of a national seniors care strategy as called for by the CMA and others.
Like most of its industrial peers, Canada has a greying demographic estimated to rise to 23% of population by 2030, about double the percentage in 1990.
We would urge federal, provincial and territorial finance ministers to think well beyond the immediate costs of an enhanced CPP and how to use this public asset to address the growing rise of poverty among the elderly.
At first glance, there may not be a compelling reason for Canadian policy makers at present to use the CPP as a weapon against poverty among seniors. After all, Canada has a fairly respectable poverty rate among its elderly at 6.7% —third best among its OECD peers.
But let's play actuary for a moment and look behind those numbers.
As the Conference Board of Canada notes, after 20 years of reductions, Canada's poverty rate for the elderly has been climbing between the mid-1990s and the late 2000s from 2.9% to 6.7%. A worrisome trend, as the Conference Board notes.
Pensions as a proportion of disposable income among Canada's seniors more than doubled between 1980 and 1996 thanks to the accumulated growth of public and private retirement income plans in the postwar years.
But now that the defined benefit pension plan is an endangered species, particularly in the private sector, and 60% of Canadians have no private pension plans, we likely won't see that kind of senior wealth for some time. Finance ministers at both levels of government should be thinking about what's ahead.
We know Canadians are thinking about it, a lot. Canadians are rightly concerned about their health care as the country's population ages. In a public opinion survey done for the CMA last summer, 83% of respondents said they were concerned about their health care in their retirement years. Just as we as a society have learned to think about environmental consequences while we grow our economy, we should also be factoring in health in every important policy decision. Policy makers should start looking at the health system beyond disease treatment and think about prevention. Prevention can pay a fiscal dividend. So can improved social and economic conditions.
The CPP was once a minimalist pension plan with a contribution rate of just 1.8% — inexpensive but inadequate and actuarially unsound. After its 1996 reorganization into one of the world's best public plans, the contribution rate was set at 6% in a series of phased increases to the current 9.9% by 2003. There were no tremors in the economy.
The time has come to make the CPP even better equipped to protect Canadians. There is no reason why Ottawa and the provinces can't come up with a non-disruptive transition over several years. All that is needed is a spirit of cooperation.
The Canadian Medical Association (CMA) is the national voice of Canadian physicians. Founded in 1867, the CMA is a voluntary professional organization representing more than 80,000 of Canada's physicians and comprising 12 provincial and territorial medical associations and 60 national medical organizations. CMA's mission is to serve and unite the physicians of Canada and be the national advocate, in partnership with the people of Canada, for the highest standards of health and health care.

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