Canada's healthcare system seems to be in a state of perpetual crisis. We've all seen the headlines: "Hospital Beds Closing", "Nurse Shortages Continue", or "Waiting Lists Longest in Saskatchewan". Yet there is one critical issue that threatens the long-term well-being of healthcare in Canada but has received little media attention - the unfunded liability.

An "unfunded liability", simply put, is the obligation or promise to provide benefits in the future. For instance, you may have heard about the unfunded liability of the Canada Pension Plan. There are actually some stark similarities between the CPP and our healthcare system. Both are mainly pay-as-you-go type systems. Rather than accumulating funds in individual accounts for future payment, current contributions are used to pay the benefits (or in case of healthcare the treatment) of current recipients.

The one obvious difference is that CPP is funded through payroll deductions, while healthcare is financed through general tax revenues. But both have massive unfunded liabilities. The current unfunded liability of the CPP is an incredible $485 billion. The unfunded liability in Canada's healthcare system, however, is an unbelievable $1.2 trillion (that's twelve hundred stacks of one billion dollars each!) This $1.2 trillion is our current obligation to provide healthcare in Canada in the future.

To put this in perspective, the unfunded liability in the healthcare system exceeds the total direct debt of all governments in Canada by 293%! This represents an enormous obligation on our publicly funded health care system and, of course, future tax revenues. If our governments don't take action, this future liability will inevitably lead to higher taxes, or a further reduction in health services (including longer waiting lines), or both.

According to actuarial reports, if we were to go the higher taxes route, in order to fund the current level of healthcare would require either: a 70% increase in federal and provincial personal income tax rates; a 400% increase in the GST from 7% to 35%; or an increase in payroll taxes of 17% of gross pay.

How has this happened One reason is that healthcare costs in Canada have exploded, rising much faster than inflation, population, or economic growth. When the final numbers are in, total healthcare spending in Canada, including both public and private sector funding, is expected to reach an all-time high of $80 billion in 1998. (It sure makes the fed's promise to restore $1 billion of healthcare funding in the upcoming federal budget pale in comparison).

But there is another reason; one that makes the situation particularly perilous for our province. And that reason is demographics. Saskatchewan suffers from the double whammy of stagnant population growth (our population only grew by 0.3% each year from 1991 to 1998) and a rapidly aging population (our province has the highest proportion of people age 65 and over). As a result of these trends, Saskatchewan's tax base has limited potential to grow in order to pay for future health care costs.

Our governments must not only address the massive unfunded liability, but also protect patients who need not suffer because of a political failure to recognize the extent of the problem. The ability of Canada's governments to finance healthcare is in critical condition. Unless we take action now, the illness could be terminal.