Session: 24

Health

* * *

Summary

The paper examines prefunding alternatives to mitigate the impact of the expected sharp increase in health care costs as a percentage of gross domestic product, in Canada, over the next 30 years. The projected cost increases are compared to those in other industrialized countries to put the Canadian situation in context globally. The paper suggests that an alternative to mitigate potentially unaffordable cost increases or tax increases is to provide mechanisms now to encourage prefunding. The paper examines the use of defined contribution health accounts in the United States and suggests modifications to this design to address projected health care cost increases in the Canadian context. The paper also looks at the reasons leading to the decision to have partial prefunding of the Canada Pension Plan (CPP). It examines the experience with partial prefunding of CPP and makes observations relevant to prefunding health care costs.

Doug Andrews is a Fellow of the Canadian Institute of Actuaries, a Fellow of the Society of Actuaries, and a Chartered Financial Analyst. He holds a Bachelor of Arts and a Master of Business Administration degree from the University of Toronto and a Master of Arts degree from the University of Waterloo.

He is Vice President at Aon Consulting Inc. in Toronto, providing advice with respect to design, funding, administration, communication, and investment considerations for retirement plans. He has over 25 years of relevant experience with consulting firms and insurance companies in the group benefit and retirement areas.

Doug is a member of the faculty at Humber College. He has served as Chair of the Benefits and Pensions Committee of the Board of Trade of Metropolitan Toronto, Chair of the Ontario Region of the Association of Canadian Pension Management, and as a director of that organization. He has also served in various capacities as a member of the Society of Actuaries' examination committees. He represented the Canadian Institute of Actuaries on a Joint Task Force with the Canadian Association of Pension Supervisory Authorities on Flexible Pension Plans.

He has written a number of articles on benefit, retirement, and social insurance issues and is a frequent speaker at industry conferences. Recent papers and presentations include:

-Policy Implications of Aging for Canadian Health Care and Retirement Programs (presented for discussion at Society of Actuaries 2001 seminar entitled Retirement Implications of Demographic and Family Change in Orlando).

-Asset Valuation Methods: Effect of Volatility (panel discussion at the Society of Actuaries 2001 Spring Meeting in Dallas).

-How To Set Appropriate Benchmarks For Performance Measurement (workshop presented at the Pension Investment Summit in December 2000 held by Federated Press).

-New Thinking Should Accompany New Health Care Spending (Benefits and Pensions Monitor 2000).

-Negotiating Pensions & Benefits (presentation to the Canadian Bar Association 2000).

-Preparing For The Challenge of Greater Foreign Investment (Benefits and Pensions Monitor 2000).

-Is Your Flexible Pension Plan Registered? (Canadian HR Reporter 1999).

G:\ACG\DOCS\ANDREWS\Personal\SHORTCV-DOUG.DOC

* * *