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Six Pillars of Social Policy: The State of Pensions and Health Care in Canada

In: The State of Economics in Canada: Festschrift in Honour of David Slater

Author

Listed:
  • William B. P. Robson
Abstract
William B.P. Robson, a co-author with David Slater of a series of papers on pension issues, has written an ambitious survey of the state of Canadian economic policy in the areas of pensions and health care. He argues that it is appropriate to tackle both issues in the same paper because they are both major spending programs strongly related to the life cycle of Canadians, and face challenges arising from the aging of the population. Robson notes that the pension debate uses the metaphor of three pillars to describe a comprehensive pension system: a safety net to guard against destitution in old age; a mandatory employment-related system to provide basic replacement income; and a voluntary system supported by provisions that reduce the double-taxation of saving. The main elements of public policy related to pensions in Canada cover these pillars. He recognizes that all three of the pillars cannot be directly applied to health care, but he argues that the three-pillar metaphor is still a fruitful perspective because it facilitates constructive responses to the pressures confronting Canada’s health system and illuminates interactions between the pension and health systems. Hence his title “six pillars of social policy”. Based on his examination of Canada’s pension and health-care systems, Robson makes a number of recommendations. First, he advocates more prefunding in both the pension and health areas to cover the future cost of the aging baby-boom cohort. Second, he recommends a gradual increase in the normal age of eligibility for pension benefits. Third, he recommends the creation of a second pillar, a mandatory contribution scheme in the health area as a way to avoid the development of a means-tested system that would exacerbate the disincentives to work and save. Fourth, he puts forward the idea of a new type of saving vehicle that provides tax-relief on distributions rather than on contributions so that Canadians can avoid the high marginal effective tax rates associated with means-tested programs.

Suggested Citation

  • William B. P. Robson, 2001. "Six Pillars of Social Policy: The State of Pensions and Health Care in Canada," The State of Economics in Canada: Festschrift in Honour of David Slater, in: Patrick Grady & Andrew Sharpe (ed.),The State of Economics in Canada: Festschrift in Honour of David Slater, pages 183-224, Centre for the Study of Living Standards.
    • Handle: RePEc:sls:secfds:09
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    File URL: http://www.csls.ca/events/slt01/robson.pdf
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    References listed on IDEAS

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    1. Robert Brown & Robin Damm & Ishmael Sharara, 2001. "A Macro-Economic Indicator of Age at Retirement," North American Actuarial Journal, Taylor & Francis Journals, vol. 5(2), pages 1-7.
    2. Martin Schellhorn, 2001. "A Comparison of Alternative Methods to Model Endogeneity in Count Models. An Application to the Demand for Health Care and Health Insurance Choice," Social and Economic Dimensions of an Aging Population Research Papers 40, McMaster University.
    3. Douglas W. Elmendorf & Louise M. Sheiner, 2000. "Should America Save for Its Old Age? Fiscal Policy, Population Aging, and National Saving," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 57-74, Summer.
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    5. Boadway, Robin & Keen, Michael, 2000. "Redistribution," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 12, pages 677-789, Elsevier.
    6. René Morissette & Marie Drolet, 2001. "Pension coverage and retirement savings of young and prime-aged workers in Canada, 1986-1997," Canadian Journal of Economics, Canadian Economics Association, vol. 34(1), pages 100-119, February.
    7. Lars Osberg, 2001. "Poverty Among Senior Citizens: A Canadian Success Story," The State of Economics in Canada: Festschrift in Honour of David Slater, in: Patrick Grady & Andrew Sharpe (ed.),The State of Economics in Canada: Festschrift in Honour of David Slater, pages 151-181, Centre for the Study of Living Standards.
    8. Carlos Bethencourt & Vincenzo Galasso, "undated". "On the Political Complementarity between Health Care and Social Security," Working Papers 184, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    9. John Burbidge, 1996. "Public Pensions in Canada," Independence and Economic Security of the Older Population Research Papers 1, McMaster University.
    10. Jack M. Mintz, 2001. "Taxing Future Consumption," The State of Economics in Canada: Festschrift in Honour of David Slater, in: Patrick Grady & Andrew Sharpe (ed.),The State of Economics in Canada: Festschrift in Honour of David Slater, pages 79-94, Centre for the Study of Living Standards.
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    Cited by:

    1. Blerina Mucaj, 2006. "Efficiency of Pension Funds Management in OECD Countries: Registered Retirement Savings Plan in Canada," Development Discussion Papers 2006-05, JDI Executive Programs.

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    More about this item

    Keywords

    Health; Health Care; Health-care; Healthcare; Canada; Pensions; CPP; Retirement; Mandatory Contribution; Aging; Ageing;
    All these keywords.

    JEL classification:

    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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