Cost Estimate for Motion 77: Improvements to Long-Term Care

[Excerpts] The Parliamentary Budget Officer (PBO) supports Parliament by providing economic and financial analysis for the purposes of raising the quality of parliamentary debate and promoting greater budget transparency and accountability.

This report estimates the cost of implementing House of Commons Motion 77, which proposes several financially significant changes to long-term care for seniors. This report was prepared at the request of Mr. Paul Manly, MP for Nanaimo—Ladysmith.

Parts of this material are based on data and information provided by the Canadian Institute for Health Information, Statistics Canada, and various provincial administrative bodies. However, the analyses, conclusions, opinions and statements expressed herein are those of the author and not necessarily those of the Canadian Institute for Health Information, Statistics Canada, or those provincial administrative bodies.

Executive Summary

House of Commons Motion 77 proposes several financially significant changes to long-term care for seniors, including:

• providing long-term care to all persons who need such care,
• increasing average employee pay and benefits for all non-public long-term care providers to
match those paid by  public sector longterm care providers,  
• requiring an average of four hours of care per resident per day, and
• increasing spending on home care to 35% of public spending on long-term care.

Implementing these changes would require increasing public spending by $13.7 billion each year. This cost is expected to grow at 4.1% a year due to rising demand and costs.

These changes would:
• increase the number of long-term care beds for seniors by 52,000 (26%) at a cost of $3.1 billion
each year;
• increase average wages and benefits for persons providing longterm care in the private and non-
for-profit sectors by $3.24/hour (15%) to $25/hour, at a cost of $1.1 billion each year;
• increase the number of hours of care provided to residents in longterm care facilities each year
by 0.95 hours per resident per day (31%) at a cost of $4.3 billion each year;
• increase the number of hours of publicly funded home care provided in Canada by 82 million
hours (52%), at a cost of $5.2 billion each year.

Increasing Pay and Benefits

Motion 77 requires all long-term care workers to receive adequate pay and benefits. We understand this to require that all workers receive the same pay and benefits, on average, as workers in public sector long-term care homes.

This change would increase average private sector hourly wages by 15%, from $21.78/hour to $25.02/hour. After accounting for the share of hours worked by private sector workers, this is expected to result in a 10% increase in personnel costs, representing a $1.1 bn (6.7%) increase in the overall cost of the long-term care system.

Providing Four Hours of Care

Motion 77 is intended to ensure that seniors in long-term care receive an average of at least four hours of regulated direct care per day. We assume that this average will be achieved through minimum requirements at the facility level over some period, adjusted based on the case mix at each facility.

Each hour of direct care requires additional time that also has to be remunerated. The total hours paid to deliver an additional hour of care is estimated to be about 23% greater than time spent directly providing care.

Employers have to cover the cost of breaks and lunch, as well as vacation, sick leave, employee benefits, and employer contributions to the Canada Pension Plan and Employment Insurance.

Currently, residents in long-term care receive an average of 3.0 hours of direct care per resident per day. For residents to receive 4 hours of care per day, a 31% increase in both worked and paid hours would be required. This represents about 96 million additional hours of direct care per year. For longterm care providers to be willing and able to deliver these additional hours, additional care funding would be required.

The proposed standard refers to ‘regulated’ direct care. However, personal support workers provide most personal care in long-term care facilities and they are not regulated in most provinces.

We assume that provinces would regulate personal support workers rather than replacing them with regulated carers like nurses.

Assuming a typical split across types of direct care provider and typical cost per hour of direct care worked, increasing the number of direct care hours to an average of four hours per resident per day would cost $4.3 billion

Click on the Download button to access the report.

<object class="wp-block-file__embed" data="https://bcrhn.files.wordpress.com/2021/08/parliamentary-budget-office-report-on-fixing-ltc-aug.-4-2021.pdf&quot; type="application/pdf" style="width:100%;height:600px" aria-label="Embed of <strong>parliamentary budget office report on fixing ltc Aug. 4, 2021parliamentary budget office report on fixing ltc Aug. 4, 2021Download