Studies of the impact of aging on health care costs in Canada often assume a constant resource cost of care for the elderly compared to the cost of those under the age of 65. While this assumption enables us to examine the sole impact of demographic shifts, it excludes a sizeable component of aging-related health care costs. In this paper, health care expenditures associated with aging are decomposed into the constituent components of demographic shifts and per capita age-specific costs. The impact of changes in both the age profile and in per capita costs on the future health care burden in Canada are simulated under alternative scenarios. The results indicate that projected health care costs associated with aging in Canada are more sensitive to the size of the differential in the growth rate in age specific utilization rates than to the rise in share of the aged population.
