TradeTrade treaties,treaties, privatization privatization andand healthhealth carecare reformreform inin CanadaCanada Jim Grieshaber-Otto and Scott Sinclair Canadian Centre for Policy Alternatives Trade treaties, privatization and health care reform in Canada Jim Grieshaber-Otto and Scott Sinclair 2004 2 CANADIAN CENTRE FOR POLICY ALTERNATIVES Copyright © 2004 Canadian Centre for Policy Alternatives and the authors. All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, or by any information storage or retrieval system, without permission in writing from the publisher or the author. Library and Archives Canada Cataloguing in Publication Grieshaber-Otto, Jim Bad medicine : trade treaties, privatization and health care reform in Canada / Jim Grieshaber-Otto and Scott Sinclair. Includes bibliographical references. ISBN 0-88627-402-8 1. Health care reform—Canada. 2. Canada—Commercial treaties— Social aspects. 3. Medical policy—Canada. 4. Privatization—Canada. 5. Health planning—Canada. I. Sinclair, Scott II. Title. RA412.5.C3G75 2004 362.1’0971 C2004-903350-6 cover design by Studio 2 ([email protected]) text layout & design by Dirk Van Stralen Printed and bound in Canada Published by Canadian Centre for Policy Alternatives Suite 410, 75 Albert Street Ottawa, ON K1P 5E7 Tel 613-563-1341 Fax 613-233-1458 http://www.policyalternatives.ca [email protected] CAW 567 OTTAWA BAD MEDICINE: Trade treaties, privatization and health care reform in Canada 3 Contents Acknowledgements ........................................................................................7 Summary ..............................................................................................................8 Chapter 1 Introduction .............................................................................17 Chapter 2 Key trade treaty rules and health safeguards ..........21 2.1 Introduction ....................................................................21 2.2 Key provisions, scope and safeguards ...................23 2.2.1 Provisions common to both the NAFTA and the WTO ................................25 Most-Favoured Nation (MFN) and National Treatment (NT) rules .....................................25 Rules on public monopolies and state enterprises ....................................................27 Rules on government procurement ............................28 Rules on intellectual property rights ...........................28 2.2.2 Provisions unique to the GATS .........................29 Quantitative restrictions ..................................................29 Restrictions on domestic regulation ...........................31 2.2.3 Provisions unique to the NAFTA .................32 Restrictions on performance requirements ....................................................................32 Minimum standard of treatment ....................................33 Rules on expropriation and compensation ..............33 4 CANADIAN CENTRE FOR POLICY ALTERNATIVES Chapter 3 Examining recent reports on health care reform............................................................... 35 3.1 The Mazankowski Report (December 2001) .......35 3.1.1 Introduction: Proposing radical change ......35 3.1.2 The Mazankowski Report on funding ...........36 3.1.3 The Mazankowski Report on organization and delivery ............................38 3.1.4 Promoting health care commercialization and privatization ............................................41 3.2 The Kirby Report (October 2002) .............................48 3.2.1 Introduction ...........................................................48 3.2.2 Service-based funding, hospitals and private, for-profit delivery ................................48 3.2.3 Devolving responsibilities for health services to regional health authorities ........52 3.2.4 Establishing a “Health Care Guarantee” ......55 3.2.5 Expanding insurance to cover catastrophic prescription drug costs ...................................63 3.2.6 Expanding public insurance to cover post- acute home care ................................................65 3.2.7 Expanding public insurance to cover palliative home care .....................................67 3.2.8 Conclusion ...........................................................68 3.3 The Romanow Report (November 2002) ...............70 3.3.1 Introduction ...........................................................70 3.3.2 The Romanow Report’s vision for medicare .......................................................70 BAD MEDICINE: Trade treaties, privatization and health care reform in Canada 5 3.3.3 Sustainability of Canada’s health care system ..................................................................70 3.3.4 Expanding public health care insurance coverage to include home care services ...72 3.3.5 Improving timely access to services .............73 3.3.6 Perennial debate: public vs. private ............76 3.3.7 Electronic health records ...............................83 3.3.8 Prescriptions drugs ...........................................86 3.3.9 Globalization and trade treaties ...................88 3.4 The Courchene paper (October 2003) ..................90 3.4.1 Courchene’s analysis of the Romanow report ......................................................................91 3.4.2 Courchene’s analysis of the Kirby report ...94 Chapter 4 Hazardous mixture: Trade treaties and health care reform proposals .........................................................97 4.1 At odds: Trade treaty principles and Medicare principles ....................................................97 4.2 Flashpoints in the health care reports ................99 4.2.1 Public-private partnerships (P3s) ..............99 4.2.2 Reducing the scope of public insurance coverage ..............................................................104 4.2.3 Expanding private for-profit delivery of publicly-insured services ................................107 4.2.4 Expanding private for-profit delivery of services that are not publicly-insured .......112 4.2.5 More private for-profit health care delivery: Market-based devolution; health care guarantee; care groups ..................................114 6 CANADIAN CENTRE FOR POLICY ALTERNATIVES 4.2.6 Telehealth .............................................................116 4.3 Unsafe practices: current health policies that increase trade treaty risks ......................................118 4.3.1 Provincial approaches .....................................118 4.3.2 New federal approach: P3s are ‘in’ ................119 4.3.3 Examples of privatization at the provincial level .........................................................................125 4.4 Looming challenges of even more expansive trade treaties ................................................................135 4.4.1 GATS negotiations ............................................135 4.4.2 FTAA and other negotiations ........................139 4.4.3 Conclusion ...........................................................142 Chapter 5 Towards healthy health care reform .....................143 5.1 Minimizing trade risks while avoiding ‘regulatory chill’ in health care reform .................144 5.1.1 Expanding Medicare coverage ......................146 5.1.2 Public, not-for-profit delivery ........................147 5.2 Relieving pressure on health: changing the approach to trade treaties .........................................150 5.2.1 Changes to existing treaty commitments..151 5.2.2 Overhauling Canada’s trade negotiating strategies ..............................................................152 5.2.3 Re-balancing the right to health and the protection of commercial interests in the international system .......................................154 Endnotes ..........................................................................................................156 BAD MEDICINE: Trade treaties, privatization and health care reform in Canada 7 Acknowledgements THE AUTHORS THANK Bruce Campbell, Corina Crawley, Col- leen Fuller, Pierre Laliberté, Stan Marshall, Blair Redlin and Matthew Sanger for their advice and valuable suggestions on the manuscript. Any errors or omissions remain the re- sponsibility of the authors. We are also grateful to Bruce Campbell, Kerri-Anne Finn, Ed Finn and Dirk Vanstralen for the assistance they provided in bringing the book to publica- tion. This study was done by the Canadian Centre for Policy Alternatives (CCPA). We are grateful to the members of the CCPA’s Trade and Investment Research Project, including the Canadian Union of Public Employees and the Canadian La- bour Congress, for their ongoing financial assistance and sup- port. Finally, we wish to express our appreciation to Diane Exley and Rosalind Waters who, in countless ways, make our work possible. 8 CANADIAN CENTRE FOR POLICY ALTERNATIVES Summary THE CANADIAN HEALTH CARE SYSTEM is at a cross- roads. One of the central and recurring themes in the debate over its future is whether private financ- ing and for-profit delivery of health care should play a greater role in Canada as it does in our gi- ant neighbour to the south. An examination of Canada’s international trade treaty ob- ligations, and the scope of the exemptions for health care under those treaties, adds a crucial dimension to this impor- tant debate. It reveals that Canada’s trade treaty commitments threaten to make commercialising reforms much