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Caring for Profit in Canada’s Medical System

Caring for Profit in Canada’s Medical System

by Susan Rosenthal

Book Review: Colleen Fuller, 1998, Caring for Profit: How Corporations are Taking Over Canada’s Health Care System. Vancouver: New Star, 321 pages.

Since 1984, the Canada Health Act has appeared to block the privatization of health care with its insistence on universal and equal access to medical services. In reality, massive cuts to health-care budgets have opened the door to private investment.

Caring for Profit exposes the corporate players and their allies in medicine and government who are opening Canada’s health-care system to market forces. This book is full of information that opponents of medicare would prefer we didn’t know. For that reason alone, it should be widely read and discussed.

The first three chapters chronicle the development of Canada’s hybrid medicare system, a tax-based public insurance system that purchases services from the private sector.

From the beginning, class conflict has shaped Canada’s medical system. After WWII, unionized workers demanded a system of “sickness insurance” to provide medical care and wage- replacement for workers injured on the job, and farmers banded together to organize rural health services. In contrast, insurers, employers, physicians and politicians were committed to a free-enterprise, profit-based model. Canada’s medical system has been shaped, and continues to be shaped, by the struggle between these two classes.

In the mid-1950s, just over half the Canadian population had medical insurance. Those with the highest incomes had the most access to medical services, while those with the lowest incomes suffered the most illness. The logical solution was a government-funded medical system. However, doctors and private insurers decried this proposal as “state medicine and socialism.”

Routing the insurance companies

In 1962, Saskatchewan doctors struck for 23 days against the province’s proposal for “a complete transfer of medicare expenditures from the private to the public sector.” Despite majority support for this move, the social-democratic government of Tommy Douglas conceded to the demands of business. The Medical Care Commission, which was created to publicly administer the health-care system, was reduced to a collection and payment agency. However, there were important gains. Saskatchewan residents could no longer be denied access to medical services because of a pre-existing illness or inability to pay.

The federal government established a Royal Commission on Health Services to contain the growing demand for national medicare. The Canadian Labour Congress (CLC) argued for a comprehensive public health service that would provide preventative services, drugs, dental care, home care and financial support for the disabled. Physicians would be on salary and there would be no user fees. The entire system would be fully financed by a progressive income tax policy including an “upward revision in corporation tax.”

However, the commissioners never considered the possibility of excluding the private sector. They flatly rejected “a system in which all providers of health services are functionaries under the control of the state.” (This was also the position of the Canadian Medical Association.) Instead, the commission recommended a publicly-financed health insurance system, to be delivered and administered by the private sector “free of government control or domination.”

After national medicare was established in 1966, Canadian health insurance companies sought markets in other countries. By the mid-1990s, over 43 per cent of premium income earned by Canadian insurers originated outside the country, with several of the largest companies collecting between 50 and 80 per cent of their total premium income from the United States.

The cuts begin

Initially, federal and provincial governments agreed to share the cost of medicare equally. When the economy slid into recession in 1974, the federal government began cutting social programs to support the corporate class. In 1977, the federal government dropped its share of medical funding from 50 to 20 percent. During the recession of the early 1980s, the Mulroney Conservatives cut the medicare budget by $30 billion, and during the recession of the early 1990s, the Chretian Liberals cut another $6.5 billion from the medicare budget.

Private insurers filled the gap in services created by de-funding medicare. Between 1975 and 1997, private spending for medical services rose from 24 to 32 percent. Currently, over 140 life and health insurance companies operate in Canada, employing more than 65,000 people.

Fuller documents how the Canadian government helped to privatize the most profitable parts of the medical system. Medical services were cut from public health plans and deductibles for prescription drugs were increased. Public institutions, like Ontario Blue Cross, were sold to the private sector, and insurance company executives were appointed to hospital boards.

Fuller quotes Industry Canada,

“Promoting Canadian companies as global health-keepers is the main objective driving the strategies and plans’ of the government for the medical devices, pharmaceutical and health-services sector.”

In 1994, The Ontario government’s Health Industries Committee concluded,

“To have the effective launching pad it needs, the health industries sector must expand its share of its own home market. Steps must be taken to ensure that, as in other countries, the domestic market supports the development of globally competitive companies.”

Because the system of workers’ compensation is exempt from the Canada Health Act, the for-profit medical industry has used it as a spring-board. Between 1985 and 1993, workers’ compensation costs rose more than 75 per cent per year in both Canada and the United States. Instead of reducing work loads, overtime and job stress, employers invested in absence and disability “management” programs. Private medical companies sprang up to offer employers rapid access to medical services and faster returns-to-work.

The human cost of privatization is high. In the province of Alberta, where the privatization of health care is most advanced, infant mortality rates rose to 10.6 deaths per 1000 live births, compared to a national average of 6.3.

The major obstacle to privatization of Canadian medicare is the sense of entitlement that Canadians feel about having access to medical services as a right. Moreover, the medical system is almost entirely funded by individual taxpayers. (In the 1950s, Canadian corporations contributed 52 per cent of tax revenues. Today, they provide just 9 per cent.) At the same time, corporations feel entitled to make a profit and governments support them to do so. This class conflict is expressed in the political conflict over medicare.

The Fraser Institute

Fuller discusses how influential Canadians, including Michael Walker of the right-wing Fraser Institute, campaigned to defeat the movement for a single-payer health system in the United States.

“Americans were warned that socialized medicine denied basic human rights, in particular the sacred right to jump to the head of the queue if one had the requisite cash and class privilege.”

By 1998, the takeover of non-profit health-care organizations by for-profit companies represented the largest transfer of charitable assets in U.S. history. As the insurance industry celebrated, the number of uninsured Americans climbed to 43 million.

In Canada, the Fraser Institute uses the financial crisis of medicare to promote the “solution” of a return to private funding. In fact, pharmaceuticals (which are manufactured in the private sector) represent the largest share of medicare spending and the fastest-rising cost component. Between 1987 and 1996, the cost of prescription drugs in Canada rose 93 per cent.

Caring for Profit removes the mask of “health-care reform,” exposes the lie of “restructuring,” and soundly condemns the corporate greed that is driving the privatization of medical services. Disappointingly, the book fails to meet its goal of providing “the means for Canadians to take action to reclaim and improve their health care system.”

Fuller’s conclusions do not match the power of her findings. The title of the final chapter, “Conclusion: Educating Canada,” is odd, because most Canadians already oppose profit-making in health care and consider access to medical services to be a right. Re-stating the demand for a publicly-funded, publicly-administered medical system does not tell us how this can be achieved, especially when government and business conspire against the wishes of the majority.

Fuller tells us that, “Canadians can learn a few things from corporations to reach their own goals in health care.” This is bad advice. Ordinary people cannot achieve their goals in the same way that corporations do. We don’t have the time, the money or the ears of politicians. Different classes have different strengths, which the author describes but seems not to understand. The final paragraphs, titled “Solutions,” offer nothing that can stand against the determination of government and business to privatize health care. Nevertheless, the solution can be gleaned from the body of the book.

The key role of labor

Unionized workers have played a key role in the development and preservation of medicare in Canada. Fuller tells us that, in 1970, the Quebec government rejected the publicly-financed, private-enterprise model and embarked on a plan “to provide health services as part of a broad social benefits system that included a comprehensive range of public services, from medical care to social assistance.” While the author praises the Quebec plan, she does not explain how it was achieved. The fact that Canadian working-class struggles reached a peak in the Quebec General Strike of 1972 is not even mentioned, let alone credited for winning the most comprehensive public medical system in North America.

Fuller recognizes that Canadian hospitals have become a battleground between hospital administrators with shrinking budgets and unionized hospital workers who are fighting against plans to out-source their work to the private sector. Fuller doesn’t seem to understand the significance of this conflict. Through their efforts to protect their jobs, unionized health workers are holding back the full-scale privatization of Canada’s hospitals. Their struggle is central to the defence of medicare.

Organized labor can win, defend and extend social services. In Canada, those who want to privatize medicare have accused unions of wanting to run the country. Caring for Profit demonstrates that we would be better off if they did.

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