20 years later: How corporations took over Canada’s health care system

Caring for Profit: How corporations are taking over Canada’s health care system was published by the Canadian Centre for Policy Alternatives (CCPA) and New Star Books nearly 20 years ago, shortly after the North America Free Trade Agreement (NAFTA) and the World Trade Organization’s (WTO) General Agreement on Trade in Services kicked into gear. Both deals contained explicit and implicit threats to Canada’s health care system, establishing new rights for multinationals that resulted in increased market access and outright privatization of publicly funded services.

In addition to these neoliberal trade deals, Canada’s corporate sector initiated an incessant chant about the country’s deficit and high taxes. In downtown Vancouver, at the corner of Hornby and Georgia Streets, the HSBC installed a multi-story “deficit clock” that registered every tick and tock of the march towards fiscal ruin. Business leaders warned about the “growth of an entitlement mentality” among Canadians who, they said, were able to “access the system for any health issue, at any time, in any province” without ever seeing a bill. And they made it clear that they planned to change that.

They received a helping hand from then-finance minister Paul Martin who obligingly continued the drastic cuts to federal health transfers initiated by the Brian Mulroney government. He also launched an assault on advocacy in the “voluntary sector,” which at the time was called the quasi-public or third sector. The government withdrew core funding from non-profit organizations like the Victorian Order of Nurses, which provided much-needed home care to seniors and people with disabilities, and established a system of competitive tendering for public contracts as required by NAFTA.

As finance minister (1993–2002), Paul Martin weakened a key tool for enforcing the Canada Health Act. In order to receive federal cash, provinces have to comply with the five criteria of the Canada Health Act: public administration of the health insurance system, comprehensive coverage, universality, access to services, and portable coverage across Canada and internationally. But after 15 years of combined Conservative and Liberal cuts, the principle of “no compliance, no cash,” had been turned upside down, and provinces were warning, “no cash, no compliance”.

By the early 2000s, the national leadership and the financial support required to sustain high standards in the health care system had been significantly compromised by neoliberal fiscal and public policies. Then, in response to growing public demands that Ottawa reverse course, the Liberals launched a “fix for a generation” in 2004, implementing some of the recommendations of the Romanow report. Under a 10-year Health Accord, provinces saw a much-needed injection of $41 billion in federal transfers over the decade, plus a 6% annual escalator. These changes increased Ottawa’s share of public health expenditures from less than 15% in 1998 to 20.4% by 2014. But the leadership role of the federal government in the health policy arena has not been restored, contributing to growing fragmentation and regional disparities within Canada’s health care system.

In 2006, a reinvigorated Conservative Party led by Stephen Harper was elected. A staunch opponent of universal medicare, Harper utterly failed to monitor provincial compliance with the Canada Health Act and rejected a renewal of the Health Accord. Instead, the federal government unveiled a new funding formula in 2012 that continued the automatic, unconditional annual 6% increase in cash transfers to the provinces for health, but only until 2016–17. Thereafter, transfers were slated to grow by 3.9% annually, well below the 5.1% annual increase expected in provincial and territorial spending. These cuts are slated to reduce the federal share of expenditures from 20.4% to 18.6% by 2025, cutting federal transfers by an estimated $36 billion over the first 10 years.

A strong focus of Caring for Profit was hospital downsizing and the ‘epidemic’ of health reform across the country that promoted this policy.

In a 1994 report entitled “When Less is Better: Using Canada’s Hospitals Efficiently,” federal/provincial/territorial deputy ministers of health recommended significant reductions in utilization by non-acute patients and increased reliance on community or alternative venues for service provision. While provinces implemented funding cuts, triggering bed and hospital closures across the country, they failed to increase investment in primary health care, a progressive system of one-stop, community-based provision of health and social care. Instead, hospital administrators, directed to contain costs, began to zero in on the largely female workforce that accounted for up to 80% of expenditures in the acute care sector.

Three years after provinces decided less was better, William Blundell, chair of Manulife Financial, told a conference on public-private partnerships that Canada’s health care system, 72% of it publicly funded, must move towards “responsible outsourcing”. The hospital system, he said, was “being dismantled—outsourced” as part of a plan to reduce its size and scope. The question for the private sector, he said, was “how can [we] participate in that 72%?”

As hospitals began looking for ways to shift so-called non-core—and, by implication, non-essential—functions away from their responsibility, a kind of courtship was initiated by a very interested corporate sector newly empowered under NAFTA and the WTO. With the help of a platoon of consultants, many of whom came from the United States armed with treatment protocols and re-engineering designs, hospitals began restructuring, contracting out laboratory, laundry, maintenance, housekeeping and food services, closing beds and laying off staff. None of this, they asserted, would adversely affect patient access to or quality of care.

20 years later

Scott Sinclair, Director of CCPA’s Trade & Investment Research Project, has written about the “significant chill” cast over policy-making by the investor-state dispute settlement mechanism in Chapter 11 of NAFTA. He argues that “governments too often [find] that the best interests of their citizens are trumped by the ability of multinationals to make profits.”

This might explain why the 1984 Canada Health Act was the last federal legislation passed in support of our publicly funded health care system. There were consequential amendments to the Act when the Canada Health and Social Transfer was introduced in 1996. Those are the only changes to the federal legislation that I know of—and none of them were designed to expand the scope of the law to include non-hospital and non-physician services. For example, the amendments included the repeal of Section 6, which had required provinces to provide what’s known as “extended care” in exchange for receiving federal health funds. Extended health services included such things as nursing homes and in-home health care.

During the Harper years, 2006–2015, Canadians witnessed for the first time a federal government that was ideologically hostile to medicare. But while the Liberals were elected in 2015 on a wave of high expectations, they have failed to reverse some of the worst health care policies of the Harper era and are decidedly uninterested in expanding medicare for the Canadian people.

An expansion of Canada’s publicly funded health care system is exactly what’s needed right now. We need to bring community-delivered services under the medicare umbrella and establish a National Pharmacare program that includes an evidence-based formulary. Not only would a national drug plan bring us in line with other members of the OECD, it would also allow us to shave an estimated 40% off total prescription drug expenditures in Canada. But instead of supporting this kind of cost-effective plan, the federal government has signed a new European trade deal (CETA) that will extend patents and add up to $1.5 billion annually to the national drug bill.

British Columbia has one of the weakest primary health care systems in the country. While Ontario, for example, has provided global funding to more than 100 community-governed, interdisciplinary, salaried community health centres (CHC), BC’s Ministry of Health has turned its back on communities with geographical and/or financial barriers to physician and primary health care services. Communities starved of primary health care services across the province are demanding funding for CHCs but their pleas have fallen on deaf ears.

Hospitals continue to contract out services deemed outside the “core mandate” of the hospital system such as food, cleaning and laundry services. Despite extensive complaints about the quality of services they provide, global corporations draw billions of dollars from Canadian hospitals, turning them into conduits for public taxpayer dollars for Wall Street and major stock exchanges. In 2015 alone, one health authority, Vancouver Coastal Health, forked over nearly $35 million to Sodexo, a French food services and facilities management company, amidst rising complaints about the awful food in BC hospitals. One investigative reporter who tried to get information about what was in Sodexo’s food and where it came from was blocked by Coastal Health, which said that the information was subject to the commercial confidentiality clause of its contract with the company.

So, our tax dollars are helping to line the pockets of Sodexo shareholders, the largest of whom is the Bellon family of France. Pierre Bellon, the company founder, is on the Forbes list of the richest 500 billionaires in the world with a net worth of $4.1 billion. Meanwhile, workers—most of them women—who had been earning $20 an hour as members of the Hospital Employees Union, had their jobs contracted out and now earn as little as $9.50 an hour as Sodexo employees for the same work and often in the same hospital.

Today, any patient who needs a non-physician health care service in the community still feels the effects of the radical downsizing in the hospital sector during the 1990s.

Progress was made on wait times until about 2013 when the Harper government, supported by provinces with right wing governments (like BC’s at the time), backed away from a national strategy to reduce the amount of time patients waited for key surgical services like hip and knee replacement. Harper, like his BC counterparts, supported both private provision of and private payment for health care, and these ideological leanings have taken a high toll on the most vulnerable people in our communities. Even patients who strongly support public medicare have had to stick by their morals in pain for months or even years or shell out thousands of dollars to a private sector they oppose. This leaves the issue of privatization to personal choice: In essence, privatizing the issue of privatization.

The path taken by services like outpatient physiotherapy, which was included in BC’s Medical Services Plan until 2002, is now being followed by outpatient surgery. Dr. Brian Day, owner of the Cambie Surgery Corporation, is leading a challenge in the Supreme Court of BC of the constitutional validity of medicare. Day and his supporters argue that allowing doctors to charge—and patients to pay—without any limits imposed by government will reduce wait times. Lawyers for BC’s Attorney General have argued in court that extra-billing by private, for-profit surgical companies (like Cambie) increases wait times for patients in the public system, a position supported by national and international evidence.

During the last 20 years, BC’s Ministry of Health encouraged health authorities to contract with private surgical facilities to help reduce wait times, especially for hips, knees and eyes. Not surprisingly, and in keeping with the best available evidence, BC has the longest wait times in the country for these surgical services.

Health care has been a political and moral battle ground in this country since before World War I. Since then, the lines have been drawn between those who support a universal, publicly funded and provided system of health care and those who believe that health care should be provided in the marketplace where access is based on ability to pay. Who pays and who provides are two issues at the heart of the debate about what our future health care system should look like.

Today, the movement to defend and expand our health care system is stronger than it’s ever been and it is uniting an increasing number of young people with older generations that have been on the front lines much of their lives.

In BC, this includes discussions at a very grassroots level about the recommendations of the Truth & Reconciliation Commission to shape an integrated system of health and social care that addresses the wide disparities in health status between Aboriginal and non-Aboriginal people. Young people are also bringing a sophisticated analysis of the consequences of private health care and how neoliberalism has moved to medicalize—and capitalize on—normal and human responses to life. They are challenging non-financial barriers to access, including racism, sexism and the lack of health care resources in remote, rural and indigenous communities around the province. British Columbia youth are linking what happens in our health care system to social determinants, including the state of our natural environment, the lack of safe and affordable housing, poorly designed social services, poverty, under-funded education and inadequate public transit.

I feel much more hopeful today than I did in 1998 when Caring for Profit was published, in spite of the daunting challenges we face to protect and expand health care services based on the principles of the Canada Health Act. I hope BC’s new government will join with other Canadians to demand a National Pharmacare program and also invest in community-based and community-governed primary health care. This is the foundation of our health care system and such investments can be an effective, much-needed step towards expanding medicare.

Topics: Health care