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From Public Providers to Private Proprietors

Its our most highly valued social program. Its also one of the programs at highest risk of being dismantled and sold off to private corporations. Private incursions into Canadas health care system are happening with increasing frequency. The decline in public financing and regulation of health care paves the way for private, for-profit health care proprietors to provide and insure services. And the diagnosis is clear: if private interests gain control of Medicare, the gross inequities and bloated inefficiencies of an expensive, U.S.-style for-profit system will soon replace our health care system.

Medicare is being systematically starved of funds. Since 1986, successive federal governments have cut more than $36 billion from health care transfers to the provinces. Across the country, more than 30 per cent of hospital beds have disappeared in the last few years, meaning patients get discharged earlier, private home care providers move in and private clinics offer their services to wealthy queue-jumpers. With every day the universality of our health care system shrinks while the threat of a two-tier system grows.

Health care is an enormous part of the Canadian economy, with spending topping $80 billion in 1998. Health care also holds enormous value in the hearts and minds of Canadians, consistently topping polls about priorities for social spending. Fully 84 per cent of Canadians surveyed in a recent poll said equal access and high quality are the most important aspects of Canadas health care system. Yet its a system at risk. The public sector share of that $80 billion is about $55.7 billion, or 70 per cent. The remaining 30 per cent, or $24.3 billion, is private sector spending. As public spending drops due to funding and service cuts, private spending expands to fill the vacuum, up 127 per cent since 1975.

The most visible threat is found in Calgary, where a corporation called the Health Resources Group wants to convert a private clinic into a full-fledged private hospital. HRGs plans were met by overwhelming opposition. In one survey, more than two-thirds of Albertans surveyed stated the hospital would mark the beginning of the end of universal, public health care. Under mounting public pressure, the Alberta government delayed a precedent-setting bill that would have given the government free rein to approve private, for-profit hospitals. Public funding cuts facilitated the rise of the HRGs private clinic, which is housed in the wing of a hospital closed due to government cuts. Its a situation that will surface elsewhere across the country, as hospitals merge and close, creating bed shortages, longer waiting lists and, ultimately, more patient deaths.

The benefits of public health care are evident to most Canadians, who need only look to the United States to see the disastrous results of two-tier health care. Most Americans rely on HMOs, or health maintenance organizations; health insurance providers that maximize their profits by providing as few services to as many people as possible. More than 43 million Americans have no health insurance at all. Millions more have such poor coverage a serious illness would bankrupt them. Hundreds of millions are wasted on advertising, bill collection and administration in a system riddled with fraud and corruption. A 1998 Harvard Medical School study concludes “large-scale fraud has become routine”.

Yet the corporate push to convert Medicare to an American style of health care continues on many fronts. A central feature of the U.S. system is a huge layer of middle managers, administrators and accountants. Spared this wasteful bureaucracy, the Canadian system far outstrips the U.S. when it comes to efficiency. As one example, the 900 bed Massachusetts General Hospital employs more than 350 staff in its billing department. The similar-sized Toronto Hospital employs only 17. Overall, U.S. hospitals spent 26 per cent of their total budget on administration costs in 1994. In the same year, Canadian hospitals spent just 10.4 per cent.

Having a single-payer system has also meant significant savings for Canadian employers. American companies pay an average 8.7 per cent of their payroll in contributions to third party health insurance plans, compared with an estimated 1.4 per cent that Canadian workers pay for employer-sponsored

supplementary health benefits. Canadian employers also realize significant savings through access to a healthy workforce and an efficient system. Administration costs for Canadian health care barely chart, at less than one per cent of total revenue, while for-profit American companies spend an average of 14 per cent.

An increasingly prominent piece of the health care puzzle is home care. Patients are being discharged “quicker and sicker”, resulting in a growing reliance on home care as an integral part of patient recovery. Public home care spending has more than doubled in the last seven years, an average annual rate of increase of 11 per cent. And private, for-profit operators are looking to corner the home care market.

In Ontario, public home care funds are rationed through Community Care Access Centres, which temporarily drive down prices through bidding wars among providers. This competitive bidding process means small, non-profit providers get squeezed out by corporate giants able to draw a lower bottom line even if that means absorbing a loss in order to undercut competitors.

But that bottom line isnt a guarantee of quality care. And evidence from the U.S. home care experience shows, for-profit home care can end up costing the public dearly. The U.S. General Accounting Office estimates that 25 per cent of all home care agencies the majority for-profit defraud Medicare.

Home care services include nursing and support care, counseling and homemaking. These services are patchwork, varying greatly from province to province. After two years of extensive study, the National Forum on Health concluded that home care must become an integral part of Canadas publicly delivered health care. Canadians need a national system of home care founded on the same principles as the Canada Health Act and with guaranteed public funding. The alternative is a fragmented, unregulated and inaccessible system of home care.

Key to any national system of home care is a new approach to prescription drugs. Current patent laws have left multinational drug firms with a stranglehold on supply, driving up hospital and insurance costs while ensuring huge profits for themselves. Unnecessarily high drug costs are of increasing concern as prematurely discharged patients foot the bill for these drugs, which would otherwise have been provided as part of a hospital stay.

Direct health care is only one area being eyed by privateers. Support services are a multi-billion dollar industry where for-profit firms stand to reap huge rewards from contracting-out and privatization. Laundry, cleaning, and dietary services, all integral parts of a well-functioning health care system, are among the first services offloaded in attempts to cut costs. But mounting evidence shows that far from being an efficient solution, privatized support services are often costlier and less efficient.

Centralized food systems, appearing in hospitals across Canada, have proven an inferior yet expensive solution. Institutions across Canada are contracting out their food services in a rush to eliminate jobs from local hospitals and nursing homes. The new kitchens often produce a much lower quality of food, despite the lofty promises that accompany any pitch for the high tech freezing and reheating processes. Complaints about lack of flexibility and variety are also common, particularly from patients in long-term care facilities.

Contracting out is also a serious concern in other areas, including labs and other diagnostic services. Study after study shows private labs cost the public more. In British Columbia, research indicates that bringing all laboratory testing back to the public sector would save as much as $25 million per year.

Ambulance services, already a mish-mash of public and private funds, are being eyed by empire-building corporate giants such as Laidlaw. Again the American experience is instructive. Information from the U.S. Department of Health warns that for-profit ambulance services are riddled with problems, including poor service, skyrocketing costs, fraud, staff burnout and high turnover rates. The average cost per call billed in the U.S. was $500 versus $200 in Ontario.

The federal governments retreat from public health care extends beyond funding cuts into the regulatory realm. The scaling back of Canadas Health Protection Branch raises many worries about food safety and the integrity of drug testing and approval. Proposed changes to the HPB will remove necessary controls that for decades have been part of a well-functioning health care system. Government plans will strip the HPB of its regulatory role, with the focus shifting to companies as clients and an emphasis on companies self-regulating dangerous trends in an industry driven to get new products on the market.

A further threat comes in the realm of health care information, where an alarming level of control is being centralized in a few private corporations. Health information can be used to track, manage and prevent illness. Such information can be part of an accountable, well-functioning system. But this can only happen if the information is controlled by a public body in the public interest. Corporations taking on administration of health information gain an unprecedented level of access to information that not only threatens individual privacy rights but can be pirated for targeted marketing campaigns and other inappropriate uses.

Since the federal government privatized the national health information system five years ago, benchmarks and bottom lines have replaced a more holistic approach to health information. The private, non-profit Canadian Institute on Health Information has assumed roles once held by Health Canada and Statistics Canada. In addition to lacking public accountability, CIHI is funded predominantly by corporations with a stake in private control of health care. Yet CIHI now controls and shapes information that policy-makers and the public will look to in shaping the future of Medicare.