Looking the Trojan horse in the mouth

When Quebec asked the Supreme Court for an 18-month delay in its ruling striking down the ban on private health insurance, one of the reasons given was that the government needs time to ensure that any measures taken to replace the current system are compatible with international trade treaties. As it turns out the concern is well-founded.

It was a dangerous oversight when the Supreme Court chose to ignore the Romanow Commission's warning that trade treaties pose serious risks that need to be considered before major healthcare reforms are undertaken. The majority of the court blithely assumed that the forced introduction of private insurance could benefit the minority that can afford to pay, while other Canadians would still be well-served by the public system.

But this decision opens the gate for a Trojan horse. Once inside the walls of the Canadian health system, foreign insurers armed with international trade treaties like the North American Free Trade Agreement (NAFTA) could fight any government attempt to displace them or even control their market share. Right now, the public, not-for-profit character of Canadian healthcare minimizes the risk of trade treaty challenges but if that foundation is shifted, our healthcare system's protection will crumble.

Government measures that affect private health insurance are governed by the financial services rules of the WTO's General Agreement on Trade in Services (GATS). When Canada's trade negotiators covered health insurance they argued that the existing public health insurance system was not affected since the GATS excludes governmental services that do not compete with the private sector.

But if the Supreme Court ruling were implemented, it would nullify the GATS "governmental authority" exclusion as Canada's provincial health insurance plans would be thrown into competition with private suppliers. To make matters worse, NAFTA's expropriation rules, which apply fully to the healthcare sector, allow foreign investors to sue Ottawa for policies that reduce their expected profits.

Multinational insurance companies could then challenge regulations that aim to ensure that our access to healthcare services is based on need rather than the ability to pay. Provincial policies, guided by the Canada Health Act, deliberately discourage the growth of private insurance markets through measures such as fee caps, restricting direct and extra-billing, and preventing taxpayer subsidy of private practice.

These public policies will be viewed as illegal trade barriers. The GATS rules and NAFTA's tough expropriation provisions would work in tandem to accelerate the growth of private insurance markets. Dislodging foreign insurers from the health sector would become next to impossible.

Hopefully, the Supreme Court ruling will never be implemented. Government reinvestment in the public system may reduce wait times and resolve the issue at the heart of the judgement. The arrival of two new justices on the Supreme Court bench may bring different outcomes in future cases. For the time being, this ruling applies only to Quebec and the Quebec government retains the right to invoke the notwithstanding clause.

If the ban on private health insurance for medically necessary services is abolished, Canada's trade treaty commitments will make it practically impossible to curb the growth of private two-tier care. To safeguard our universal public health insurance system, we must leave this Trojan horse outside Medicare's gate. — Scott Sinclair

Scott Sinclair is a trade policy specialist with the Canadian Centre for Policy Alternatives (www.policyalternatives.ca). He is co-editor, with Matthew Sanger, of Putting Health First: Canadian Health Care Reform in a Globalizing World, a collection of reports on globalization and health prepared for the Romanow Commission.

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