Privatization of Healthcare Flashcards
Privatization of HC in Canada
- prevalence & current situation
since **1970s → Medicare **(no private HC)
Since then, creeping privatization of HC
gradually taking up more of HC → today: 1/3 of HC is privatized (1 in 3 dollars goes to private sector)
more politicians/businessmen & hospital admins are saying it is inevitable, unstoppable & the **way of the future **
Privatization of HC - all over the world
HC systems all over the world are becoming increasingly privatized
- as part of larger project of **Globalization ***(introducing market into every area of society all over the world) *
Since the **80s **→ about pushing out state & bringing in market
As Sociologists, How is this issue of Private vs. Public HC become settled?
by looking at **historical records of both **& make comparisons
How can Sociologists examine Canada in terms of private vs. public HC?
**Public HC: **state-run HC history goes back over half a century
Private HC: doesnt have national private HC system but there is one next door (USA) that since the **80s **has developed the largest private HC system
How is the example of the USA & its private HC system important to consider when examining Canada’s HC system?
potentially important because it shows us **Canada’s future **if we privatize HC
- same US corporations will come into Canada & we will end up with the same HC system as USA
Private vs. Public Healthcare
- Conclusions
- impact on health of Americans
- rich vs. poor
- results of private HC
facts & figures demonstrate conclusively that privatization of HC has been **absolute disaster **for the health of most Americans
- the rich end up with best HC in world, rest of society ends up with poorer HC & as a result, **poorer health ***(works better for rich by taking away resources from everyone else) *
- WHEREVER private HC is introduced:
- higher prices (for HC)
- higher inequality of **access **
- less **HC coverage **for more **people **
- basically: ***pricesgo up,services** go down *
Healthcare & Private Sector
private sector’s job is to **maximize profits **by **raising prices **as high as possible & **reducing services **to **minimum **
- when you care for profit, *all you care for is profit *
Every single place where HC has privatized – *prices go up, services go down *
Roy Romanow - Royal Commission (2003)
- Former SK Premier
- in charge of RC to investigate ways to improve HC
- him & fellow members travelled around Canada & spoke to whoever wanted to talk to them (private or public advocators)
- told those in favor of **private HC **that if they could provide ANY evidence to show it works better than public HC, they will support **privatization **
- unable to provide ANY evidence
**Healthcare Systems: **
USA vs. Canada
USA - never had comprehensive state-run medical care like **Canada **
**- **always more decentralized & more room for private HC
Brief History of Healthcare in USA
- After WW2 & Prior to the 1980s
After WW2: Biggest expansion in HC as part of building of welfare state
**Federal Government **set up state-run insurance only for the most needy
→ Medicare (for the poor) & Medicaid (for elderly & disabled)
- rise in companies like **Blue Cross **& **Blue Shield **→ policy to provide insurance to non-profit health organization, which meant that most hospitals/clinics ran on non-profit basis
**Early 1970s: **GPs organized into group practices **→ Health Maintenance Organizations (HMO’s) - **non-profit practices where doctors worked for salary
(only specialists remained independent)
History of Healthcare in the USA
- 1980s onwards
- Privatization began in corporate sector → at this time,** workers compensation **was largest area of HC that was still privately insured by for-profit insurance companies
- division emerged in HC → government dealt w/ non-profit health organizations but corporations got health insurance from private insurance companies
- Chrysler proved private HC insurance was 3x more expensive
- corporations demanded lower rates → led to Managed Care Arrangement in **1988 **
**- **caused small businesses to go bankrupt or bought by bigger companies
- HMO’s, Blue Cross & Blue Shield bought by private insurance companies & converted to for-profit basis
What problem did private healthcare insurance present for corporations? What study corroborates this?
too expensive
Chrysler Corporation conducted the 1st study comparing private (USA) & public health insurance (Canada)
- per car manufactured: private HI cost 700$ vs. state-run HI costs **223$ **
**- **private HC costs **3x more **
Corporations & high costs of private health insurance
- results
demanded private insurance companies to lower rates →
in 1988, private insurance companies came up with an alternative - Managed Care Arrangement
- 3 year contract with industrial corporation where private insurance company provided health coverage at lower guaranteed/stable price
What was the result of the Managed Care Arrangment in 1988
→ caused fall in profits which triggered wave of mergers/consolidations (small companies went bankrupt or bought by larger companies)
by **1994 **→ top 100 insurance companies controlled nearly 90% of insurance **industry’s profits & assets **
(profits: 12 billion US $$, assets: 2 trillion US $$) → Health insurance premiums alone made over 300 Billion
**- **by **1994 → **10 largest HMO’s had combined **10.5 billion **US in liquid assets
→ Blue Cross & Blue Shield &** HMO’s ** bought by private insurance companies & converted into for-profit organizations
- HMO’s consolidated together (in **1984: **18% of HMO’s were for-profit vs. **1997: **75% of HMO’s)
How did the USA’s Healthcare System get privatized so quickly?
**Ronald Reagan → **leading figure in new right movement
- when he became president, introduced **laws to favor corporations → **particularly policy of Deregulation
**→ **eliminated most regulations governing conduct of corporations & regulation saying HC should be non-profit
-basically allowed corporations to do whatever they wanted & allowed in private insurance companies
Managed Care Arrangements
In order to lower & stabilize corporates health insurance rates, what was the tradeoff?
private insurance companies raised insurance rates for individuals/small companies
→ late 80s: some rates rose by up to 400% in a few years
At the same time that Insurance Companies increased rates (late 80s → rose by up to 400%), what did the Federal Government do?
Introduced cutbacks to Medicare & Medicare
What was the result of Federal cutbacks in tandem with an increase in private insurance rates?
- Statistics (4)
- Result?
** large increase in # of people without health insurance
by 1991 → 33 million Americans without health insurance
**1997 → ** 44 million without health insurance (1/3 children) - still this today
→ 70 million Americans under-insured
- # of businesses providing health coverage to workers steadily declined
2000 → only 1/2 of US workers recieved any medical benefits through work
RESULT: major decline in American’s health
What evidence is there that the increase in # of uninsured & under-insured led to a major decline in American’s health?
Study published by **Harvard Medical School **in 2006
- Found insured Americans have same level of health as Canadians
- Uninsured Americans had much **poorer health **(especially w/ chronic illnesses)
- Compared to CDNs, Americans are:
- 42% more likely to have diabetes
- 32% more likely to have high BP
- **12% **more likely to have arthritis
in **2005, **1.5 million Americans filed for bankruptcy (50% **b/c of medical problems)
What tactics did Private Insurance Companies use to keep profits high?
(6 main, 3 subpoints)
- **Raise **insurance rates for small businesses/individuals
- **Cutbacks **on services
- **deductibles **raised
- some **specialized treatments **removed from standard benefits package
- co-payment fees (extra-billing)
- restricted consumer choice
- flat rate system for paying doctors
- hospital support services outsourced to private companies
- replace trained nurses with unskilled/semi-skilled cheaper staff
Tactic to keep profits high/cut costs: Cutbacks on services
- deductibles raised
- some specialized treatments removed from standard benefits package
- co-payment fees (extra-billing)→ introduced by more insurance benefit packages
Results of Cutbacks on Services
once introduced, co-payment fees rose
→ 1987-1993: hospitals co-payment fees rose by over 450%
Overall, patients share of doctors fees tripled
(amount of doctor’s fees paid by patient)
Tactic to keep profits high/cut costs: Restricting Consumer Choices
Under terms of Managed Care Arrangements, insurers gave employers annual list of doctors & services covered under plan
→ can only go to corporate approved doctors & services
What did private insurance companies want from corporate-approved doctors?
→ pay the minimum possible in worker’s compensation & get workers back to work ASAP
- health of patient is secondary to raising profits of insurance company & company that employs them
Tactic to reduce costs/increase profits: Flat Rate
Private insurance companies introduced new system of paying doctors flat rate per patient
- gave doctors financial incentive to spend less time with each patient so they could see more patients & make more money
When did HMO’s total cost drop? By how much?
How was this portrayed in the media?
1996 - HMO’s total cost dropped for 1st time in over a decade
→ dropped by 4% compared to previous year
Right-wing Media hailed this as major triumph for private-sector HC
- ignored that drop in cost achieved primarily by denying/delaying services
- ignored dramatic decline in health standards caused by new policies
Tactic: Replacing Trained Nurses
Result?
cut costs by replacing trained nurses with unskilled/semi-skilled cheaper staff
→ small # of RN’s in supervisory position - forced to work 16-hr shifts
RESULT: major increase in levels of death & injury caused by nursing mistakes (nurses & nursing assistants)
What studies show that Privatization of HC has caused a decline in American’s health?
(especially regarding replacing RN’s with less-skilled cheaper staff)
US Institute of Medicine Study - 1999
Chicago Tribune Newspaper Partial Study - 2000
Harvard Medical School Study - 2006
US Institute of Medicine Study
- year?
- findings?
1999
estimated between 44-98k Americans were killed by medical mistakes each year
Chicago Tribune Newspaper Partial Study
- year?
- findings?
2000
found 2,000 dead & 10,000 injured by medical mistakes (of RN’s)
Statistics on # of **for-profit hospitals **
- year?
- percentage?
By 1998:
15% of USA’s 5,200 hospitals had been bought by corporations & converted to for-profit status
Columbia/HCA
- history
- assets/profits
Private HC corporation → founded in 1987 by small group of doctors & corporate investors
→ by 1997 (10 years later), became largest private HC organization in world
- owned ~350 hospitals & ~300 clinics/HC facilities
- quarter-million employees
- income of ~25 billion a year
- (within 10 years - higher revenue than Mcdonalds, General Electric & every CDN province except ON & QB)*
- under investigation for insurance fraud → for submitting fraudulent worker’s compensation claims on massive scale - despite this, still expanding & buying more HC facilites
How have these new for-profit hospitals prospered? Result?
By raising prices & focusing on high-income patients
- decreased services provided to low-income patients
→ meaning they are diverted to remaining non-profit hospitals - growing strain
Result: more HC services for rich & less for the rest of Americans
Statistics showing the unequitable distribution of consumption of HC services
- year?
By 1997 → 72% of HC services being consumed by richest 10% of population
top 10% gets 3/4 of HC leaving only 1/4 for the remaining 90%
Tactic to cut costs: Outsourcing Hospital Support Services to Private Companies
- hospital services consolidated w/ several hospitals in region sharing costs for administration, diagnostic & food services
*→ actually increases costs b/c accompanied by privatization/outsourcing of support services *
1995 → Hospital Support Services (laundry & catering) mostly private in US → cost 24% more per day than public SS in Canada
- CDN hospitals 42% less expensive per patient discharged despite 48% longer average length of patient stay
For-profit US hospitals cost ~3x more per hr of patient stay
1995 study concluded if US switched to public system - would save 7.5 billion a year
Privatization & Americans Reaction
- Result?
- had no input into privatization of HC
- were taken by surprise → once they were aware: protested
- in response to public pressure*→ President Bush Sr. & Clinton put forward proposals introducing modest restraints on private HC
Early 90s→US Insurance Industry spent ~100 million on propaganda campaign against Clinton’s HC reforms
- created limited public support
- focused on sex scandals
→although polls showed Americans didn’t think it was relevant, authority of presidency was still undermined & reforms did not get passed
What did opinion polls show about Americans & Canadians views on their HC system?
USA:
- 90% “highly disatisfied” with HC system
- 2/3 preferred to switch to public HC system like Canada
Canada:
- 80-90% satisfied with Canadian HC
- 80% favored continued/expanded role of Fed Gov in HC
- < 10% prefered privatized system
Canadians traditionally view idea of making profit from misfortunes of sick/disabled as morally repugnant
-Majority of Americans feel the same way
How is it that privatization is still occuring despite the majority of Americans/Canadians being opposed to it?
even though Canada & US are supposedly democracies, power of billions of corporate dollars speaks louder than **voice of ** majority of pop’n
Colleen Fuller
Canadian HC Analyst → examined US’s privatized HC system
concluded that it “offers the best care for the fewest number of people and this is its greatest accomplishment”
(in other words, privatized HC is best if your rich but not if you’re the other 90%)
How has Obama impacted Healthcare in the USA?
- main plank in platform was vow to reform HC
- introduced Obamacare → American version of Public Private Partnership (P3)
- when 1st looked at reforming US HC → talked about changing to Canadian-style state-run HC
- abandoned idea under pressure from corporations
- Instead, forced private insurance companies to provide HC insurance to poor (largely paid by Fed Gov)
Effect of Obamacare on US HC
disastrous
- private sector will provide absolute minimum care while charging government maximum for doing so → cost of Obamacare will skyrocket
- eventually, Obamacare will be abandoned before US government goes bankrupt
Obamacare
- Expected results
→ American version of Public Private Partnership (P3)
- situation where private corp. gets contract from government
- basically a way of funneling tax dollars into private corporations
- done with good intentions but will only make private sector richer & drive US government further into debt
Britain’s HC system
National Health Service (NHS)
just like Reagan in US, Margaret Thatcher introduced Deregulation & Privatization to Britain in mid-80s
-
privatization in Britain has followed P3 model
- signing long-term contracts with private HC companies
2002 - Introduced Private Finance Initiative
- Consisted of network of small private hospitals around Britain w/ government contracts
Results of privatization of NHS
- contracts guarantee big profit for private companies by bleeding NHS dry → despite this, hospitals have inadequate resources & high prices
- since hospitals have to give more $$ to private contractors, have less $ for internal needs
studied by # of ppl including Dr. Allyson Pollock (prof of public health research & policy @ Queens Uni in London) → concluded privatization of HC has been disastrous
- Since mid-80s, 1/3 of hospital beds closed & nursing budgets cut by 1/4
- some hospital wards no longer have nurses at all → replaced by virtually untrained Ward Hostesses
Dr.Allyson Pollock
prof of public health research & policy @ Queens Uni in London
- one of many people who have studied privatization of HC in Britain
→ concluded privatization of HC has been disastrous
argues that these contracts are disaster for general public & amount to “a free lunch for the private sector where governments simply act as tax-collectors, collecting taxes from the public on behalf of private corporations”
Private Finance Initiative (PFI)
Despite warnings of people like Dr. Pollock → in 2002, Britain introduced PFI
- British version of P3
- Consisted of network of small private hospitals around Britain with government contracts
- Despite having guaranteed income from government, private hospitals had inadequate resources & high prices
- 1st of these hospitals went bankrupt in 2005
- since then, many others on brink of bankruptcy
Privatization of Canadian HC
- problems for corporations?
- begins in US where big corporations 1st emerged
- since US is under their control, will inevitably target Canada next
Problem is many Canadians oppose privatization
- have “entitlement mentality”
- ‘ridiculous’ idea that HC should be a right which every Canadian is entitled to
How have corporations tried to change Canadians attitudes about private HC?
How did the Canadian government justify cutbacks?
launched propaganda campaign →began in 80s with claims that HC costs were spiralling out of control
- part of larger prop. campaign saying growing cost of social programs in general (particularly health, education & welfare) is pushing Fed & Prov government into debt
- Due to recession, social programs too expensive
- to stop government from going into debt, Canadians need to make do with fewer social services
*
Age of Cutbacks
cutbacks to all government services (including Healthcare)
- due to recession, social services too expensive & government going deeper into debt
Between 1988-1998: cut 36.5 billion from Federal HC budget
- major consequence: HC standards fell
Consequence of Cutbacks in Social programs
HC standards fell
- 30% of hospital beds closed
- staff reductions
- closure of many out-patient services
- delisting of medical services
- rising deductibles for drug plans
- longer waiting lists
What argument did the government make to justify massive HC cutbacks?
Was this argument accepted?
Argument that growing cost of social programs (like HC) was responsible for government debt
→ accepted & repeated over & over by CDN media
Was the claim that government debt was largely responsible for growing cost of social programs true or false?
- evidence
- almost entirely untrue
Mimota Study (1990) published by Statistics Canada
- studied increase in Canadian government debt from 1975-1989
- 6% of increase in gov. debt due to higher social program spending
- 94% due to growing tax breaks & subsidies for corporations, borrowing from private banks & rising interest rates
- Wealthfare has driven our government into debt not social programs like HC
- (financial aid provided to corporations by government)*
Why is the majority of Government debt attributable to corporations?
1956- corp taxes accounted for 1/2 of government income
1996 - corp taxes less than 12% of gov income (lowest % of Western countries)
- in addition to corporate tax cuts: tax credits & tax holidays introduced
- by 1984: 80k businesses w/ combined profit of 17 billion paid nothing in taxes
Corporate Transfer Payments → subsidies for corps (supposedly incentives) rose sharply through 70s & 80s
- since 1980 → gov transfer payments avgd 23 billion/year or 1,500 per tax payer
(2) Major reasons for growth of HC costs in Canada
1) tax cuts, credits, holidays &subsidies for corporations
* increase in corporate transfer payments (subsidies)
→ shortfall made up by raising income & sales tax
2) Political decisions regarding prescription drugs:
- Bill C-22
- Bill C-91
Contribution of Prescription Drugs to Growth of HC Costs in Canada
- political decisions
- Result?
1987 - Mulroney gov enacted Bill C-22 which weakened licensing arrangement under which Canada’s HC service previously had bought generic cheaper drugs usually made in Canada → forced HC system to buy more expensive brand-name drugs
1993 - Bill C-91 expanded this by granting 20 year protection for brand-name drugs
- also allowed evergreening by corporations (where corps introduce minor variations to drug to extend patent indefinetely
RESULT: Canada went from having lowest drug costs in industrial world to 2nd-highest (after the US)
Results of Bill C-22 & C-91
- evidence & statistics
Canada went from having lowest drug costs in industrial world to 2nd-highest (after US)
- 1987-1997: prescription drug costs doubled → from 9% to 14% of total health exp.
- Mid-90s: avg pharm. companies profits = 3x avg profit of Fortune 500 industries
- sunk to joint last place w/ US in terms of availability of publicly insured drug plans
- by 1996: Only 43% of CDN population eligible for drug plan coverage
- deductibles rising steadily
- by 1996: Only 43% of CDN population eligible for drug plan coverage
Largest factor of Increased HC Costs since 1980s
rising drug prices imposed by foreign corporations = single largest factor
2005: CIHI published report saying rising drug prices “key escalator” pushing up HC costs
What was the reason given to the public for the financial problems of the Government?
- Why did they tell the public this?
- What evidence did they have to back them up?
right-wing politicians & media claimed it as due to inefficiencies & out of control spending in HC system
→ to undermine welfare state so private sector could usher in/push privatization
Fraser Institute (right-wing think-tank): funded by corporations to conduct studies that basically provide evidence to back up corporations
- only 1 conclusion to all studies: less government & more corporate involvement
- provided legitimation for politicians & businessmen to push privatization agenda
- claims to be academic but simply corporate advers
Impact of findings provided by the Fraser Institute & other institutes on general public?
What other attempts have been made to capture public support?
relatively little impact on general public
→ Eventually came up with P3 (gov contract given to corps to perform some service)
- generally represented as supplement to public HC
- Ex) Sask Party pushing for private MRIs largely paid by gov
Problem with P3 in Canada & setting up clinics & private services alongside public clinics & HC services
P3 is public private partnership → However, private sector does NOT want partnership, they want to take over
- private HC corporations constantly work to undermine public sector
- pressure politicians to cut funding to public HC so ppl are forced to turn to private
Major entry point for private sector into HC
- Example in Alberta
Worker’s Compensation → under Canada Health Act - seperate from Medicare
- employers began to privatize HC benefits to cut back on benefits recieved by workers
1992: 13 of AB’s largest corps formed Alberta Employer Committee on HC
- only allocated 1.4% of pay roll to health/dental benefits (& still tried to shift HC costs to employees)
- implemented Flexible Benefits Plan that changed nature of coverage
- meant standard insurance package covered only minimum services & had to pay higher premiums to get more coverage
Change in Worker’s Compensation
- before vs. after 90s
up to the 80s: run by worker’s compensation board (non-profit organ. consisting of reps of employers, employees & government)
Early 90s: board provided benefits to more workers than American privately run WC
- benefit rates 4-5x higher despite costing 25-50% less
Yet, more corp employers withdrew from boards & set up private insurance policies
IN USA:
Despite Worker’s Compensation Boards providing benefits to a greater % of workers, benefit rates 4-5x higher despite costing 1/4-1/2 less,
More corporate employers still withdrew from boards and set up Private Insurance Policies
- Explain these policies
- criticisms?
- cutback on services & created list of doctors patients could see
- paid doctors 2x standard public rate to get worker’s off compensation & back to work ASAP (demand management)
HC Analyst Shari Caudron said “overall intent is to reduce HC utilization not to reduce illness”
What similarities do Canada & US share in regards to privatization of HC?
- corps withdrawing from WC boards → set up private insurance policies & changed to system of Integrated Health Service that focused on demand management
- private insurance companies bough non-profit companies & converted them to for-profit status → in 80s/90s in USA
- ex) American Insurance Company Liberty Health bought Ontario Blue Cross & did the same
*
- ex) American Insurance Company Liberty Health bought Ontario Blue Cross & did the same
Summary of
- corporate tax cuts
- political decisions regarding prescription drugs
- other entry points for private sector
→ Mulroney & Chretien - steadily dropped corp taxes through 80s & 90s
- shortfall bc of corp tax cuts made up by raising income & sales taxes
Tax credits, holidays & subsidies (Corporate transfer payments)
1987 - Bill C-22 forced HC system to buy more expensive brand-name drugs
1993- Bill C-91 granted 20 year protection for brand-name drugs & allowed evergreening
Media & Politicians blamed increased HC costs that were due to changing tax & drug policy on inefficiencies & out-of-control spending in HC system
Fraser Institute & other institutes provided legitimation for politicians/businessmen but barely impacted general public
after various attempts to capture public support, came up with P3
also workers compensation = major point of entry for private sector into HC
more corporate employers withdrawing from WC boards & setting up private insurance policies → Integrated Health Service focusing on demand management
In course of the 90s: hospital care increasingly embraced US model of HC
- Evidence? (timeline)
1991 → Winnipeg 7 Oaks General Hospital adopted US principle of Managed Care
1997 → Health Resource Group opened Canada’s 1st for-profit hospital in Calgary
2000 → Ralph Klein introduced **Bill 11 ** in AB → private clinics allowed minor surgeries & over-night stay
2004 → AB gov gave 6 million $ contract to HRG to perform ~500 surgeries (Strategic Partnering)
2005 → Canada’s 1st primary care clinic opened in Vancouver
2006 → 23 private surgical centres in Canada (mostly in BC, QB, also AB)
1991 → Winnipeg 7 Oaks General Hospital adopted US principle of Managed Care
by implementing treatment guidelines designed to cutback on hospital stays
- guidelines developed by American medical management company
- led to some financial savings → accomplished at cost of closing beds & reducing services
Winnipeg was 1st but many other CDN hospitals adopted similar principles in 90s
1997 → Health Resource Group opened Canada’s 1st for-profit hospital in Calgary
HRG = medical corporation composed on doctors & corporate investors
called Health Resource Center
- To get around Canada Health Act (1984) → said it was clinic run by surgical corporation (didn’t call it a hospital)
2000 → Ralph Klein introduced **Bill 11 ** in AB → private clinics allowed minor surgeries & over-night stay
allowed private clinics to perform minor surgeries & have over-night stay
at this time, AB gov run by Conservative Ralph Klein
- supportive of HRG & privatization of HC in general
2004 → AB gov contract with HRG
gave 6 million $ contract to HRG to perform ~500 surgeries
even though HRG charged 10% more than public hospitals per procedure
2005 → Canada’s 1st primary care clinic opened in Vancouver
- Ralph Klein was most out-spoken supporter of HC privatization in Canada → Other provinces followed his example*
- opened with 1,200$ initiation fee & 2,300$ annual fee
- clearly part of two-tier HC service (only for rich who can afford it)
After major expansion in private clinics in early 2000s
→ problems arised in late 2000s
Despite having higher prices & providing fewer services, private clinics still had difficulty making ends meet
- May 2010 → AB gov gave HRG 2 million to keep HR Centre out of bankruptcy
- August 2010 → AB gov went to court to get out of contract w/ HRG
-
2000→ Winnipeg’s Panam private clinic had to be bought by prov gov (going bankrupt) → converted to public → costs fell
- cataract extraction surgery cost fell from 1000$ to 700$
Strategic Partnering
more & more provincial govs continued cutbacks on public HC & multi-million contracts to private HC corps
- prov gov’s cut funding to public hospitals so they are forced to cutback on services
services then offered by private corporations → outsourcing of rehab, diagnostic, X-ray & lab services
tell us there’s no money for public HC yet come up with $$ for private
Result of Strategic Partnering of Provincial Governments & Private HC corporations
- statistics/evidence
Slow & steady expansion in privatization of Canada’s HC system
Manitoba:
- 1984-1994: went from 4 private HC companies with combined income of 25 million → over 100 with 100 million
Ontario: quiet privatization
- since 1970s - outsourcing of home-making services (food/laundry)
- hospitals encouraged to think in terms of profits (co-payment fees, developing commercial operations & raising parking fees)
- Elderly care = field with largest point of entry for private sector
Winnipeg - Privatization of HC
1991 → Winnipeg 7 Oaks Hospital adopted Managed Care principle
1984 → 4 private clinics - combined income = 25 million
1994 → over 100 private clinics - combined income = 100 million
Ontario → quiet privatization
since 1970s → outsourcing of food/laundry services - contracted out to for-profit HC companies
Hospitals encouraged to think in terms of making profit by charging user co-payment fees, developing commercial operations (stores/restaurants) & raising parking fees
Elder Care
History of Elder Care in Ontario
Early 20th Century → nursing homes run by charities/small family businesses
1950s/60s → welfare state set up, Medicare & expansion in public HC
- studies conducted on private nursing homes - found residents were underfed/overcrowded/neglected/abused & no competant medical care
- 1965 → Ontario Welfare Council study found 165/425 (1/3) ON private NHs provided substandard care
1966 Nursing Homes Act - to improve nursing home living conditions
- many small family-run NHs going bankrupt → bought by corporate chains
Late 60s/early 70s → private NHs ran by large corp chains
70s → nursing corporations got organized & formed ONHA→ pressured prov to expand private NHs (rewarded politicians for giving them contracts - legalized bribery)
1979-1983→ private institutional long-term care expanded by 40% - public only by 5%
Change in Elder Care in 1950s/60s/70s
new non-profit elder care institutions set up → Homes for the Aged run by municipal gov
50s/60s → 1965 Ontario Welfare Council study showed 1/3 of NHS had substandard care
1966 Nursing Homes Act →stricter regulations to force private NHs to improve living conditions
- small family-run NHs went bankrupt → bought by growing corp chains
1974 → already 75 corp NH chains (compared to 35 in BC, 5 in SK & 0 in QB)
ONHA formed in 70s - represented over 90% of ON NHs in late 70s
- pressured gov to expand private nursing homes
Extendicare
largest private NH chain
1980 → bought Crown Life insurance → turned it into CrownX
1989 → owned 59 CDN & over 150 US NHs
- 40 paramed facilities, managing 4 hospitals
- 4th largest NH chain in NA (income of 65million/year)
How did large corporate NH chains influence politicians?
- rewarded politician when they retire → given high-paying job
- contributed to election campaign fund
*
Why did corporations give politicians well-paying job after they retired if they gave corporations contracts?
1) reward
2) b/c former politicians usually keep close ties with current politicians
Contribution to Election Campaign Fund
- Example
- Result
1982 → Canadiana NHs donated over 10k to election campaign fund of ON governing Conservative party
- That same year → granted licensing to open over 8,000 new beds
Private sector went from providing 47% to providing 54% of total NH beds
1979-1983 → private sector of institutional long-term care expanded by 40% where public only expanded by 5%
Public’s Response to growing privatization of elder care
1980s → protests in ON against growing privatization of elder care
friends & relatives organized into Lobbying groups
Lobbying Groups & those against privatization of elder care
Concerned Friends on ON Citizens in Care facilities - 1982 report
CUPE
Liberal Party
NDP (supported by CMA)
- Advocacy Centre for Elderly*
- Advocacy Resource Centre for Handicapped*
- ON Coalition for NH Care Reform*
- ON Coalition for long-term Care Reform*
- Social Planning council of metropolitan Toronto*
Lobbying groups & Others against Privatization
- reports
1982 - Concerned Friends of ON Citizens in Care Facilities
- report declared most ON NHs were “sterile, friendless…old people stare at walls.. told when to get up, eat, bathe…if they protested..they were considered difficult…medicated or restrained…inadequate hopeless places where people go to die”
CUPE - representing over 10,000 employees in field of elder care
ON Liberal Party
NDP → said all for-profit NHs should be phased out altogether
- supported by CMA - 1984: task force → concluded “when an institution becomes the only answer for the care of elderly person it must be one that is run on principle of loving care not tender loving greed”
Government’s reponse to:
- 1982 report by Concerned Friends of ON Citizens in Care Facilities
- NDP sayind all for-profit NHs should be phased out altogether
- 1984 report by CMA task force
slowed down privatization
1987 → Nursing Homes Act amended
- had to submit proper financial statements & accept resident bill of rights
Criticisms of 1987 - amendments to Nursing Home Act
Canadian HC analyst - Vera Tarman concluded changes were mostly “symbolic gestures”
- gov accepted financial statements that were so general & confusing it was impossible to determine profit margin
- inspections were cursory (quick glance-over/not proper)
- new regulations made no difference b/c weren’t enforced
- so-called bill of rights made little difference in quality of care
Evidence of Vera Tarman’s conclusions that amendments made in 1987 to Nursing Homes Act were:
- “symbolic gestures”
- financial statements = confusing & general
- inadequate inspections
- impossible to determine profit margin
- regulations not being enforced
- quality of care not improved
2004 → CTV’s W-5 aired footage of abuse & theft in 2 ON NHs owned by Central Care corp.
Response to CTV’s W-5 footage of abuse & theft in 2 ON NHs (owned by Central Care Corp.)
- results?
Central Care Corp. fired 1/2 dozen employees
Government increased # of unnannounced inspections
RESULT: made little improvement b/c politicians have ignored resports of their own inspectors
Other areas of HC being privatized
(other than elder care)
- supporting/ancillary services
- lab services
- CAT scans & MRIs
Privatization of Ancillary Services
→ MDS
- origin
*
- lab services in particular
largest CDN private HC corp. = MDS:
- founded in Toronto in 1969 → originally Medical Data Sciences ltd.
- By 1986 → assets = 4 million & annual income = over 800 million
- fast growth due to buying small independant labs owned by docs
- labs continued to recieve funding from gov
- more money for MDS = less for public hospital labs → forced hospitals to turn to MDS/private labs
- 80s → MDS bought more labs & kept raising prices
- 1990 → per capita lab services tripled in price (most expensive)
-
90s → MDS spread across Canada
- expanded into pharm & forming partnerships w/ hospitals
- MDS revenues = over a billion/year & growing
Privatization of CAT Scans & MRIs
more private diagnostic units appearing (provide CAT scans & MRIs)
ON authorized in 2003
- Fed Liberals promised to cancel contracts & make illegal but didnt once in power
Private MRIs spread across Canada →1st in ON, then: AB, BC, QB & SK (Brad Wall)
Why does privatization continue to expand in Canada despite:
- facts/figures showing private HC provides less services for higher price
- Protests
(2) reasons
(1) Buying Politicians
- Legalized Bribery (campaign contributions & well-paying jobs)
- Illegal Bribery (kickbacks from corps → gives multi-million$ contract & money finds its way back to politician through swiss bank account)
(2) Growing Influence of Corporations & US Government
(2) Growing Influence of US Corporations & Government
on privatization of HC
- both have worked to speed up Americanization of CDN market, society & HC
→ primarily accomplished through intro of Free Trade
Began in 1989 → Mulroney & Reagan introduce Canada-US FTA
1994 → expanded to include Mexico → renamed NAFTA
- involved unfair subsidies to business
-
result: 1991 → eliminated UI program & changed to EI
- cutbacks in benefits & eligibility
- used to pay off gov debt
-
result: 1991 → eliminated UI program & changed to EI
FTA → Unfair Subsidies
- debate/concerns
- design of FTA
*
- design of FTA
late 80s → debate over free trade
- concerns raised about Americanization of Canada (especially social programs) → Mulroney dismissed concerns saying FTA doesnt mention social programs (example of how politicians lie by telling part of truth)
FTA designed to eliminate unfair subsidies to even playing field for businesses
FTA → unfair subsidies
- after signing FTA
- results
US government argues unfair subsidies = anything CDN gov spends money on that US gov doesn’t
→ 1st thing US did after signing FTA → claimed our social programs constitute unfair subsidies to business
- complained about UI program
- CDN fed gov contributed to IU fund but US gov didn’t
Within months: cutback on fed contributions to CDN UI fund
1991 → eliminated UI altogether & changed to EI
- fed gov stopped contributing but continued to manage
- introduced cutbacks in benefits & eligibility
- → 1998 - only 1/3 qualified
- used fund to pay off debt
- introduced cutbacks in benefits & eligibility
Results of change of UI → EI
federal government stopped contributing funds but continued to manage fund
1) introduced cutbacks in benefits & eligibility
* by 1998 → only 1 in 3 unemployed CDNs qualified for EI
2) Fed Gov used fund as personal piggybank → to pay off gov debt
2008 → Supreme Court of Canada ruled gov had stolen over 57 mill from EI fund
- didn’t order gov to repay money
- set up crown corporation to manage EI
Unemployment program only 1 of many social programs brought down to US level
Free Trade
- what did it do?
- eliminated:
government tariffs on imports
all kinds of regulations on corp activity
- government restricins on cross-border takeovers
→allows corps in Canada or US to buy up smaller businesses on opposite side of border
- previously existing 25% ceiling on foreign ownership of insurance industries
Result of Free Trade
cross-border integration of North America’s insurance industry
Large US corps (AETNA, PRUDENTIAL & MUTUAL OF OMAHA) began to buy small CDN insurance companies
CDN insurance companies (Great West) increased policies in US & Mexico
1995 → 1/2 of revenue of CDN insurance industry generated abroad
CDN life & health insurance → assets over 165 billion, revenues over 45 billion/year
concentrated wealth → insurance industry became oligopoly
- over 140 insurance companies in CDN → 3 control ~ 1/2 of market
- top 10 raked in 75% of insurance premiums
bottom 84% have less than 1% of market share
What happens with an Oligopoly?
Collusion (illegal) →CEOs of richest corps make agreement to not actually compete but charge same price, wages & move industry in same general direction
- price-fixing/price-gouging
- rise in cost of insurance premiums
- LI premiums bring in 2x what insurance companies pay in benefits → 100% profit margin
What does this cross-border integration of North America’s insurance industry mean to public insurance & medicare?
- whether insurance industry is dominated by US or Canadian corporations makes little difference to consumer
all act to increase private insurance sector & pushing back/eventually eliminating public insurance → like Medicare
Medicare under attack by richest/most powerful organizations (NA’s Insurance companies)
Result of Free Trade (general)
cross-border integration of North America’s insurance industry
concentrated wealth
- stripping away laws that protect state-run insurance from takeover
Government passed & continues to support FTA although it has allowed corps to takeover more & undermine HC & social programs
WHY?
Brian Mulroney → originally against free trade
- 1983 campaign speech “FT like sleeping with elephant” → ANTI FT platform
Reasons behind creeping Privatization of Canada’s HC system (5)
- Bribing of politicians→ money talks
- Influence of the USA
- growing influx of private sector in HC administration in 1980s
- private sector either coincidentally & deliberately creates problems for public sector
- private corporations lie to increase public support of privatization
growing influx of private sector in HC administration in 1980s
strong ideological commitment to private sector
belief that private sector always does it things better than gov
even when statistics show otherwise (more expensive less efficient)
ideological belief is reinforced by self-interest
not same life long commitment that doctors have
financial incentive to promote privatization
private sector either coincidentally & deliberately creates problems for public sector
growing waiting lists are becuase doctors bumping Medicare patients to end of line in favor of higher+paying privae patients
- More often, patients given choice to wait months/years or pay privately & get it right away
- vicious cycle → ppl pay for private, pushes back public patients, increases privatization
Propaganda Campaign in 80s
by mid90s, HC accounted for 1/3 of prov budgets
Privatization has led to rising prices in areas like outsourcing, diagnostics, pharmaceuticals & insurance
Problems caused by private sector: Cherry-picking/Cream-skimming
private sector tends to siphon off least sick patients to private institutions
leaving difficult, chronic, low income, long-term cases to public sector
→maximizes private sector profits & puts more pressure on public sector
Biggest problem private sector created for public HC
- results?
constant pressure on government to cutback on social programs
since 1970s, cutbacks justifed by claims that social programs are reason behind gov debt
- Canada has trillion dollar economy (1 of biggest in world)
- corp subsidies & tax breaks are real reason behind gov debt
“Death of a thousand cuts”
When Medicare installed non-profit HC system, if gov had given reasonable budget increases to HC, Medicare would provide good HC for all Canadians
- instead, more cutbacks → put pressure on every aspect of HC system
made it impossible for Medicare to operate effectively through “death of a thousand cuts” - each cutback isnt crippling, but together have undermined Medicare
5) Private corporations lie to gain public support of privatization
- what are some of the lies told? (4)
claims that:
1) have to choose between equality & efficiency
2) private sector provides cheaper services
3) private sector increases consumer choice
4) private sector provides lower administrative costs b/c government is over-bureaucratized
claims that:
1) have to choose between equality & efficiency
efficiency in HC → defined as providing cheapest care for greatest # of ppl
if this is true, then equality is essential component of efficiency
equal & universal access is only way to provide efficient HC to whole population
ALSO, disproven by stats:
- non-profit CDN hospitals offer 3x more care per dollar than US for-profit hospitals
- non-profit workers comp boards offer 8-10x as many benefits per premium dollar than US private workers comp
claim that:
2) private sector provides cheaper services
FALSE → since pharmaceuticals & diagnostics increasingly privatized in 80s, prices doubled in 90s
- for-profit always more expensive b/c includes profit margin (have to raise prices to make profit)
non-profit HMOs gave back 90% of income in providing services vs. 70% of income by for-profit HMOs
US has HC costs spiraling out of control
- 1991 → HC costs over 662 billion (more than any country)
-
late 90s → US spending almost trillion (1/3 of total world HC spending)
- compared to Europe (25%), Asia (12%), Canada (2.5%)
-
2005 → 2 trillion spent on HC (50% more per person than any country)
- WHO ranked US HC 37th in world (last among industrialized countries)
3) private sector increases consumer choice
OPPOSITE OF TRUTH
- actually limits costumer choice by only allowing them to go to certain lists of doctors & go for certain services on list
- private insurance companies worked together w/ employers & selected docs to reduce sick time & health services recieved
4) private sector provides lower administrative costs b/c government is over-bureaucratized
TRUE → gov HC bureaucracy is larger that those of private HC corps
→ Canadian HC system has almost as many admins as doctors
- b/c gov bureaucracy (Medicare) covers every single Canadian citizen
- private HC companies only cover select minority (their patients)
Costs examined on per person basis by Michael Rachlis showed Canada’s HC system admin costs = 1/4 of US HC admin costs
Harvard Med School study in 2003 found per capita HC costs were:
- $1,059 in US vs $307 in Canada
Reasons private HC insurance is more expensive (per capita HC costs) (3)
private insurance companies duplicate records
have to hire insurance claim adjusters
- job to find loopholes so that people get as little benefits as possible
have to hire expensive lawyers to fight endless lawsuits
Canadian Media & Privatization of HC
most people don’t know facts that show private sector claims about private HC are lies
- just know what media tells them
Media = set of corps with right-wing pro-business bias
- Constantly telling Canadians that public HC is sick & privatization is cure
propaganda campaign has had limited results
→ opinion polls show majority of Canadians support Medicare over private HC
→ but has allowed for greater public acceptance of private HC
While not many supports complete privatization of HC, more ppl accepting privatization nibbling at edges
If Media campaign since 80s continues, more creeping privatization in HC system
For many years → debate between left & right wing in politics
concerning?
stances?
concerning respective roles of state & capital in our economy
right-wing → for **privatizaton **
- says capital does things better
left-wing →for nationalization
- says state does things better
Capital vs. State
(
neither side is entirely right or wrong
- state & corporate capital = 2 most central & powerful institutions in modern society
- each has pros & cons → need to use both where each is strongest
→ state & capital should complement each other not compete
- to establish this type of system - need to follow natural division of goods & services
→ Capital best at providing goods → cure
→ State best at providing services → care
Pros & Cons of Private Sector (CAPITAL)
(2 each)
PRO #1: good at creating new technology
PRO #2: excels in mass production
CON #1: problem of standardization
CON #2: act to increase social inequality
PRO #1: good at creating new technology
(5)
recipe for tech innovation → businesses compete to intro new gadgets to make profit
capital private business responsible for new technology in last 200 years
new medical tech is mostly from private sector
- has always taken lead in inventing new lab equip, hosp machinery & pharm etc.
- has & will continue to revolutionize our tech in all areas in future
PRO #2: excels in mass production
(invents technology & the technology to invent it ) → production & consumption goods
→ can produce products by the millions
→ always finds ways to make goods as cheaply/efficiently/quickly as possible
private sector best equipped to supply HC with necessary goods on mass scale
CON #1: problem of standardization
mass production works b/c machines can be standardized & broken done into simple interchangeable parts
→ can replace broken part & carry on - same machine has identical parts
→ People ARE NOT machines →can’t be standardized
trying to standardize people & medical procedures causes problems
- seen private corps enter HC field & try to intro factory methods (TQM, LEAN)
- especially amount of time for procedure
- can’t standardize b/c ppl’s health vary along diff dimensions
- need customized patient care (fitted to each individual)
private sector HC has financial incentive to standardize HC to cheapest/lowest level
Problem: if you introduce private capital into HC - financial incentive to standardize HC to cheapest/lowest level of care
ELABORATE
Private sector tries to standardize treatment appropriate for healthiest part of pop’n
(young, white, male, middle-class adults with no previous history of serious health problems)
most demographic groups don’t fit into this category → require more care
but providing HC services above minimum standard eats into profit margin
→ tries to cherry-pick
This is why capital will never provide adequate HC to society
Only state can ensure adequate HC is provided to all segments of society
CON #2: acts to increase social inequality
over time, natural tendency for wealth to be concentrated
state has power to counteract tendency
after WW2 to mid70s → Western gov did counteract tendency toward growing inequality by raising taxes on corps & used money to create welfare state
- inequality decreased across western world
late-70s → right-wing came into power & reversed policy of previous 30 years
- more tax cuts for corps & social program cutbacks for rest of society
- this has been main gov policy since
- state has abdicated its power & allowed corps to do whatever they want
- massive growth in equality in terms of income, wealth & HEALTH
Who should provide non-essential small scale services?
small family businesses (not state or capital)
- hair dressers, restaurants & corner stores
How State can compliment Capital
Capital→ new technology & mass production
- provides goods
State → provideds large services & 3 pillars of welfare state
- resolve standardization problem through laws & regulations
- establish universal criteria for HC & min standards
Non-profit State
PROS?
1 → can resolve standardization problem (provide customized care)
- establish universal HC criteria & hold HC institutions to certain standard
- regulations & laws
Only non-profit state can…
deliver large # of highly trained professionals in nation-wide organization accessible to all citizens
- allocate resources (including medical) on basis of need not income
- guarantee essential services are provided on basis of universality not inequality
- provide care & not just cures
Distinction between care & care
comes down to beds
without beds, HC facility is just dispensing cures
with beds, HC facility becomes total institution that has total control over inmates & responsibility to care for them 24/7
The example of increasing privatization of elder care in Ontario shows…
what private HC looks like with long-term beds
shows what privatized long-term HC facilities would be like
Long-term Care facilities
1) private capital
vs.
2) public non-profit state
1) able to take more long-term & innovative approach
- cut long-term costs by providing more services
- look to keep ppl out of institutions by providing programs allowing elderly to stay home
2) incentive to cut costs to increase profit
- will have (-) impacts on residents
- treats residents like objects that make them money
Solving problem of standardization
by passing laws to establish universal criteria of HC
holding HC institutions to certain min. standard of care
provide HC professionals with freedom & resources to customize care
- regulate market & actions of corporations
Why does state need to regulate market & actions of corporations?
otherwise, harmful consequences
- process of providing technology not concerned about human suffering as side-effect
- work-related accidents →1000 per year
- mostly due to failure of corps to introduce proper safety measures
State had established safety principles & regulations for capital to obey until period of deregulation
RESULT? (pharm industry)
1994 - review time = 38 months
1997 - reduced to 18 months (due to pressure by corps)
- more drugs on market with no idea of long-term side effects
