Trump could back for-profit health care in NAFTA renegotiation

Tom Price and Wilbur Ross have been nominated to be the Secretary of Health and the Secretary of Commerce in the Trump administration.

Toronto Star national affairs columnist Thomas Walkom writes, "Donald Trump has promised to renegotiate the 1994 North American Free Trade Agreement. Don’t be surprised if he takes a swipe at medicare."

Walkom explains, "Right now, Canadian medicare is relatively exempt from NAFTA, as it was from the original 1989 Canada-U.S. Free Trade Agreement. I say 'relatively exempt' because some analysts argue that any government effort to expand universal public health insurance into new areas where U.S. firms are involved could incur financial penalties under NAFTA. That point was made in two separate papers commissioned by the 2002 Romanow royal commission on the future of health care. One was written by a corporate trade lawyer, the other by the Canadian Centre for Policy Alternatives."

The CCPA paper highlighted, "Full public financing could displace private insurers that currently cover drug expenses that are brought into a Pharmacare program. Canada’s best protection against a NAFTA compensation case would be to manage the political context.  There seems to be little risk of a NAFTA compensation case following introduction of mixed or privately-financed insurance regime, but such an approach could restrict future policy options by expanding the market for American insurers and consequently raising potential compensation costs if commercial insurers were later displaced."

Walkom adds, "But medicare as it is now gets a pass from NAFTA. One section of the free trade pact specifically exempts anything that is a 'social service for a public purpose' from the overall NAFTA requirement that eligible foreigners be allowed to invest freely. A second exempts existing provincial and local arrangements – like medicare – that otherwise contravene NAFTA principles. Both allow the current medicare system to operate as a single-tier, public monopoly that limits the role of private insurers and for-profit hospitals."

He also notes that during NAFTA talks the U.S. focused on "patent protection for drug companies [which increases the costs of prescription drugs]... it didn’t press for access to the Canadian health care sector. The medicare exemptions set out in 1989 stayed [when NAFTA came into force in 1994]."

But Walkom warns, "Whether they will stay in a renegotiated NAFTA depends largely on what the [highly profitable] U.S. health care industry wants. That industry has been going through an unprecedented period of consolidation, with both hospital chains and health insurers merging in order to cut costs and increase their clout. For these expanding U.S. healthcare insurers and hospitals, the medicare-protected Canadian market remains largely virgin territory. If it is in their interest to remove the Canadian medicare exemption from NAFTA in order to exploit this new opportunity, I expect Trump will listen sympathetically."

That's a likely bet given Trump's campaign statements. His platform highlighted, "It is not enough to simply repeal this terrible legislation [the Patient Protection and Affordable Care Act more commonly known as Obamacare]. We will work with Congress to make sure we have a series of reforms ready for implementation that follow free market principles and that will restore economic freedom and certainty to everyone in this country. By following free market principles and working together to create sound public policy that will broaden healthcare access, make healthcare more affordable and improve the quality of the care available to all Americans."

Two key politicians on this file may be Tom Price (who has been nominated to be the Secretary of Health and Human Services) and Wilbur Ross (who has been nominated to be the Secretary of Commerce). On November 29, CNN reported, "Tax credits to buy insurance on the individual market. Incentives to sock money away in Health Savings Accounts. Limits on employer-sponsored plans. High-risk pools to cover the sick. These are some of the ways Tom Price would replace Obamacare. And on November 30, CNN reported, "[Ross says] that the renegotiation of the NAFTA is one of the first -- if not the first -- things he will tackle on Day One of the job."

For our commentary on the renegotiation of NAFTA with respect to the building of pipelines and bulk water exports, please see Climate leaders don't build pipelines, nor do they back NAFTA (November 11, 2016) and Will the renegotiation of NAFTA include bulk water exports? (November 13, 2016).

Just days after the November 8, 2016 U.S. presidential election, the Trudeau government signalled to the incoming Trump administration its willingness to renegotiate NAFTA. But Trudeau has been unwilling to disclose to the public what provisions it would renegotiate, has not committed to any kind of transparent and accountable public process in advance of opening these talks, and maintains that NAFTA has been a beneficial agreement for Canada.