Have We Traded Away the Opportunity for Innovative Health Care Reform? The Implications of the Nafta for Medicare

Abstract

The integrity of medicare depends on governments having flexibility to respond to the changing dynamics of the health care system. This article concludes that the North American Free Trade Agreement ("NAFTA") has potential to place constraints on the ability of Canadian federal and provincial governments to regulate freely.

The health care system is a mix of public and private interests. At its core, "medically necessary" hospital and "medically required" physician services are fully publicly financed, but often privately delivered. However, private financing is funding an increasing number of important goods and services such as drug therapy. Various proposals have been made for the reform of the health care system, including national insurance programs for prescription drugs and home care, and this article assesses some of these proposals in light of the NAFTA.

Canada has made reservations to the NAFTA to protect medicare but these reservations fail to recognize the public/private nature of the health care system, resulting in uncertainty as to what services are protected from application of some of the NAFTA's key provisions. The expropriation provision presents particular concerns for reform, as the reservations provide no protection from its application. Further, the dispute settlement process allows disputes to be heard away from the light of public scrutiny.

Canada should work towards a political solution to these concerns. In all relevant contexts, both the federal and provincial governments should clarify that their intention with regard to health care is to act for a "public purpose". The authors also emphasize the importance of international trade negotiators working with Health Canada officials to ensure appropriate treatment of health care in international trade negotiations.