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Even U.S. Corporations Like Canada's National Health Plan

by Dave Lindorff Saturday, Mar. 26, 2005 at 10:02 AM

Even as they lobby in Washington against any move towards socializing the health care system, U.S. companies are shifting production to Canada where they don’t have the cost of paying for employee health care, and once there, they are joining Canadian firms in calling for better funding for health care and more extensive services. What’s going on here?

News that General Motors is planning on trying to force its unionized workers to agree to a give-back of health benefits--possibly including having to contribute for the first time to their insurance premiums and for coverage of their families--raises an interesting and potentially embarrassing political question.

For the same General Motors (like Ford and Chrysler) has for years been shifting production from Michigan and other venues to Ontario, across the Detroit River, to take advantage of Canada’s national health program, which virtually eliminates health care from the cost of production. For GM, the difference is about $1400 per vehicle produced.

The interesting thing is that while GM, like all American corporations, insists that a Canadian-style single-payer health system, where everyone in the country gets free physician and hospital care, and where hospitals and doctors are paid by the government, is a bad idea, and not workable, over the border they and the other big auto makers, along with other U.S. corporations, are saying something entirely different.

Consider this letter, sent two years ago by GM Canada's CEO Michael Grimaldi, and co-signed by Canadian Autoworkers Union president Buzz Hargrave, to a Crown Commission considering reforms of Canada's 35-year-old national health program.

"The public health care system significantly reduces total labour costs for automobile manufacturing firms, compared to their cost of equivalent private insurance services purchased by U.S.-based automakers," Grimaldi wrote. "These health insurance savings can amount to several dollars per hour worked. Publicly funded healthcare thus accounts for a significant portion of Canada's overall labour cost advantage in auto assembly, versus the U.S., which in turn has been a significant factor in maintaining and attracting new auto investment in Canada."

The auto company CEO and his union counterpart went on to tell the commission that it was "vitally important that the publicly funded health care system be preserved and renewed, on the existing principles of universality, accessibility, portability, comprehensiveness and public administration." They went further though, calling not just for preservation but for an "updated range of services," including prescription drugs and home care services.

CEOs of the Canadian units of Ford and DaimlerChrysler wrote similar letters to the commission, not only endorsing the national health system, but like GM Canada urging increased funding and expanded coverage.

They were joined by most of Canada's largest employers, 30 of whom banded together into a lobbying organization called the Employer Committee on Health Care-Ontario (ECHO).

How can it be that the same corporations that recognize--when they are in Canada--the bottom-line logic of a national health system that makes healthcare a right and that spreads the costs of caring for the whole citizenry across the whole population by financing it through public taxation, can be so opposed to introduction of such a system here at home?

One answer is ideology. The idea of having the government take over an industry that represents about 15 percent of the U.S. economy gives U.S. corporate executives the willies. Moreover, many U.S. corporations that may not be primarily in the business of health care, nonetheless own health care subsidiaries, and thus have an inherent interest in preserving those business units' profits.

That said, it is nothing short of hypocritical, and probably also stupid from a business perspective, for corporate America to be backing the insurance industry's intransigent and self-serving opposition to national healthcare.

Bill and Hillary Clinton, who came to the White House after a campaign that focused on the health care crisis, almost single-handedly destroyed the chance for America to join the rest of the modern in making healthcare a right by establishing a national medical program back in the mid 1990s. Cravenly inviting the insurance industry to the table and insisting that any plan must be administered through the insurance industry—a group of vultures if there ever was one—they doomed their effort to failure as its costs inevitably soared through the roof.

It's time for progressives to forget that sorry sell-out chapter and to bring the demand for a national health system back to the front of the domestic agenda. With health care inflation--and insurance industry profits--continuing to soar, even the business lobby may soon have to start rethinking its hidebound ideological opposition to a national health care model, as health coverage from employees--currently running at an average $6779 per worker--wipes out profits.

Back in 1970, a year before Canada switched over from an employer-based, insurance company-administered health system like that in the U.S. to a national single-payer model, both countries were devoting about 7 percent of GDP to health care. Today, Canada devotes 9.1 percent of GDP to health care, while the U.S. devotes 15.1 percent of GDP to health care. Meanwhile, Canada boasts better health statistics (life expectancy, infant mortality, etc.), and everyone there is fully covered, even for catastrophic illnesses like cancer or AIDS. In the U.S., some 15 percent of people have no insurance coverage at all, medical costs are the leading cause of bankruptcy, and the tens of millions covered by Medicaid must endure long waits and often get only minimal care when they do get it at all. Even the elderly, who come the closest to having state-funded health care, because of funding cutbacks, are paying more out of pocket today (in constant dollars) than they did in 1965 before Medicare existed.

The Canadian system is often attacked by conservatives in the U.S. for allegedly having long waits for treatments, and for driving many Canadians across the border for such things as MRI scans. In fact, however, polls repeatedly show that Canadians love their national health system, and keep voting for candidates who back it. Moreover, Canadians say that U.S. criticisms of their system are gross exaggerations. The numbers of people seeking U.S. medical treatment are tiny, and most Canadians report that they get treated immediately in their hospital ERs. Left unsaid by U.S. critics, too, is the reality that waiting times for many Americans seeking treatment in hospital ERs, or trying to get a specialist appointment--for example for an OB-GYN visit or an annual physical--can also be interminable, while many are finding that necessary treatments are simply rejected by their insurance carriers. (For every story of a Canadian who had to come to the U.S. to get treated, there are probably 10 stories of Americans turned away by hospital emergency rooms after wallet biopsies failed to locate an insurance card.)

While the rest of the modern world has long since adopted policies that make healthcare a right of citizenship, available to all, the U.S. has continued to make it a matter of income and, to some extent luck. Where most modern societies have the state play the key role in providing health care, in the U.S., the main provider of health insurance is the employer, and increasingly employers are shucking that responsibility.

On Wednesday, the New York Times reported--on its business page instead of its front page, where the story belonged--that the percentage of companies that pay 100 percent of their employees’ insurance premiums had "plummeted" over the last four years, from 29 percent to only 17 percent, while the percentage providing full benefits for family members had been halved from 11 percent in 2000 to only 6 percent last year.

Worse yet, even more employers are dropping employee insurance benefits altogether, and at an accelerating rate. Between 1991 and 2000, according to Brian Klepper, director of the Center for Practical Health Reform, the number of jobs that provided no health insurance coverage rose at an annual rate of 2.4 percent. But since 2001, the number of such jobs without health benefits has been climbing almost twice as fast, at a 4.5 percent clip. Before long, he suggests, health care benefits will be the exception, not the rule.

For the rest of this column and other stories by Lindorff, please go (at no charge) to This Can't Be Happening! .

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