from the pages of May 1995

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NAFTA's Bitter Pill

By Joyce Nelson

 

As partners in NAFTA, both Canada and Mexico are currently having their public health care systems dismantled and privatized. Not surprisingly, the key (but well-hidden) players involved in this destruction are the same ones that were central to orchestrating NAFTA's passage: David Rockefeller's Trilateral Commission (TC), and New York-based PR/lobbying giant Burson-Marsteller (B-M), which since 1989 has become an ad hoc lobbyist for the TC (see sidebar). According to the most recent figures available, Burson-Marsteller (the largest PR firm in the world, with 62 offices in 29 countries) earned $18 million for getting NAFTA signed, sealed and delivered.

Compounding the assault on public health care, it was these same corporate superpowers who were primarily responsible for defeating the possibility of “single payer/universal coverage” for health insurance in the U.S.

 

The United States

The late 1980s populist push in the U.S. for a single-payer/universal system modeled on Canada's health care system prompted the U.S. Congress to appoint in 1988 the Bipartisan Commission on Comprehensive Health Care (known as the Pepper Commission) whose mandate was to suggest “reforms” to American health care. At the time, 35 million U.S. citizens had no health insurance coverage at all. The Commission was chaired by senator and Trilateral Commission (TC) member John D. Rockefeller IV.

While Rockefeller's Commission was underway, the American Medical Association (AMA) hired Burson-Marsteller, long a leader in health care PR and lobbying, and in 1989 launched a major effort to discredit the Canadian health care system with a series of “Dear Doctor” letters to some 300,000 AMA members as part of its program to “alert Congress and voters to the dangers of a Canadian-type health care system.” This misinformation campaign also included full-page ads pillorying Canadian-style Medicare in the New York Times, the Washington Post, Wall Street Journal, U.S. News & World Report, Time, and Newsweek. The ads claimed lengthy waiting-lists in Canada for open-heart surgery, and lack of organ-transplant facilities in Canada's apparently primitive hospitals.

In 1990 Rockefeller's Health Care Commission released its report and urged employment-based private insurance coverage. As Senator Rockefeller explained to the business community: “Employer-mandated coverage is the last resort we have against the establishment of a national health program that neither you nor I want.”

By 1991 the Jackson Hole Group -- a private think-tank in Wyoming bankrolled by a host of corporate donors, including Metropolitan Life, Aetna, Prudential and Cigna -- had come up with the form that such employment-based coverage would take. Its 1991 report, “The 21st Century American Health System,” launched the basic principles of “managed competition” for health coverage.

Fortune magazine gave its imprimatur to the Jackson Hole Group's model in its March 23, 1992 issue, where an article by Edmund Falternayer, called “Let's Really Cure the Health System,” stated: “The model that Fortune favors would require nearly every American to enroll in a health maintenance organization (HMO) or a similar managed-care plan. These limit a patient's choice of doctor and hospital, though a growing number allow patients to go outside the network by paying extra..HMOs, pioneered in the U.S., are only one of the building blocks of a superior medical system that could be a model for the world.Managed competition is one of the key principles of an ambitious blueprint for reform that has emerged from two years of Wyoming meetings by the Jackson Hole Group.”

On September 24, 1992, presidential candidate and TC member Bill Clinton officially embraced “managed competition” in a speech at Merck Pharmaceuticals. But Clinton's speech revealed a slight difference from Fortune's “model for the world” in that he intended HMOs to stay within a set per capita fee and adhere to state-set budgets, with doctors following state-set fee schedules. Three days later, the New York Times scolded candidate Clinton in an editorial, “Clinton Waffles On Health.” As Trudy Lieberman writes in the Columbia Journalism Review: “Clinton's proposal, said the Times, had come up short by coupling managed competition with controls on the $800 billion medical market that 'would require states to set thousands of prices for fast-changing, complex procedures.' Clinton's flirtation with explicit cost controls was brief. On October 10, the Times declared: 'The debate over health care reform is over. Managed competition has won.This week the governor released a crystal-clear statement -- managed competition, not price controls, will make the budget work and maintain quality.'” The editorial lauded Clinton for apparently changing his mind about fee schedules and other price control mechanisms, an anathema to doctors, conservative politicians, and the nation's major dailies.”

When Clinton was elected U.S. president in autumn 1992, he quickly appointed TC member Donna E. Shalala as U.S. Secretary of Health and Human Services, along with 13 other TC members to key cabinet and administrative posts. Not surprisingly, the President's Health Care Task Force, chaired by Hillary Clinton, rejected any approach not based on private insurance -- a $300 billion industry in the U.S.

According to U.S. health care activist Townsend Walker, of the Alabama Health Education & Action League, “The Clinton administration's so-called 'reforms', based on `managed competition,' were intended right from the first to benefit the big insurance companies, many of which are directly linked to the Rockefeller Group of financial holdings, including Metropolitan Life, Equitable Life, and New York Life.”

Metropolitan Life has been a Burson-Marsteller client for more than a decade. In 1993, at the height of the lobbying turbulence surrounding both health care and NAFTA in the U.S., B-M's insurance clients included Met Life, Equitable Life, Aetna, and State Farm. B-M's subsidiaries, Gold & Liebengood and Black Manafort Stone & Kelly, in 1993 were advising clients Equitable Life, Mutual of Omaha, and Aetna.

Now that health care legislation is dead in the water in the U.S., the primary beneficiaries of all the chaos and turmoil have been the pharmaceutical giants (11 of whom are current B-M clients), and “the Big Five” private insurers: Met Life, Aetna, Prudential, Cigna, and The Travelers -- vertically integrated health care behemoths who own and operate huge chains of HMOs ready to provide every service on the medical spectrum, for a price. During 1994, the Year of the Merger, both the pharmaceutical industry and the private insurance industry consolidated into even bigger players on the health care scene, with B-M playing a major role in arranging the mergers among its clients.

While the number of U.S. citizens without health insurance coverage has risen to 40 million, HMO membership is already 50 million. The HMO insurers, paid to provide coverage for companies' employees, don't have to cover all illnesses or all people but can pick and choose those likely to need the least medical care as a cost-saving measure. As a writer for the Nation has observed, “The same insurance industry that brought us 'redlining' by disease and 'cherry picking' of healthy people in order to increase profits, is now to be catapulted into the role of 'caring' provider.“

According to O'Dwyer's PR Services, a U.S. company that closely tracks the activity of PR/lobbying firms, as well as the fees paid to them, Burson-Marsteller played the leading role in the U.S. health care “debate” -- the most lucrative PR and lobbying bonanza in history. O'Dwyer's senior editor Kevin McCauley says that during the years 1992 and 1993, “B-M earned $81.2 million just on its health care PR billings” -- at least three times more than its closest competitor, Hill & Knowlton. Says McCauley, “B-M is a big outfit and they are by far the leaders in health care lobbying.”

B-M has its own specialized unit called Burson-Marsteller Health care, which McCauley says provides clients with “consumer and professional marketing; issues/crisis management; government relations; constituency relations; media training; media relations; media design; and advertising.” Burson-Marsteller Health care's staff “includes a medical doctor/physician; former FDA [Federal Drug administration] commissioner; former hospital administrator; former pharmaceutical communications executives; former non-profit communication chiefs; grassroots specialists, and former reporters.”

On behalf of its numerous and powerful clients -- which in 1993 included the Health Leadership Council (comprising more than 55 corporations with a stake in the health care industry) -- B-M was central to blocking the populist push for a health care system modeled on Canada's.

Much of that “debate” involved the trashing of Canada's health care system, with scare-tactic stories about lengthy waiting times for emergency care, the inability of Canadians to choose their own doctors, the seeming unavailability of medical procedures like bone marrow transplants, and even the “illegality” of operations for Canadian seniors. Michael Rachlis, MD, and Carol Kushner, Canadian authors of the 1994 book Strong Medicine, say this tactic was meant “to keep Americans confused about public insurance” and note that “both the American Medical Association and the insurance industry have spent millions trying to discredit Canada's health care system since 1991.”

Some of those scare-tactic stories originated high up in the Republican Party, with whom Burson-Marsteller has long been connected. Edward Ney the former U.S. head of Burson-Marsteller's parent company, Young & Rubicam, who continues to be B-M's international advisor -- was an advisor for George Bush's 1988 election campaign and helped to create the infamous “Willie Horton” ad that is often credited with getting Trilateralist Bush elected. In his 1992 State of the Union Address, President George Bush told Americans that Canadians can't choose their own doctors. During the 1992 election campaign, Republican Senate Whip Newt Gingrich claimed that Canadians go to American hospitals for treatment because if they're over 65, “it is illegal in Canada to get a whole series of operations.”

As the disinformation campaign continued, Fairness & Accuracy in Reporting (FAIR) took out a page in the New York Times (June 7, 1994) to inform the public that the point-counterpoint duo appearing regularly on National Public Radio's “Morning Edition” were actually both paid lobbyists for the same side: Tom Downey, a lobbyist for Met Life and Merck (both B-M clients) and Vin Weber, paid by the Alliance for Managed Competition, the “Big Five” insurers group that includes Met Life. FAIR's op-ed page stated: “Downey is a lobbyist for the Metropolitan Life Insurance Company, one of the 'Big Five' floggers of health insurance, and has also represented U.S. Health care, a major Pennsylvania HMO. The biggest health insurers and HMOs stand to benefit from the so-called “managed competition” approach to health care, the strategy Downey recommends on air. Downey also represents a division of the giant Merck pharmaceutical company. Weber is paid by the Alliance for Managed Competition, the `Big Five' insurers' group that includes MetLife, and by the United Health care Corporation. He characterizes universal coverage as requiring 'a big increase in taxes' or 'serious, rigorous restriction of choice,' dismissing (like Downey) Congressional alternatives that impinge on the profits of big insurers.”

FAIR suggested this was “just one more sign that commercial health interests have succeeded in subverting the biggest public policy debate in the last 20 years.”

 

Canada

Now a similar, if more subtle, discrediting process is under way in Canada, with Canadians as the target. The first steps are to undermine the public's confidence in the Canadian system, especially through deficit-mania, and to cause confusion. As Canadian health care activist and filmmaker Laura Sky explains, “In the business world it's called `the chaos theory of market restructuring.' There is a value in creating chaos if you want to reorganize and capture a market, and in our case, the Canadian health care system is being thrown into chaos so that private interests can step in and provide `solutions'.”

Burson-Marsteller, which has four branch-plant offices in Canada, is particularly skilled at what's called “media placement” -- getting news items, editorials and commentary favorable to its client's interest into the media. BM accurately claims to its prospective clients that it can “manage issues by influencing -- in the right combination -- public attitudes, public perceptions, public behavior and public policy.”

It is that last item, public policy, that is crucial, especially with Trilateralists playing major roles in Prime Minister Jean Chretien's Liberal government: TC member Roy MacLaren, the party's most vociferous advocate of NAFTA, is International Trade Minister, while Finance Minister Paul Martin is said to have been hand-picked by Liberal Party advisor Mitchell Sharp, North American Deputy Chair of the TC during the 1980s.

In October 1994, Martin announced that $9.4 billion will have to be raised over the next two years, either through higher taxes or spending cuts, in order to meet his deficit-reduction target date. Immediately, the Toronto-based C.D. Howe Institute -- a powerful TC-connected right-wing think-tank -- urged Martin to cut federal spending even deeper and faster, calling for $14.6 billion in annual cuts over the next two years by cutting deeply into Canada's social programs and virtually eliminating all federal spending on health care -- a move that would undermine the Canada Health Act.

According to health care union activist Colleen Fuller, Communications Director for the Health Sciences Association in BC, “The Canadian federal government did not exempt the Canada Health Act from the financial services chapter of NAFTA. The ability of U.S. health insurers to participate in the Canadian `market' is totally dependent on the serious erosion or out-right elimination of the Canada Health Act,” which specifically excludes private, for profit administration of health insurance.

The erosion is already underway as the provinces, faced with steady cuts in federal transfer payments under two previous Tory governments, begin to delist medical services previously covered by public insurance plans -- a decision that Rachlis and Kushner say “could throw patients into the arms of the private insurance industry.” The C.D. Howe Institute wants to hasten that process.

The C.D. Howe Institute linked up with the Trilateral Commission during the 1970s when Marcel Belanger, one of the Institute's directors at the time while serving as President of the Provincial Bank of Canada, joined the TC in 1976. Current Institute membership suggests that it is not a disinterested spectator in health care issues. TC member Marshall (“Mickey”) Cohen, a member of the Institute's Executive Committee, has been vocal about the need for “taking away [Canadians'] old age pension and their Canadian Pension Plan, child credits, unemployment insurance and everything else.” Cohen's Molson Industries' subsidiary, Diversey Corp., has already targeted the fast-growing private U.S. industry that provides contracted cleaning services to hospitals, in hopes of securing steady and large orders for Diversey cleaning and sanitation products.

Institute member Marc Lalonde, former federal Minister of Health, is on its Canada-America Committee. Lalonde is also Chair of Hotel-Dieu hospital in Montreal and a director of Citibank, which is owned by Citicorp -- the financial core of the Rockefeller empire. Citicorp, which has been a Burson-Marsteller client since 1991, organized (with J.P. Morgan) the $50 billion credit-line from Canada and the U.S. to prop up Mexico's plunging peso.

The Chair and director of the C.D. Howe Institute is Adam Zimmerman, who is also a director of TD Bank, a Trustee for Toronto's Hospital for Sick Children, and, since 1990, the Chair and a director of Confederation Life. Simon Reisman, Canada's free trade negotiator, is on the Executive Committee of the Institute and is President of Ottawa's Trade and Investment Advisory Group.

Thomas E. Kierans, the President and CEO of the C.D. Howe Institute, is on the board of Manufacturers Life and, during the 1990s, has been “Special Policy Advisor” to the Ontario government.

In 1992, the Ontario government, faced with shrinking health care budgets like the rest of the provinces, decreed that the province's 223 publicly-funded hospitals must find ways to cut costs and become more “efficient” -- pushing hospitals to merge, make radical changes in the way health care is delivered, or close. In May of 1994, the Metro Toronto District Health Council, a provincial government advisory body, appointed a nine-member committee to decide the fate of Metro Toronto's 44 hospitals -- reported to be the largest hospital restructuring project in the world. The Hospital Restructuring Committee (HRC) is scheduled to release its final report in June 1995.

Since the HRC will have a tremendous influence over the future of Canadian hospitals, as well as the future of thousands of public health care workers, it is amazing how little media coverage has been given to this project -- especially because the composition of the nine-member Committee is controversial indeed.

The HRC Chair is Ed Crawford -- Chairman of the Canada Life Assurance Co., director of the Canadian Imperial Bank of Commerce, and Trustee for Toronto's Hospital for Sick Children. HRC member Richard E. Lint is President and CEO of Citibank and a director of Skandia Canada Reinsurance Co. A subsidiary of B-M client Citicorp, Citibank Canada's board members include Marc Lalone and Radcliffe Latimer, Chair of Prudential.

A third member of the nine-member HRC is John C. Wilson, formerly of Ernst & Young and now a private consultant, who led the recent restructuring of Ontario Hydro which, since 1993 has resulted in nearly 12,000 job-cuts at the Crown corporation. Given that Ontario Hydro was a Burson-Marsteller client in 1993, Wilson must have worked closely with B-M in the process, now widely acknowledged as a major step towards privatization. Maurice Strong, head of Ontario Hydro, joined the Trilateral Commission in 1976. From 1990 to 1992, Strong worked closely with B-M in planning for global business' involvement in the 1992 Rio Earth Summit.

HRC member Wilson is also the Founding Chairman of the Canadian Institute for Advanced Research (CIAR) -- a think-tank funded by the federal and Ontario governments, as well as a handful of blue-chip corporations such as Manufacturers Life, listed as a “primary benefactor” of CIAR and the funding initiator of CIAR's Program in Population Health, which generously funds research fellowships ($100,000 per year for 5 years) and scholarships ($50,000 per year for 5 years) for 18 university CIAR scholars -- four of whom have been appointed to Prime Minister Chretien's four-year, $14 million National Forum on Health.

With private insurance and banking interests heavily involved in both the largest hospital-restructuring project in the world and the National Forum on Health, Canada's health care future is being decided by special interests who have a lot to gain from privatization. Says Colleen Fuller, “Private insurers and for-profit health care providers are intricately linked in the U.S.”

That linkage is especially apparent in Toronto-based Crownx Inc., which owns both Crown Life and Extendicare -- now the third largest company in North America providing long-term care to the elderly through 228 private clinics, including 63 in Canada. Extendicare also sells hospital-management services to publicly-funded hospitals. Crownx is chaired by TC member David Hennigar, with Senator Michael Kirby (who joined the TC in 1977) on its board.

Says Laura Sky, “Extendicare is an example of the private marketplace taking over in Canada, as hospitals are selling themselves off to such companies. More and more U.S. health care companies are coming in, attracted by the chaos in public funding. U.S. companies like Marriott and Baxter promise to reduce costs for hospitals, but it's basic union-busting. The hospitals lay off unionized nurses and staff and then, under private management, offer the jobs back under non-unionized conditions.” Crownx CEO Fred Ladly recently complained that Canada's politicians “do not recognize the role that the private sector can play in providing health care.”

Such saber-rattling has been bolstered by an October 1994 BC Medical Association survey of more than 2,800 doctors, 82 percent of whom say they would like to see the publicly financed health care system cover “a limited core” of essential medical services, with “optional services” covered by private insurance for those who could afford to pay the premiums. This push for a two-tiered medical insurance plan is, of course, precisely what the private insurance industry wants. “It is no coincidence, “ says Laura Sky, “that Canadian hospital boards and health care agencies are increasingly peopled with bankers and insurance executives.”

It is also no coincidence that Canada's banking and insurance sectors are filled with Canadian Trilateralists, including B-M's Canadian chair as a member of the International Advisory Committee for the Bank of Montreal. In the spring of 1994, there were 24 Canadian Trilateralists on private insurance and banking boards of directors just at the time behind-closed doors decisions were being made on whether or not to pull the plug on Confederation Life -- the largest insurance company failure in North America.

While the mainstream business press was filled through the spring and summer of 1994 with high drama and speculation about the impending fate of Confederation Life, especially a possible rescue of Confed led by (TC member) Paul Desmarais's' Great West Life, no one bothered to inform the public that, since 1993, one of the directors of Desmarais's Power Financial Corps (which owns Great-West Life) is Edward Ney -- B-M's international advisor.

Throughout Ney's tenure as U.S. Ambassador to Canada (1989-1992), the press neglected to identify Ney's connection to Burson-Marsteller, or, for that matter, the B-M connection between Ney and Allan E. Gotlieb. Such silence was, of course, useful for the passage of NAFTA. Since 1993, a similar press silence has surrounded Ney's involvement in Power Financial Corp.

Kenneth Kidd's article, “Life Preserver,” for Report On Business (Oct. 1994) states that Canada is “one of the most saturated insurance markets on the planet” with $1.3 trillion in life insurance already owned by Canadians. Kidd says, “Confed's collapse merely prefaces a massive shakeout in an industry plagued by too many operators chasing too few customers.”

Though Kidd doesn't say it, the answer to the dilemma is obvious: a two-pronged strategy that a) decreases the number of operators, and b) introduces what are euphemistically being called “new product lines in Canada.” The first prong is already underway, with Canada Life, North American Life, Sun Life, Great-West Life and Manufacturers Life all feeding on the Confed corpse, but also making other purchases in the industry. On Feb. 10, Maritime Life, owned by Boston-based John Hancock Mutual Life, arranged to buy Confed's individual life and disability insurance businesses.

But the biggest player is B-M client Metropolitan Life, whose Canadian operations are based in Ottawa and Toronto. Met Life has announced agreements to acquire Allstate's personal life-insurance line, Confed's group life and health business, and made a merger deal with The Travelers Inc. to create one of the largest HMOs in the U.S., with 17,500 health care employees providing managed health care programs for 13 million people. In late November, MetLife announced an agreement to acquire the Canadian group life business of Travelers Inc.

Thanks to the federal Tories, the 1992 Canadian Bank Act allows banks to buy insurance companies and sell insurance too, so during the current feeding frenzy, the Canadian Imperial Bank of Commerce, the Bank of Nova Scotia, the National Bank of Canada, and the TD Bank are buying up new insurance assets.

If that sounds like some even bigger operators are now “chasing too few customers,” consider this: the private insurers and the banks together have their eye on the lucrative bonanza locked up in Canada's public health insurance system. As Colleen Fuller explains, the terms of NAFTA include “barrier-free access to insurance services by multinational corporations. The Canadian federal government did not exempt the Canada Health Act from the financial services chapter of NAFTA. The banks and insurance companies. who call themselves avid free traders, have been active at all trade tables -- the FTA, NAFTA and GATT -- pushing hard for worldwide liberalized trade in financial services.

In the weeks leading up to Finance Minister Paul Martin's 1995 budget, U.S. financial interests placed unprecedented pressure on the Canadian government to decrease the federal deficit by cutting social programs. This pressure included editorials in the Wall Street Journal and warnings by financial companies like (B-M client) Salomon Brothers and Moody's. Bending to the pressure, Martin's February 27th budget not only cuts drastically into the transfer payments to provinces, but makes the payments into block-funding with no money specifically designated for health care. Critics charge that this tactic will balkanize health care and dismantle the public system.

 

Mexico

A similar dismantling process is underway in that other NAFTA partner, Mexico -- whose government has been a Burson-Marsteller client since 1990. According to Canadian health care union activist Colleen Fuller, “Mexicans have guaranteed rights of access to health care services in their Constitution, but, like Canada, Mexico did not take steps to protect its public health care insurance in the financial services clause of NAFTA. In 1994, following the wishes of U.S. companies, the Mexican government cut the top layer of income earners out of the public insurance plan and said they must purchase private health care insurance.”

This removal of the wealthiest part of the taxpaying public from paying into the public insurance system is, says Fuller, “a way to deplete public funding for the system and thereby degrade it,” while also setting up a private system for the rich. The private insurance companies operating in Mexico also are building private hospitals on the HMO model.

The Mexican health care workers' union bosses are, says Fuller, “in bed with the PRI government” so workers are getting nowhere in their attempts to fight the changes. As well, Mexico has had a much more extensive public-sector health care system than Canada's, including a manufacturing component to provide medical equipment like surgical gloves, hospitals blankets, etc. “In 1994,” says Fuller, “the Mexican government began withdrawing money from that manufacturing sector in order to run the factories into the ground and sell them to the private sector.” This area of medical supply is “of great interest” to U.S. companies, says Fuller, “who are putting pressure on the government to privatize it.”

Through the efforts of Burson-Marsteller and the Trilateral Commission, NAFTA's Canadian and Mexican partners are being coerced into adopting the private HMO model for health care that Fortune called “one of the building blocks for a superior medical system that could be a model for the world” whether we want it or not.

Canadian writer Joyce Nelson is the author of several books, including Sultans Of Sleaze: PR & The Media (Common Courage).