The General Agreement On Trade In Services: Implications For Health Policymakers

Abstract

ABSTRACT:The General Agreement on Trade in Services (GATS), created under the auspices of the World Trade Organization, aims to regulate measures affecting international trade in services-including health services such as health insurance, hospital services, telemedicine, and acquisition of medical treatment abroad. The agreement has been the subject of great controversy, for it may affect the freedom with which countries can change the shape of their domestic health care systems. We explain the rationale behind the agreement and discuss its scope. We also address the major controversies surrounding the GATS and their implications for the U.S. health care system.

International Trade and Health Policy: Implications of the GATS for US Healthcare Reform

“…The existing federal Medicare program appears to be exempt from GATS rules under Article I(3)b, which exempts 'services provided in the exercise of government authority'. However, proposed Medicare 'reforms' that would allow private health insurers to compete against the government program could disqualify the Medicare program from the GATS exemption (Belsky et al, 2004 vide health insurance to employees, or pay into a state fund that will provide insurance. 38 Unless US 'specific commitments' in the health insurance sector are withdrawn, reform proposals like these could run afoul of the GATS' market access rule if they limit access to health insurance markets, or the national treatment rule if they grant 'discriminatory' subsidies to public insurance plans that compete with private insurers.…”

“…The threat of trade sanctions is likely to become increasingly important in the future as free trade agreements, like the GATS, remove the barriers that have kept non-US insurers and health services providers from entering the US market. For this reason, Belsky et al (2004) have characterized GATS obligations as 'analogous to constitutional obligations' in that they restrict domestic legislative power in ways that future generations will find difficult to undo. Healthcare reform represents one area where US commitments under the GATS could jeopardize domestic governance of the health sector by limiting legislative options to those that are consistent with the provisions of the GATS.…”

“…Business ethicists, however, have not yet grappled with the broader implications free trade agreements may have for democracy in rich and poor nations alike. A growing public policy concern is the question of whether multinational, regional, and bilateral free trade agreements will constrain public policy options and curtail state and local polities' autonomy in determining health policy, implementing heath insurance programs, and/or delivering health services; such issues have not been adequately addressed in the business and economics literature (Belsky et al, 2004; Center for Policy Analysis on Trade and Health, 2002, 2004Shaffer et al, 2005).…”

“…Similarly, the federal Medicare program appears to be exempt from the GATS rules at the present time. However, proposed Medicare reforms 18 that would allow private health insurers to compete against the government program could disqualify the Medicare program from the GATS exemption (Belsky et al, 2004). To the extent that public health insurance programs compete on a commercial basis with private providers (now or in the future), public health insurance plans are vulnerable to challenge as a violation of the GATS' national treatment rule.…”

Health in an Age of Globalization

“…illustrated by the much slower improvement in population health in China that accompanied the rapid economic growth after the reforms, Jean Drèze and Amartya Sen (2002, Chapter 4.) The assessment of the GATS by Leah Belsky et al (2004) suggests that the worst fears may be exaggerated, but the authors acknowledge that there is a great deal of uncertainty about how the agreement will operate. There are also concerns about bilateral trade agreements, particularly between the US and other countries, in which the interests of the US pharmaceutical companies are strongly represented.…”