In 1992, the Institut Jantung Negara (National Heart Institute) was hived off from the Kuala Lumpur Hospital and corporatised as a fully government-owned referral heart centre. One of its explicit missions was to provide high-quality cardio-thoracic and cardiological services at medium cost to Malaysian citizens.

For non-civil servants, patient charges at the corporatised IJN would be increased from the hitherto highly-subsidised rates, and IJN staff would be paid salaries markedly above the corresponding Ministry of Health scales.

The IJN however would continue to be subsidised by public funds although not to the extent of 90-95 percent as was commonly the case for the regular Ministry of Health facilities.

The intention was that IJN should also act as a price bulwark, i.e. a fallback option which would serve as a competitive price check against steep price increases in the private sector. (It is for this reason also that the Citizens' Health Initiative has repeatedly emphasised that it is in the interests of everyone to support the continuance of well-funded, competent and credible healthcare of quality provided by the public sector).

In the Dec 9, 2000 issue of the Lancet (United Kingdom's leading medical journal), Dr Allyson Pollock, professor of health policy at University College, London, pointed out that the ongoing World Trade Organisation (WTO) negotiations on the General Agreement on Trade in Services (Gats) could very well lead to a situation which "would outlaw the use of non-market mechanisms such as cross-subsidisation, universal risk pooling, solidarity, and public accountability in the design, funding, and delivery of public [sector healthcare] services, as being anti-competitive and restrictive to trade.

The domestic policies of national governments [on healthcare] will be subject to WTO rules, and if declared illegal, could lead to trade sanctions under the WTO disputes panel process".

Free market system

This is a major breach of solidarity in the context of western European social democracy, and a remarkable encroachment of international trade regimes into an area traditionally at the core of welfarist states, possibly the most crucial aspect of an implicit social contract and therefore of regime legitimacy.

Given the medical and health technologies currently available (and the associated economics of healthcare), there exists no country that can rely solely on the market to deliver necessary health and medical care to the bulk of its citizenry. Even in that archetype of free-market health care, the United States, more than half of national healthcare expenditures is accounted for by public spending - on Medicare (for the elderly), Medicaid (for the poor), and on other federal, state, county and city government health services.

Indeed, the market-driven US healthcare system would collapse without this massive intervention to prop up economic demand for healthcare services.

Massive social transfers and cross-subsidies in healthcare are therefore unavoidable if any semblance of social decency (and economic stability and political legitimacy) is to be maintained. Professor Robert Evans of the University of British Columbia has demonstrated convincingly that the affluent in most societies would benefit from (and therefore prefer) a free-market system with minimal taxation and social transfers, as opposed to universal access to healthcare financed by progressive taxation.

Hence, we note the retrogressive neoliberal ethos of generous tax exemptions coupled with drastic cutbacks in social spending, at best alleviated by "social safety nets" and charitable initiatives. The inevitable scenario emerges: a polarised system of deluxe, five-star care for the rich, and decimated, demoralised, and under-funded services for the destitute.

Gross imbalances

At the recently concluded People's Health Assembly at Gonoshathaya Kendra, Bangladesh (Dec 4-8, 2000), delegates concerned with the globalising reach of market medicine called for an internationally co-ordinated campaign to remove health-related services (broadly defined) from under the dictates of WTO-Gats regimes, i.e. to reinstate the discretion and jurisdiction over the organisation and financing of healthcare back to national governments.

More generally, there was a clear consensus that the WTO's overriding concern for minimally restricted trade, often to the detriment of health considerations (e.g. country restrictions on imports of (potentially) hazardous commodities and processes) was unacceptable.

Prime Minister Mahathir Mohamad has rightly warned Malaysians and other Third World citizens about the perils of globalisation under duress, while subject to gross power imbalances. Malaysia, to our knowledge has yet to make wide-ranging, market-opening commitments on healthcare under the Gats regimes, at the moment confined to medical and dental services, hospital services, and health insurance.

Extreme caution by our trade negotiators is absolutely essential at the WTO-Gats deliberations, especially in light of Professor Pollock's further remarks that in the attempt to get around the voluntary nature of country commitments to specific service sectors, "the regulatory reform process [currently underway in the WTO] consists of negotiations to make changes to Gats [via] general or top-down provisions that apply automatically to all service sectors, even those where members have made no specific commitments. The process has been made possible by a mandate, otherwise known as the built-in agenda, already written into the treaty".

Global links

But even in the absence of WTO-Gats commitments, transnational healthcare entrepreneurs have not been idle. Foreign-based healthcare consultants have been busily scouting out joint-venture opportunities emerging from the government's privatisation policy, and advising on partnership deals with well-connected local counterparts -- in hospital support services, pharmaceuticals, hospital construction and equipping, medical supplies and disposables, telemedicine and medical informatics, medical insurance, managed care and HMO's among others.

(The Commercial Service of the US Embassy in Kuala Lumpur lists healthcare right at the top of its "Best Prospect" Markets for Malaysia for 2000. The economic intelligence units of the UK and Australian High Commission are similarly enthusiastic about emerging healthcare markets as privatisation proceeds in Malaysia).

On Dec 15, 2000, The Edge Daily (an online business journal) reported that Aetna-ING, one of the largest health insurers in Malaysia had linked up with WorldCare Health (Malaysia) Sdn Bhd, the Malaysian subsidiary of US-based WorldCare Consortium.

WorldCare Consortium is a leading international player in telemedicine, operating a globally distributed referral network with links to the Johns Hopkins Medical Institutions, The London Clinic, Duke University Medical Center, Cleveland Clinic Foundation, Massachusetts General Hospital, Brigham & Women's Hospital (Boston), Spaulding Rehabilitation Center, and the Dana-Farber CancerInstitute (Harvard Medical School) among others.

For-profit hazards

This fusion of bulk purchasing power (insurers' patient pools) with electronic referrals (tele-consultations, tele-imaging etc) to designated healthcare providers locally and globally, i.e. an electronically-enabled feeder network for patient referrals who are enrolled in healthcare plans (insurance, managed care, HMOs), is for-profit managed care writ large, in the making, globalised with the aid of informational technologies.

Affluent healthcare consumers would of course appreciate the facilitated access to state-of-the-art healthcare, but poorer patients faced with cutbacks in social supports and a deteriorating public sector would inevitably end up in the bottom rungs of a multi-tier system.

But even so healthcare consumers should be wary, as the same tensions that exist in managed care, between corporate profits versus patient welfare and good medical practice, will eventually emerge. For-profit managed care is the latest incarnation of medical insurance, a projection of the insurers' influence (as bulk purchaser of healthcare services) into fee setting and in extreme cases, even into clinical judgement and prerogative, and treatment protocol.

Ultimately beholden more to shareholder interests, for-profit managed care can be detrimental to patient welfare and good medical practice, as when medically necessary care is all too often denied.

In the United States, this system has clearly been a highly unsatisfactory tool for reining in the wastefulness and excesses of fee-for-service healthcare and we should not repeat these avoidable experiences with profit-driven managed care.

CHAN CHEE KHOON is the co-ordinator of Citizens Health Initiative, a non-governmental organisation involved in issues concerning public health.