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Accidental tourist

The rejection in May of the draft EU Constitution by the French and the Dutch was more than just a rejection of increased interference in domestic politics by Brussels-based Eurocrats.

touristFree movement of patients across the EU is grave concern for health ministries.  The rejection in May of the draft EU Constitution by the French and the Dutch was more than just a rejection of increased interference in domestic politics by Brussels-based Eurocrats. It was a rejection of the economic and social model which has come to dominate the EU over the past decade.

The chief target of 'non' campaigners, in France in particular, was a legislative proposal from the European Commission, known officially as the Directive on Services in the Internal Market. Although only part of the broader drive to extend the EU's free trade rules to such things as healthcare and social services, the directive became a symbol of all that is wrong with the current direction of the European project.

Creation of an EU-wide market in all types of services ranging from legal and advertising offerings, through to tourist and construction services, is the goal for the directive. It aims to achieve this by preventing Member States from introducing rules which would stop multinationals from being able to establish and operate on their territory.

Despite its arcane and highly technical nature, the proposal has succeeded in arousing anger and suspicion across the older Member States.

Not only have mass demonstrations taken place in Belgium, France and Sweden, angry public sector workers in France took direct action against the now retired commissioner and author of the proposal, Fritz Bolkestein, by cutting off the electricity supply to his holiday home in the South of France.

One controversial clause in the Bolkestein Directive, as it has become known, would require Member States to abide by the 'country of origin principle'. Under this rule, businesses that establish themselves temporarily in Member States will be required to abide only by the rules of the country from which they originate.

With the enlargement of the EU to include poorer Member States in the East, many of the richer countries fear an influx of Eastern-based companies operating in accordance with lower health and safety standards, and poorer terms and conditions of employment.

However, the part of the proposal which caused most outrage in the older Member States was the inclusion of healthcare services within the scope of the directive. By including health within the directive, the Commission signalled that it believes healthcare services should be subject to the same market opening rules as all other services. Even for supporters of the directive, like the UK government, this went too far.

Healthcare services across the EU had been understood by the general public as beyond the reach of the EU law makers.

As a result of the uproar surrounding the draft proposal, the commissioner who took over from Bolkestein, Charlie McCreevy, admitted in March that the directive as currently drafted, won't fly and that major changes would have to be made to get the proposal through the Council of Ministers and the European Parliament. In particular, he suggested that healthcare along with other public services would be excluded from the next draft of the proposal.

With the publication in May this year of the European Parliament's first response to the directive, it is now almost certain any services directive that becomes law will not cover healthcare.

Yet this is far from the end of the matter for Member States, since the EU has had a hand in national health policy for some time now. As the Commission has regularly pointed out, the Bolkestein Directive is merely a mechanism for getting Member States to abide by the market opening requirements demanded by the EC Treaty and EU law.

Irrespective of what happens to the directive, the impact of EU law on national healthcare systems will still be significant.

Social or economic
Healthcare was part of the draft directive not because of the ideological tendency of one EU commissioner, but a series of European Court of Justice (ECJ) rulings that have transformed EU health policy.

In the highly significant Kohll and Decker ruling of 1998, the ECJ confirmed that healthcare services are an 'economic', rather than a social, activity under EU law. More importantly, it required Member States to allow patients, who experienced undue delays in receiving treatment, to travel to other Member States to receive hospital care; all paid for by their own national healthcare systems.  Placing restrictions on patient movement was considered by the court to be an illegitimate barrier to free trade.

By using the articles of the EC Treaty, which require Member States to permit free movement of services, the ECJ entrenched in law the idea that healthcare services are a commodity that can, and should, be traded much like any other good.

It also seemed right for the Commission to include healthcare in a market opening directive, when a market in healthcare services in Europe is clearly developing.

This, in part at least, is due to reforms introduced by Member States. Previously, the EU treated healthcare as purely 'social' services, which could not be subject to the rules governing free movement or free competition. This was because in the majority of EU countries, the state played a big role in providing these services to people at no, or very low, cost.

Since the early 1990s, private firms have been heavily involved in most national healthcare systems. As they began to make profits, the logic of EU law meant that it was difficult for the Commission to treat them as different from any other industry. Indeed, the private healthcare market in Europe is growing all the time.

Even if healthcare is now excluded from the directive, the furore over Bolkestein has at least woken up domestic health ministries to the possible ways in which EU trade law will affect national systems. In the UK, the Department of Health now has a team of civil servants dedicated to examining what the Bolkestein Directive and ECJ rulings could mean for the NHS.

Cause for concern
An area of concern for health ministries is the impact that the free movement of patients across the EU may have on the financing of national healthcare systems.

Many new Member States, such as Hungary and Poland, see healthcare tourism in the EU as an important source of income. In fact, Hungary named 2003 the 'Year of Health Tourism' and has private hospital facilities dedicated to treating overseas patients.

A boom in EU-wide health tourism, which could result from the new rights granted to patients to receive funded healthcare anywhere in the EU, could undermine the financial stability of many national health systems.

There is the question of which set of standards healthcare providers will be required to abide by. As in any market, the regulation of standards is a crucial aspect in ensuring consumer confidence, as well as basic health and safety protection. Yet, in the health sector, the risks are so high and the level of consumer information so low that national governments have, historically, intervened to ensure high standards in medical treatment.

For other products, the EU has produced European-wide standards, or harmonised national rules, to provide legal certainty for business and protection for consumers.But in seeking to create an EU-wide market in health services, neither the Commission nor the Court has proposed a set of standards that are applicable to all operators.

Instead, as Thierry Stoll of the European Commission told the UK Parliament earlier this year: We believe that the starting point should be that Member States accept that, give or take a couple of exceptions, their legislative regimes are basically comparable and do not subject their citizens to unreasonable risks.

Full harmonisation prior to free move-ment is therefore not required [...] If you want to have everybody starting from exactly the same position, then you lose the whole incentive of competition and you stifle innovation.

This approach has led some to fear a 'race to the bottom', where firms will seek to operate within the least stringent regulations. Its use has already been questioned with regard to the freedom of medical personnel to operate anywhere in the EU.

Under directives covering the mutual recognition of professional qualifications, Member States are required to allow foreign doctors to operate as long as they have had the minimum training required in their own country. However, this training can differ between countries, raising concerns that variations in standards will persist.

Despite many Member States embracing the ideology of markets in healthcare services, national governments are almost unanimous in their desire to prevent the Commission and the Courts from meddling with their domestic healthcare systems.

In fact, the draft EU Constitution and the existing EC Treaties show that the EU has no formal powers to determine national healthcare policy. Indeed, Article 152 of the EC Treaty, which is currently in force, specifically states that the EU shall 'fully respect the responsibilities of the Member States for the organisation and delivery of health services and medical care'.

The problem that governments now face is that control of health policy is being decided by the Commission and the Court by the back door, using only free market and business considerations as a guide.

While national health ministers in the EU are getting their act together, establishing health discussion forums in Brussels, the development of a comprehensive EU health policy, which promotes the social aspect of European healthcare systems, is still a distant reality.

If the EU is to regain the legitimacy it so badly needs, it cannot just remove the standards and entitlements that have provided security to millions over the past 50 years. It needs to offer something better in its place.

With the future direction of the EU now up for debate, a good start would be to enshrine a legal right to healthcare based on the principle of equal care for equal need and provided in accordance with a set of high-quality standards which are enforceable across the EU.

If a commercial market in EU health services is to develop, it should be regulated by the principle of social solidarity in keeping with Europe's highly successful welfare tradition.

The Author
David Rowland is a research fellow at The School of Public Policy, University College London, UK

2nd September 2008

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