I am Canadian and an having a baby with an American. I am having the baby in Canada due to free healthcare. But we are wondering if our baby with automatically have dual citizenship? If not how difficult it will be to get?

Yes, your baby can have dual citizenship. The USC must register, within 60days, that the birth has taken place abroad.

No, but you must report the birth at one of the American consulates in Canada. The consulate will issue a US passport to the child if qualifies for US citizaenship.

I thought the USC had to report that the birth took place abroad... at least that's what I knew from the past. Things may have changed.

Yes will be dual citizen, all you need to do for USA citizenship, is register the birth at the US consulate. Canada recognizes dual citizenship, so citizenship will not be given up when birth is registered at the US consulate.

http://travel.state.gov/law/family_issues/.../birth_593.html

A Good read: http://www.richw.org/dualcit/

Note that both of you will have to travel to the consulate to present the child to the CO. Make sure you get a Canadian and US passport for your child before you leave the country.