Chilean Health Reform Challenges & Pitfalls

1. Chilean Health ReformChallenges & Pitfalls Rodrigo Castro, PhD(c) Libertad & Desarrollo www.lyd.org

2. Outline Main Issues • How is Chilean health status? • Why does AUGE arise? • What does AUGE mean? • How much does AUGE cost? • Will it be worth it? • What are the main challenges in our health care system?

3. Since 1990 public health sector have thrown three times more money with a low productivity

4. Expenditure Public Health Expenditure (mill $2002) How much to spend?

5. Expenditure Public & Private Per capita expenditure How much to spend?

6. How is Chile’s health status ?

7. Health Status Basic Health Stats • On basic health indicators, Chile scores well. • Infant and maternal mortality are among the lowest in LAC. • Average life expectancy is almost 76 years, up from just over 60 years in the early 1970s. • These achievements are mainly due to investments in public goods (child health control), sanitation, water and sewage etc.

8. Health Status Statistics Infant Mortality General Mortality

9. Health Status Demographic Indicators Statistics Source : INE

10. Health Status Statistics Main death causes Source : INE

11. Health Status International Comparison Statistics Notes: (1) % GDP (2) in USD PPP (3) 1998, each 100.000 NB Source: World Development Report 2000/2001

12. Health Status Organization • 2 systems • Poorly linked • Population is segmented by risk and income • Centralism • Historical public policies • Big public sector, was design in the 1950s • Inercy • There is no leaderships • Interest groups have important power

13. Health Status Organization • Poorly management performance due to wrong incentives: • Financing does not follow good management practices. • Human Resources policy is poorly defined. • There is no competition between public hospitals. • Unfair competition against private sector (Chart). • Public hospitals which must offer free care to the poor, are overstretched and grossly inefficient Chart. • Since 1990 have thrown more money –three times more- with low productivity (Chart).

14. Health Status Public Health System Productivity Management Source: Rodríguez & Tokman, 2000

15. Health Status Management Outgoing patients per bed Source: Asociación de ISAPRES

16. Health Status Unfair Competition Subsidy due to fiscal aid Assumption: household of three persons

17. Health Status Private Insurance • Poor with no access (Chart). • Different rules of the game : law does not support integration and competition. • Information and coverage problems: health plans aim to ambulatory care and only does not cover high cost treatments. • Health cost increase due to information assymetriesbetween users-physicians-insurer, new diseases. • Discrimination by age/gender/diseases (Chart)

18. Health Status Costs by Gender and Age Risk Selection by gender/ age/illness

19. Health Status No Access to Poor Health Insurees by income level 2001 (M$)

20. Health Status What’s the problem? • Policy experts believe that current health system won’t be able to face with reasonable sucess the future sanitary challenges.

21. Why does AUGE arise?

22. AUGE’s Philosophy Causes: • Political issues • Average conceals glaring inequality • Population low satisfaction

23. AUGE’s Philosophy Political issues • “Improve health for all, lowering life lost because of premature mortality or disability (DALYS) as well as, lowering health inequalities, improving health conditions of riskier groups” Sanitary Goals 2000-2010

24. AUGE’s Philosophy Infant Mortality in local governments Inequality Gap

25. 35,0 30,0 25,0 Mortality rate (100K NB) 20,0 15,0 10,0 5,0 0,0 Average 00 01-03 04-06 07-09 10-12 13-+ Mother’s Years of Schooling Neonatal Post-neonatal AUGE’s Philosophy Infant Mortality by mother’s years of schooling Health Inequality

26. AUGE’s Philosophy Mortality rates adjusted by years of schooling Inequality Gap

27. That mirrors our unequal income distribution

28. AUGE’s Philosophy Income Inequality Ratio 20/20: increase from 9 to 13 times between 1970-00 Source: Data 1970-1980, U of Chile. Data 90-2000, Household Survey, CASEN

29. AUGE’s Philosophy Public Opinion about their health condition order by income quintiles Low Satisfaction Source: CASEN 2000

30. AUGE’s Philosophy Low Satisfaction Public Hospitals long waiting lists Source: Altura Management

31. AUGE’s Philosophy Low satisfaction Public Hospital Waiting Lists

32. AUGE’s Philosophy Low Satisfaction Patients in waiting list and weeks Source: Altura Management

33. AUGE’s Philosophy 4 Challenges • Demographic changes • Inequalities gaps • Population Expectations • Solve pending problems and enhance sanitary achievements

34. AUGE’s Philosophy Why do we need to guarantee? • Because people need to know what to expect from health system and what they should do if their expectations are not fulfill. • It points out an issue: health care is getting more expensive and current health care system is not able to insurance “everything to everyone”.

35. AUGE’s Philosophy What kind of guarantee? • Ideal: total coverage • Reality: set up priorities, direct resources where they are most needed, while encouraging patients to demand their rights. • How do we define it? • Technical criteria • National Sanitary Goals • Financial criteria and • Social and political criteria

36. What does AUGE mean?

37. AUGE Definition • Sanitary instrument which enhance equity and aims to achieve sanitary and social protection goals • Set up health guaranteed plan • EXPLICIT GUARANTEE • Access • Opportunity • Quality • Financial protection

38. AUGE Components • Collective: • Collective and individual actions • Prevention and promotion • Individuals: • Current ailments offered by FONASA (Public Health Insurance Fund) • Priorities with maximum or intermediate guarantee

39. AUGE How does it work? • Ailments’ set up: • MINSAL has to define ailments every 3 years. • Advise by Consultive Council • Approve by joined Supreme Decree of MoH and MoF

40. AUGE How does it work? • FONASA and ISAPRES would have to offer to their beneficiaries • Guarantee will enhance insurees’ rights.

41. AUGE What does include? • Minimum Health Care Plan will offer guaranteed free or low-cost treatment for 56 ailments that between them are responsible for three-quarters of years of life lost because of premature or disablement.

42. AUGE What does it include? • AUGE - Pilot: • Heart disease • Kidney failure • Infant cancer • Pain Treatment • Uterous cancer

43. AUGE However,....

45. How much does it cost?

46. Health Care Financing Cost estimation • Government says the reform will add an extra USD 230m to Chile’s total spending on health of USD 4.3billion (or 6%of GDP). Most extra money would come from the public purse. • But, likely this reform will cost much more than that...

47. Health Care Financing Some bad news… • Is not the only reform that needs financial aid • Rema, no más... Mira que tenemos que pagar el Chile Solidario, el Auge, las compensaciones por la baja de aranceles, la descontaminación de Santiago, las aguas lluvia, la crisis de la educación, el hoyo de la salud, la compra de tierras para los mapuches, el Miramar, las víctimas de los DD.HH., las obras para celebrar el bicentenario, la plata de los partidos políticos, las deudas de los municipios, los...

48. Health Care Financing What does it include ? • AUGE - Pilot: • Heart diseases • Kidney failure • Infant cance • Pain treatment • Uterous cancer MillionsUS 1.84 5.38 0.61 0.61 0.92 Total 9.36

49. Health Care Financing Resources • Where do we get these resources?

50. Health Care Financing • Solidarity Compensation Fund • Solidarity in health care is rather limited in the present Chilean health care system. Money does not follow health needs. • Also, private insurers are not really forced to compete on quality and efficiency of health care, but rather compete on risk selection (cream-skimming) which is a waste of resources.