Chile
The current health system in Chile began to take shape in 1952, with the creation of the National Health Service (SNS), which united different public health service providers and centralized nearly 90% of public health resources under one entity. It provided healthcare services and medicine free of charge to blue-collar workers and the indigent, which accounted for approximately 60% of the population. The Ministry of Health followed suit in 1959, taking on the responsibility for coordinating and controlling public health issues. Finally, in 1969 the National Medical Services for Employees (SERMENA) was created for white collar workers, who accounted for 25% of the population. Throughout their existence, both SNS and SERMENA were funded by tax revenues, payroll contributions, and out of pocket payments. During the 1960s and 1970s, centralized planning was the dominant feature of the political, economic, and organizational spheres of health sector evolution.
The current health system in Chile began to take shape in 1952, with the creation of the National Health Service (SNS), which united different public health service providers and centralized nearly 90% of public health resources under one entity. It provided healthcare services and medicine free of charge to blue-collar workers and the indigent, which accounted for approximately 60% of the population. The Ministry of Health followed suit in 1959, taking on the responsibility for coordinating and controlling public health issues. Finally, in 1969 the National Medical Services for Employees (SERMENA) was created for white collar workers, who accounted for 25% of the population. Throughout their existence, both SNS and SERMENA were funded by tax revenues, payroll contributions, and out of pocket payments. During the 1960s and 1970s, centralized planning was the dominant feature of the political, economic, and organizational spheres of health sector evolution.
In 1973, Augusto Pinochet came to power in a coup d’état. The emergence of a military government brought with it new health policy initiatives based on a limited role for the state, free market policies, and support for private business. In order for the health sector to align with the ideology of the regime, institutional reforms were undertaken in 1979. The first step entailed the creation of the National Health Services System (SNSS). This system would initiate the process of decentralization, establishing normative and regulatory functions within the Ministry of Health (MOH), operational functions within three separate ministries, and financing functions within the National Health Fund (FONASA). The MOH issued central directives to 13 new regional health divisions and 26 new local health divisions across the country. These divisions would be responsible for medical personnel and for executive functions including the provision of curative and preventive services. In 1981, legislation established a private health insurance system within Chile, spurring the creation of Health Insurance Institutions (ISAPREs) with the responsibility for collecting premiums and providing health services in return. This action completed the process of health system reforms under the military regime.
Chile
Historical Context
The current health system in Chile began to take shape in 1952, with the creation of the National Health Service (SNS), which united different public health service providers and centralized nearly 90% of public health resources under one entity. It provided healthcare services and medicine free of charge to blue-collar workers and the indigent, which accounted for approximately 60% of the population. The Ministry of Health followed suit in 1959, taking on the responsibility for coordinating and controlling public health issues. Finally, in 1969 the National Medical Services for Employees (SERMENA) was created for white collar workers, who accounted for 25% of the population. Throughout their existence, both SNS and SERMENA were funded by tax revenues, payroll contributions, and out of pocket payments. During the 1960s and 1970s, centralized planning was the dominant feature of the political, economic, and organizational spheres of health sector evolution.
In 1973, Augusto Pinochet came to power in a coup d’état. The emergence of a military government brought with it new health policy initiatives based on a limited role for the state, free market policies, and support for private business. In order for the health sector to align with the ideology of the regime, institutional reforms were undertaken in 1979. The first step entailed the creation of the National Health Services System (SNSS). This system would initiate the process of decentralization, establishing normative and regulatory functions within the Ministry of Health (MOH), operational functions within three separate ministries, and financing functions within the National Health Fund (FONASA). The MOH issued central directives to 13 new regional health divisions and 26 new local health divisions across the country. These divisions would be responsible for medical personnel and for executive functions including the provision of curative and preventive services. In 1981, legislation established a private health insurance system within Chile, spurring the creation of Health Insurance Institutions (ISAPREs) with the responsibility for collecting premiums and providing health services in return. This action completed the process of health system reforms under the military regime.
The political process of decentralization and privatization of the health system was carried out by Augusto Pinochet, who came to power in 1973. Because of the extensive use of the state-run health system by the Chilean population, some have argued that Pinochet delayed privatizing the health sector until privatization had proven itself in other, less political, sectors. Pinochet’s regime was devoutly capitalist and anti-communist, espousing that the state’s role did not extend beyond safeguarding its patrimony. Pinochet believed that favoring public over private actors in the economy stunted competition and limited growth. This thought process stemmed from the influence of the Chicago Boys, a group of economists who studied under Milton Friedman at the University of Chicago. Between 1973 and 1980, state enterprises fell from 460 to 23. Such market-oriented economic policies led to health sector budget cuts, and to the decentralization and privatization of health services.
The political process of decentralization and privatization of the health system was carried out by Augusto Pinochet, who came to power in 1973. Because of the extensive use of the state-run health system by the Chilean population, some have argued that Pinochet delayed privatizing the health sector until privatization had proven itself in other, less political, sectors. Pinochet’s regime was devoutly capitalist and anti-communist, espousing that the state’s role did not extend beyond safeguarding its patrimony. Pinochet believed that favoring public over private actors in the economy stunted competition and limited growth. This thought process stemmed from the influence of the Chicago Boys, a group of economists who studied under Milton Friedman at the University of Chicago. Between 1973 and 1980, state enterprises fell from 460 to 23. Such market-oriented economic policies led to health sector budget cuts, and to the decentralization and privatization of health services.
In 2000, Ricardo Lagos assumed the presidency of Chile and put in place the process that would lead to the AUGE plan. Early in his term, he established a committee to analyze and propose changes to the health system. This committee was composed of members from the Medical Doctors Professional Association, health workers unions, and private health providers. The committee concluded that four objectives were necessary to tackle the challenges within the health sector: (1) improve health indicators, (2) address the demands from an aging population, (3) close inequalities among socioeconomic groups, and (4) improve the scope, quality, and access to services.
The Medical Doctors Professional Association rejected the legislation that emerged from the committee’s recommendations. They feared that AUGE would restrict their professional autonomy and weaken their bargaining power with the National Health Fund (FONASA) and the Health Insurance Institutions (ISAPREs), negatively affecting their income. The ISAPREs were also against the reform, as they feared that an increase in spending would hurt their profitability. The resulting stalemate caused significant disruptions within the health system for approximately six months, until the president supported the reform and established a series of accords with health workers. One of the outcomes of the divide was a withdrawal from the proposal to establish a solidarity fund that would transfer resources between ISAPREs based on their actuarial risk portfolios. The AUGE plan went into operation in 2005.
Chile
Political Context
The political process of decentralization and privatization of the health system was carried out by Augusto Pinochet, who came to power in 1973. Because of the extensive use of the state-run health system by the Chilean population, some have argued that Pinochet delayed privatizing the health sector until privatization had proven itself in other, less political, sectors. Pinochet’s regime was devoutly capitalist and anti-communist, espousing that the state’s role did not extend beyond safeguarding its patrimony. Pinochet believed that favoring public over private actors in the economy stunted competition and limited growth. This thought process stemmed from the influence of the Chicago Boys, a group of economists who studied under Milton Friedman at the University of Chicago. Between 1973 and 1980, state enterprises fell from 460 to 23. Such market-oriented economic policies led to health sector budget cuts, and to the decentralization and privatization of health services.
In 2000, Ricardo Lagos assumed the presidency of Chile and put in place the process that would lead to the AUGE plan. Early in his term, he established a committee to analyze and propose changes to the health system. This committee was composed of members from the Medical Doctors Professional Association, health workers unions, and private health providers. The committee concluded that four objectives were necessary to tackle the challenges within the health sector: (1) improve health indicators, (2) address the demands from an aging population, (3) close inequalities among socioeconomic groups, and (4) improve the scope, quality, and access to services.
The Medical Doctors Professional Association rejected the legislation that emerged from the committee’s recommendations. They feared that AUGE would restrict their professional autonomy and weaken their bargaining power with the National Health Fund (FONASA) and the Health Insurance Institutions (ISAPREs), negatively affecting their income. The ISAPREs were also against the reform, as they feared that an increase in spending would hurt their profitability. The resulting stalemate caused significant disruptions within the health system for approximately six months, until the president supported the reform and established a series of accords with health workers. One of the outcomes of the divide was a withdrawal from the proposal to establish a solidarity fund that would transfer resources between ISAPREs based on their actuarial risk portfolios. The AUGE plan went into operation in 2005.
Today, Chile’s health system is composed of mandatory health insurance that can be either public or private. Public insurance is offered through a single non-profit provider, the National Health Fund (FONASA). Private insurance can be purchased from many for-profit or not-for-profit private health insurance institutions known as ISAPREs. All formal sector workers who are not self-employed, self-employed workers with a retirement fund, and all retirees with a pension must enroll with either the public or private plan by paying 7% of their income or pension per month, up to a monthly income limit of approximately $2,000USD. Legally certified indigent citizens and the unemployed receive free coverage through FONASA.
Today, Chile’s health system is composed of mandatory health insurance that can be either public or private. Public insurance is offered through a single non-profit provider, the National Health Fund (FONASA). Private insurance can be purchased from many for-profit or not-for-profit private health insurance institutions known as ISAPREs. All formal sector workers who are not self-employed, self-employed workers with a retirement fund, and all retirees with a pension must enroll with either the public or private plan by paying 7% of their income or pension per month, up to a monthly income limit of approximately $2,000USD. Legally certified indigent citizens and the unemployed receive free coverage through FONASA.
In 2005, a new set of Explicit Health Guarantee (GES) laws came into effect. An important facet of these laws is the Universal Access and Explicit Guarantees (AUGE) plan, which details coverage guarantees for 56 health problems. The plan was adopted gradually in order to mitigate fiscal pressure, with 25 problems guaranteed by 2005 and an additional 31 problems guaranteed by 2007. The AUGE plan requires that public and private health service providers supply the minimum services that will lead to successful clinical outcomes under a peremptory period of time. These guarantees do not pretend to be a basic health system. Rather, the guarantees make explicit rights to certain procedures that previously fell under the purview of general health rights. The AUGE plan, therefore, is conceived as a subset of the broader health system.
Prior to this reform, many types of health services were provided within the public system, but with limited access, quality, and financial protection. In FONASA access to different types of medical treatments faced widespread rationing through long queues. With the institution of the AUGE plan, citizens are now legally empowered to demand the established guarantees for access, quality, opportunity, and financial protection. The plan emphasizes prevention, early examination, and primary care, although the majority of its guaranteed services are curative, half of them are for chronic diseases. It also defines a maximum waiting period for the treatment of each condition, the procedures and technologies to be used, and the maximum amount that a patient will spend on health per year. Patients under AUGE are aware of the specifications of minimum service provisions during suspicion of disease, diagnostics, treatment, and follow-up.
The 56 problems were chosen based on a qualitative algorithm that captured the following variables: (1) burden of disease of different conditions, (2) inequity in mortality among socioeconomic groups, (3) effectiveness of treatment, (4) capacity of the health system to deliver the necessary services, (5) high-cost conditions, and (6) people’s preferences. The primary criterion for the selection of the diseases was Disability-Adjusted Life-Years (DALYS), which is the sum of years of potential life lost due to premature mortality and the years of productive life lost due to disability. The 56 health conditions account for approximately 75% of the disease-burden and 50% of all hospitalizations within Chile. In 2008, a pilot program with an additional 7 diseases was implemented under the public provider system. In 2009, this pilot program grew by an additional 2 disease conditions. The AUGE Plan reform also created the Network Sub-secretariat under the MOH in order to insure that human resources, infrastructure, and transportation logistics are adequate to meet AUGE guarantees.
Chile
Summary of Reforms
Today, Chile’s health system is composed of mandatory health insurance that can be either public or private. Public insurance is offered through a single non-profit provider, the National Health Fund (FONASA). Private insurance can be purchased from many for-profit or not-for-profit private health insurance institutions known as ISAPREs. All formal sector workers who are not self-employed, self-employed workers with a retirement fund, and all retirees with a pension must enroll with either the public or private plan by paying 7% of their income or pension per month, up to a monthly income limit of approximately $2,000USD. Legally certified indigent citizens and the unemployed receive free coverage through FONASA.
In 2005, a new set of Explicit Health Guarantee (GES) laws came into effect. An important facet of these laws is the Universal Access and Explicit Guarantees (AUGE) plan, which details coverage guarantees for 56 health problems. The plan was adopted gradually in order to mitigate fiscal pressure, with 25 problems guaranteed by 2005 and an additional 31 problems guaranteed by 2007. The AUGE plan requires that public and private health service providers supply the minimum services that will lead to successful clinical outcomes under a peremptory period of time. These guarantees do not pretend to be a basic health system. Rather, the guarantees make explicit rights to certain procedures that previously fell under the purview of general health rights. The AUGE plan, therefore, is conceived as a subset of the broader health system.
Prior to this reform, many types of health services were provided within the public system, but with limited access, quality, and financial protection. In FONASA access to different types of medical treatments faced widespread rationing through long queues. With the institution of the AUGE plan, citizens are now legally empowered to demand the established guarantees for access, quality, opportunity, and financial protection. The plan emphasizes prevention, early examination, and primary care, although the majority of its guaranteed services are curative, half of them are for chronic diseases. It also defines a maximum waiting period for the treatment of each condition, the procedures and technologies to be used, and the maximum amount that a patient will spend on health per year. Patients under AUGE are aware of the specifications of minimum service provisions during suspicion of disease, diagnostics, treatment, and follow-up.
The 56 problems were chosen based on a qualitative algorithm that captured the following variables: (1) burden of disease of different conditions, (2) inequity in mortality among socioeconomic groups, (3) effectiveness of treatment, (4) capacity of the health system to deliver the necessary services, (5) high-cost conditions, and (6) people’s preferences. The primary criterion for the selection of the diseases was Disability-Adjusted Life-Years (DALYS), which is the sum of years of potential life lost due to premature mortality and the years of productive life lost due to disability. The 56 health conditions account for approximately 75% of the disease-burden and 50% of all hospitalizations within Chile. In 2008, a pilot program with an additional 7 diseases was implemented under the public provider system. In 2009, this pilot program grew by an additional 2 disease conditions. The AUGE Plan reform also created the Network Sub-secretariat under the MOH in order to insure that human resources, infrastructure, and transportation logistics are adequate to meet AUGE guarantees.
The capacity of different municipalities to contribute additional resources for primary health varies widely. Per capita payments from the central government adjusted for geographic region and poverty are insufficient. As a result, the MOH has begun to conduct in-depth analyses in order to ensure equitable financing for primary health.
The capacity of different municipalities to contribute additional resources for primary health varies widely. Per capita payments from the central government adjusted for geographic region and poverty are insufficient. As a result, the MOH has begun to conduct in-depth analyses in order to ensure equitable financing for primary health.
Chile is also facing a substantial demographic transition over the next 40 years. In 2002, 11.4% of the Chilean population was over the age of 60. By 2025, the Chilean population over 60 years of age is expected to reach 20%. By 2050, however, it is projected that the Chilean population over 60 years of age will reach 28%. Seniors are currently consuming 30% of public health spending. This suggests a growing financial load on the state that will require innovative solutions in order to maintain a sustainable fiscal space.
Chile
The Way Forward
The capacity of different municipalities to contribute additional resources for primary health varies widely. Per capita payments from the central government adjusted for geographic region and poverty are insufficient. As a result, the MOH has begun to conduct in-depth analyses in order to ensure equitable financing for primary health.
Chile is also facing a substantial demographic transition over the next 40 years. In 2002, 11.4% of the Chilean population was over the age of 60. By 2025, the Chilean population over 60 years of age is expected to reach 20%. By 2050, however, it is projected that the Chilean population over 60 years of age will reach 28%. Seniors are currently consuming 30% of public health spending. This suggests a growing financial load on the state that will require innovative solutions in order to maintain a sustainable fiscal space.
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