Unified Health System (SUS)

Coverage Level: 143 million
Types of Benefits:
Primary Source of Funding:
Provider Payment Mechanisms:
Program Summary: 
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The 1988 constitution crystallized the movement toward democratization. One of the primary tenets of this new constitution was the de jure establishment of free, universal healthcare. Such a goal would be pursued through the Unified Health System (SUS), a newly established administrative body responsible for the stewardship of both the public and private health systems. The primary purpose of the SUS was to decentralize health policy down to the level of the state and municipality, with municipalities responsible for managing and providing primary health care services. States would assist in setting policy goals and provide technical and financial assistance. Under the new legislation, municipal health secretariats were the primary entities responsible for planning, managing, and administering most aspects of health care. Most federal hospital and ambulatory health services were transferred to both state and municipal secretariats, which now had to staff hospitals, contract out services to the private sector, and provide community outreach services. The majority of public hospitals run by municipalities tend to be small facilities, with larger hospitals being operated by the states and the largest teaching hospitals being operated by the federal government.

The 1988 constitution crystallized the movement toward democratization. One of the primary tenets of this new constitution was the de jure establishment of free, universal healthcare. Such a goal would be pursued through the Unified Health System (SUS), a newly established administrative body responsible for the stewardship of both the public and private health systems. The primary purpose of the SUS was to decentralize health policy down to the level of the state and municipality, with municipalities responsible for managing and providing primary health care services. States would assist in setting policy goals and provide technical and financial assistance. Under the new legislation, municipal health secretariats were the primary entities responsible for planning, managing, and administering most aspects of health care. Most federal hospital and ambulatory health services were transferred to both state and municipal secretariats, which now had to staff hospitals, contract out services to the private sector, and provide community outreach services. The majority of public hospitals run by municipalities tend to be small facilities, with larger hospitals being operated by the states and the largest teaching hospitals being operated by the federal government.

Implementation of the SUS has been piecemeal, as new legislative programs have been added to its initial 1988 framework. In 1991, the first Basic Operational Standards (NOB) were passed; the second and third NOBs were added in 1993 and 1996 respectively. The purpose of these legislative programs was to increase the involvement and capacity of state and municipal governments in health care management. Between 1996 and 2000, the number of municipalities deemed capable of managing the health system increased from 30% to 99%. This allowed for the direct transfer of resources from both federal and state funds into municipal funds. It is worth pointing out, however, that oftentimes the process of certifying a municipality as capable was political and did not in fact mean that the municipality was able to operate the local health system. To this day, many municipalities lack the capacity to operate an effective delivery system.

In 1994, the government created the Family Health Program (PSF) and the Community Health Agents Program (PACS). The PSF provides primary care services through medical teams consisting of a physician, a nurse, and community health workers. PACS provides a more restricted set of services than the PSF and employs primarily community health workers to deliver care. The last NOB in 1996 introduced financial incentives by the Ministry of Health for mayors to implement and manage the PSF and the PACS. Since then, implementation of these programs has expanded significantly.

The PSF is the program through which the government restructured the organization and delivery of publicly financed primary health care (it has recently taken on the role of covering chronic diseases). In essence, it has turned a passive, facility-based delivery system into an active, outreach model in which family health care providers deliver care to households and communities.

Funding: 
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Federal resources originating in a pool of value-added, general income, financial operations and insurance, export, and import taxes flow into the National Health Fund (NHF), which then funnels resources in five separate directions. First, the NHF transfers resources to both the State Health Funds (SHF) and the Municipal Health Funds (MHF), which are responsible for consolidating resources from the different sources. Second, the NHF transfers resources to public and private hospitals, public and private health care providers, and to special health programs such as the PSF. The same type of resource re-allocation occurs at both the state and municipal levels, with the following exceptions. (1) The State Health Fund only transfers resources to the Municipal Health Fund, and (2) the Municipal Health Fund does not transfer resources to any other administrative bodies. The Health Secretariats at both the State and Municipal levels oversee the administration of funds provided by the different sources.

Federal resources originating in a pool of value-added, general income, financial operations and insurance, export, and import taxes flow into the National Health Fund (NHF), which then funnels resources in five separate directions. First, the NHF transfers resources to both the State Health Funds (SHF) and the Municipal Health Funds (MHF), which are responsible for consolidating resources from the different sources. Second, the NHF transfers resources to public and private hospitals, public and private health care providers, and to special health programs such as the PSF. The same type of resource re-allocation occurs at both the state and municipal levels, with the following exceptions. (1) The State Health Fund only transfers resources to the Municipal Health Fund, and (2) the Municipal Health Fund does not transfer resources to any other administrative bodies. The Health Secretariats at both the State and Municipal levels oversee the administration of funds provided by the different sources.

 Flow of funds within the Unified Health System (SUS)

Funding of the SUS takes place through a variety of resource streams. In 2001, federal funds were transferred to municipalities through 78 different mechanisms and programs, which were linked to particular administrative requirements, as well as planning and control instruments. Some of these mechanisms pay for production, while others pay for coverage on a per capita basis. Individuals have argued that such a system could lead to high transaction costs. Indeed, a recent study found that in 2007, private insurance and commercial plans allocated 81% of their revenue for the payment of medical services, whereas the Ministry of Health allocated only 66% of its resources to such an end.

There are five primary funding mechanisms through which the National Health Fund channels resources for services rendered under the SUS.

  1. Direct payment to service providers by the MOH. These are reimbursements for costs assumed by private and public providers. This is done in a fashion similar to the Diagnostic Related Groups (DRGs) in the US. Such remuneration can be affiliated with hospitalizations and ambulatory costs incurred by SUS-associated providers.
  2. Direct transfer to states or municipalities that are fully managed by the SUS for hospitalizations or ambulatory care. Such transfers are based on prior budgets and on future costs agreed to between states, municipalities and the federal government. The MOH also transfers funds for complex procedures like organ transplants and surgeries.
  3. Transfers to special programs for health promotion and disease prevention. These programs include tuberculosis and diabetes.
  4. Transfers to states for activities within the municipalities associated with payments for special medications for patients with chronic diseases, sanitation, and for programs such as PSF.
  5. Direct transfers to municipalities for basic health activities. These transfers include per capita payments for the financing of the basic health program (PAB), the PSF, the PACS, nutritional programs, and contagious diseases programs.

Between 1985 and 1996, federal financing for public health fell from 73% to 54% of public resources for health. Meanwhile, municipalities augmented their total share of national health costs from 9% to 28%, while states remained at 18%. During this same time period, looking at the responsibility for spending those resources, the federal share fell from 67% to 46%, while that of the municipalities increased from 10% to 35%. In other words, there has been a clear progression towards municipal responsibility for both the mobilization and utilization of resources.

In 2001, a constitutional amendment declared that federal funds must be allocated in an amount equal to the prior year’s budget, adjusted for GNP, starting with the 1999 budget as a reference. Furthermore, the amendment stipulated that states and municipalities must increase their health spending until it reaches 12% of the state budget and 15% of the municipal budget. However, the amendment did not define what could and could not be considered an expense. Therefore, state and local governments began including expenses such as food stamps and care for prisoners that had previously been accounted for elsewhere. Thus it is difficult to ascertain which municipalities and states actually increased public health activities and attempted to improve the delivery of care.

Funding for the Family Health Program (PSF) by the national government consisted of a flat, one-time transfer for establishing a new PSF team. Thereafter, variable transfers are meant to incentivize continuous expansion of coverage. Table II highlights the incentives in place for the expansion of the PSF in 2002.

Table 1: Financial Incentives for the Family Health Program

LevelPopulation coverageAmount per team per year ($R)
10 to 4.9%R$ 28.008,00
25 to 9.9%R$ 30.684,00
310 to 19.9%R$ 33.360,00
420 to 29.9%R$ 38.520,00
530 to 39.9%R$ 41.220,00
640 to 49.9%R$ 44.100,00
750 to 59.9%R$ 47.160,00
860 to 69.9%R$ 50.472,00
970% and moreR$ 54.000,00

Source: La Forgia, G. (This incentive model was in place during the first 10 years of the Family Health Program. It is no longer in use.)

The Brazilian health system also has a sizable private health sector known as the Supplementary Health System (SHS). Since 1988, consumption of private health insurance has grown substantially— particularly among the middle class—with private spending rising faster than public spending. Income tax breaks that compensate for private expenses on health care account for some of this growth.

Population covered: 
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Brazil’s health system is based on the notion of free, universal care. In 1998, 71.2% of the population reported that they had a regular-use service. In 2003, this number had increased to 80%. This is significant, since it means that individuals have a service which they use as an entry point into the health system. While 100 % of the population is able to receive services under the SUS, approximately 25% opt for private insurance coverage.

Brazil’s health system is based on the notion of free, universal care. In 1998, 71.2% of the population reported that they had a regular-use service. In 2003, this number had increased to 80%. This is significant, since it means that individuals have a service which they use as an entry point into the health system. While 100 % of the population is able to receive services under the SUS, approximately 25% opt for private insurance coverage.

The Brazilian Supplementary Health System (SHS) served 33 million Brazilians in 2002, or 19% of the population. By 2007, it accounted for more than 50% of health care expenditure, yet it served less than 30% of the population. Health care operators within the SHS are grouped into categories by the Agency for Supplementary Health within the MOH, depending on their economic and financial status. Ordered by market share in 2002, these categories are group medicine, medical cooperatives, health insurance, charity, self-management, group dentistry, and dentistry cooperatives. Most of these plans are connected to employment. The majority of these plans tend to be small or medium in size and operate mostly through contractual arrangements with doctors’ offices and hospitals. In 2002, group medicine, medical cooperatives and health insurance served around 80% of supplementary users and accounted for 90% of billing. Initially, private prepayment plans had an incentive not to provide comprehensive coverage to enrollees, as high-cost procedures were usually funneled to the SUS for treatment. However, in 1999, the government instituted a norm that allows it to recover the costs associated with services rendered by the SUS to beneficiaries of private health plans. This norm is implemented through the National Supplementary Health Council (CNSS).

Benefits package: 
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Brazil’s health system offers free, universal coverage. Care under the SUS is divided into basic, specialized, and high complexity categories. Basic care is composed of health promotion and disease prevention. Care is deemed specialized if the intervention requires the use of a medical specialist. Finally, complex care is composed of interventions that require the use of advanced technology and equipment.

Brazil’s health system offers free, universal coverage. Care under the SUS is divided into basic, specialized, and high complexity categories. Basic care is composed of health promotion and disease prevention. Care is deemed specialized if the intervention requires the use of a medical specialist. Finally, complex care is composed of interventions that require the use of advanced technology and equipment.

The PSF’s original priority areas were: women’s health, child health, hypertension, diabetes, tuberculosis, leprosy, HIV, oral health, and health promotion.

Service delivery system: 
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Primary care delivery happens through primary care units and primary care teams under the Family Health Program (PSF). Primary care units are run by municipalities and are mostly managed by government-employed clinicians. These units are funded on a per capita basis based on the population size within the catchment area. While patients can use clinics outside of their area, they may be encouraged or referred back to their corresponding primary care unit.

Primary care delivery happens through primary care units and primary care teams under the Family Health Program (PSF). Primary care units are run by municipalities and are mostly managed by government-employed clinicians. These units are funded on a per capita basis based on the population size within the catchment area. While patients can use clinics outside of their area, they may be encouraged or referred back to their corresponding primary care unit. In some municipalities, primary care units are contracted-out through RFP on a winner-take-all basis to NGOs, who receive similar per capita budgets as government health centers but are not subject to civil service rules. They can more easily hire and fire and some are experimenting with pay for performance mechanisms.

Service delivery within the Family Health Program (PSF) and the Community Health Agents Program (PACS) is the responsibility of the Municipal Health Secretariat. The PSF is the program through which the government reorganized some of the organization and delivery of publicly financed primary health care (In recent years, the PSF has also covered chronic diseases). In essence, it has turned a passive, facility-based delivery system into a dynamic, outreach model in which family healthcare providers deliver care to households and communities. There is a primary care team responsible for a territory of 800-1,000 families, or up to 4,000 people. The team includes a generalist physician, a nurse, a community health agent, and an odontologist or dental hygienist. The team monitors and evaluates the health situation of the population, provides primary care services, and makes referrals to other levels of the system. The number of PSF teams increased from zero in 1994 to close to 32,000 by 2008.

The primary purpose of the PACS is to improve the health and quality of life of the community. PACS utilizes community personnel with no higher education to engage in a wide variety of activities such as registering families, general diagnostics, sanitary health, looking out for critical situations in need of intervention, and overall follow-up with families and patients.

The delivery of secondary and tertiary health care services under the SUS is conducted through both public and private providers. Public contracting of private hospitals has a long history in Brazil, where the SUS contracts for private beds. In 1999, 67% of all SUS hospitals were privately owned, 8% were state owned, and 23% were municipally owned. In terms of clinics, 27% were privately owned, 3% were state owned, and 69% were municipally owned. Such ratios make it clear that while the SUS is a publicly funded system, the private sector is responsible for a large proportion of the services provided.

The role of the private sector in service delivery appears to be waning slightly. Between 1988 and 2005, public establishments offering hospitalizations grew by 50%, while private establishments offering the same grew by 23%.
In 2005, 34% of Brazil’s hospital beds were in public facilities while 66% were in private facilities. Of the beds in the private sector, 82.1% have indicated that they are providing services under the SUS. Thus, there were 55% more beds offering SUS services within the private sector as compared to the public sector.

Public contracting of services with private providers is allowed under MOH guidelines. Managers can complement the supply of services with private providers only when all public health capacity is being used and when the need is proven and justified. Charitable and non-profit organizations, however, are given the status of public sector partners. Furthermore, in order for private entities to be able to provide service to the SUS, they must agree to make available 60% of their capacity to the SUS. These private entities can only serve private users once capacity has been exhausted by SUS patients.

Institutional structures: 
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The Brazilian health system is largely decentralized. Funds collection takes place at the federal, state, and municipal levels, with the municipal level as the final destination for resources. Operations within the Brazilian health system are managed primarily at the state and municipal levels. Finally, federal and state governments have primary responsibility for overseeing the health system, with the Ministry of Health and the state health secretariats taking lead roles.

The Brazilian health system is largely decentralized. Funds collection takes place at the federal, state, and municipal levels, with the municipal level as the final destination for resources. Operations within the Brazilian health system are managed primarily at the state and municipal levels. Finally, federal and state governments have primary responsibility for overseeing the health system, with the Ministry of Health and the state health secretariats taking lead roles.

The Brazilian health system is divided into the Unified Health System (SUS), which encompasses the public provision of health care, and the Supplementary Health System (SHS), which encompasses the private provision of health services. Under the SUS, the federal government is responsible for developing national policies, controlling national regulation, providing technical and financial assistance to states and municipalities, and regulating public-private relations as well as private sector activity. The states are responsible for the regional network, as well as for supervising and providing technical and financial support to the municipalities. The municipalities are responsible for providing health services and health planning.

At the federal level, the Ministry of Health (MOH) is responsible for the health sector. The MOH has counterparts at the state and municipal level which are organized into Secretariats. Each of the secretariats has a health fund responsible for consolidating the financial resources that come from the different sources (i.e. the municipal fund consolidates municipal, state and federal resources while the state fund consolidates state and federal resources).

 Institutional Makeup of the Brazilian Health System

Planning and allocation decisions occur every four years at National Health Conferences (NHC). The most recent one was the 13th NHC in 2007. Conferences occur in stages whereby municipal health councils meet first, followed by state councils, and finally ending with the national conference. The councils are formed by the following types of members: 50% are users of the SUS, 25% are elected representatives from the health professions, and 25% are elected representatives of managers and providers of public health services. The health councils are bodies of the executive branch which include the Ministry of Health, the State Secretary of Health, and the Municipal Secretary of Health. As of 2006, Brazil had 4,390 municipal health councils with at least 100,000 members in total. Most of these municipal councils were formed in 1991. The National Health Council has 48 members and holds monthly plenary meetings, organizes commissions and work groups, and has an executive secretary.

In preparation for each conference, each council produces a priority-setting health policy report concerning a core subject that is predetermined by the NHC. Municipal reports are sent to the state committee and the state reports are sent to the national committee. During the last five days of the last NHC, ten discussion groups debated and voted for the health legislation proposed by the state jurisdictions. Those that received at least 70% of the vote and were approved by 6 out of the 10 discussion groups became policy. Proposals that received between 30% and 69% of the vote could become policy if during a final voting round they received 50% plus one vote.

Provider payment mechanisms: 
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Primary care providers at the municipal level are paid on a per capita basis. Transfers from state and federal resources trickle down to the municipal level through streams such as the basic health program (PAB), the PSF, and the PACS.

Primary care providers at the municipal level are paid on a per capita basis. Transfers from state and federal resources trickle down to the municipal level through streams such as the basic health program (PAB), the PSF, and the PACS.

The same method of provider payments is used for both private and public providers under the SUS. Payments for hospital stays and complex procedures are based on Hospital Stay Authorization (AIH) codes. The AIH payment system is a procedure- or service-based rate system that is not linked to resource usage or costs. Fixed values are established per disease and necessary procedures. Hospitals that undertake complex procedures receive additional resources to maintain their facilities. Ambulatory services are paid by the health funds based on Ambulatory Care Units (UCA) plus an additional fixed amount for each service rendered.

 Brazilian health system in the 1990s

Regulation: 
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Regulation and control of health system activities is managed by a number of different bodies. The Health Care Secretariat develops control and evaluation mechanisms for primary and specialized services. It also maintains a national program to evaluate health services. Formulation and coordination of SUS management policy is handled by the Strategic and Participatory Management Secretariat. The MOHs Secretariat of Internal Control and the Brazilian Court of Audit are responsible for the supervision and control of national health expenditures.

Regulation and control of health system activities is managed by a number of different bodies. The Health Care Secretariat develops control and evaluation mechanisms for primary and specialized services. It also maintains a national program to evaluate health services. Formulation and coordination of SUS management policy is handled by the Strategic and Participatory Management Secretariat. The MOHs Secretariat of Internal Control and the Brazilian Court of Audit are responsible for the supervision and control of national health expenditures.

Regulation of the Supplementary Health System is the responsibility of the National Supplementary Health Agency (ANS), which was created in 2000. The ANS monitors private plan costs, providers, and inputs as well as authorizes corporate mergers, acquisitions, and splits. There now exist minimum criteria for the supply of services, restrictions on the grounds permitted for discontinuation of care, and variations in the amount of premiums charged according to age have been reduced.

Monitoring and evaluation: 
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The MOH, through the Executive Secretariat, is responsible for formulating policy regarding performance evaluation of the health system involving the national, state, and local levels. The monitoring and evaluation of the performance of programs that emanate from the multi-year plans is under the jurisdiction of the Ministry of Planning and budget.

The MOH, through the Executive Secretariat, is responsible for formulating policy regarding performance evaluation of the health system involving the national, state, and local levels. The monitoring and evaluation of the performance of programs that emanate from the multi-year plans is under the jurisdiction of the Ministry of Planning and budget.

Results of the reform: 
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From a macroeconomic perspective, the share of total expenditure on health paid for by the public sector has increased from 41% in 2003 to 46% in 2009. Furthermore, from 1995 to 2009, out-of-pocket expenditures as a percent of total health expenditure fell from 39% to 31%. This suggests some improvements in equity within the system.

From a macroeconomic perspective, the share of total expenditure on health paid for by the public sector has increased from 41% in 2003 to 46% in 2009. Furthermore, from 1995 to 2009, out-of-pocket expenditures as a percent of total health expenditure fell from 39% to 31%. This suggests some improvements in equity within the system.

In relative terms, when comparing Brazil’s health outcomes with its Latin American neighbors by looking at infant mortality rate per 1,000 live births, its ranking has improved from 26th out of 33 in 1990 with a rate of 48 per 1,000 up to 19th in 2006 with a rate of 19 per 1,000.

Between 1986 and 2006, the proportion of women who had assisted deliveries rose from 76% to 98%. Furthermore, the number of children vaccinated against the primary communicable diseases increased from 55% to 81%. Also of note, between 1987 and 2005, the number of consultations per inhabitant increased from 1.67 to 2.5.

From 1992 to 2004, the proportion of poor households accessing health services rose by almost 50%. Meanwhile, poor states and municipalities have received a greater share of federal resources. Between 1997 and 2001, per capita public spending in the Northern and Northeastern (poorer) regions increased by an average of 123%, whereas such spending in the South and Southeastern (wealthier) regions increased by only 65%.

Between 1998 and 2006, community health workers increased from .79 per 1,000 persons to 1.72. Also during this time, post-neonatal mortality fell from 14.24 per 1,000 live births to 6.92, which suggests some effect from the institution of the PSF and the PACS.

After the establishment of the PSF between 1994 and 1999, ambulatory procedures per capita increased from 7.7 to 8.7 (a 13% increase) while hospitalizations per 1,000 persons decreased from 100 to 76 (a 24% reduction). This suggests an improvement in the efficiency of service provision.

Data from household surveys indicates that 98% of people seeking a health service received the service that they were seeking.

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