Andre Medici
The long and wide path to integrate health pluralism
Health care in Colombian is a pluralistic and complex system composed by four main delivery schemes[1]. Three of these schemes are based on insurance. They are the contributory regime (CR), for formal labor market workers, the subsidized Regime (SR) and the partial subsidized regime (PSR), for low income families no attached to the formal labor market. The last is the supply side coverage scheme (SSCS). This scheme is not insurance-based. It is organized as an open-access system and covers, potentially, all those that are not registered in the insurance schemes, known in Colombia as “vinculados”. On the other hand, the SR is basic financed by payroll contributions meanwhile the SR, the PSR and the SSCS are mostly public funded (taxes and transfers from the payroll contributions)
Since initiating reform in 1993, the Colombian Health System has utilized insurance schemes as the primary method of increasing coverage. Two main kinds of insurance schemes were created by Law No. 100, issued in 1993: the contributory regimen (CR) for formal labor market workers and their families, and the subsidized regimen (SR) for those working in the informal labor market without capability to pay. The latter are identified by a means-test mechanism called SISBEN[2].
Both insurance regimens – CR and SR -- include mandatory enrollment and are financed by different mechanisms. The CR is financed by payroll taxes applied to companies and workers[3]. These payroll contributions are consolidated into the Solidarity and Guarantee Fund (Fondo de Solidaridad y Garantía - FOSYGA), which finances all medical services for these workers and also transfers some funds to the SR. In addition to these FOSYGA transfers, the SR is financed by state and municipal tax revenues. In 2007, 49% of SR funding came from federal tax revenues, 36% from FOSYGA transfers and 14% from municipal taxes[4]. The SR is also financed by co-payments paid directly by clients when services are delivered. FOSYGA also finances part of the public health and public hospital expenditures.
To access health benefits, insured populations must be enrolled in a Health Promotion Company (Empresas Promotoras de Salud - EPS) which compete for clients and supervise service delivery. As insurers, the EPSs are either organized vertically (integrated model) or horizontally (network model). All EPSs contract with health providers, such as hospitals, clinics, ambulatories, labs and others[5], to deliver health services to their insured populations. The organization of these subcontracting arrangements may vary depending on the EPS model. The EPS are remunerated according to capitation mechanisms. The value of the capitation rate unit (Unidad de Pago por Capitación - UPC) received by the EPSs per each person affiliated is defined according to formulas that need to be reviewed and unified[6].
A third type of insurance coverage is available for those who do not meet the requirements of CR or SR. By Law, all workers in the formal labor market are covered by the CR regime and all informal workers must be enrolled in the SR regime. Those workers determined to be under the poverty line have their health insurance premiums subsidized by the government when using the SR. However, many informal workers are not eligible for the SR because they do not meet SISBEN eligibility criteria[7] due to high income or other factors. In these cases, the Colombian government established a partially subsidized regime (PSR), which provides a smaller health package and requires higher out-of-pocket deductibles and co-payments.
Both regimes – CR and SR - offer their insured populations a comprehensive health package called the Mandatory Health Plan (Plan Obligatório de Salud - POS) which should provide comparable coverage. The POS is a package of promotion, prevention, treatment and rehabilitation services. While in 1993, the package of procedures covered by the POS for the CR was more comprehensive than that covered by the SR, disparities have been progressively reduced in recent years[8]. The PSR still offers a smaller POS for its beneficiaries.
Citizens without any health insurance coverage can still access health services. Remaining populations not covered by the CR or SR are supposed to have access to health services by using public facilities (hospitals and ambulatory clinics) without the supervision of an EPS. This kind of coverage – known in Colombia as supply side coverage schemes (SSCS) -- has been deemed inefficient since it exercises little control over expenditures or labor patterns of health workers.
Current government policies and incentives designed to bolster the SR are not strong enough to eliminate the demand for supply-side health services. In 2003, the SSCS spent an amount equivalent to half of the public health expenditures and it still delivers services in big cities like Bogota[9]. The SSCS remains the main health provider scheme in smaller cities and rural areas.
In recent years, the national government has tried to reduce the use of SSCS and to transfer its covered populations to the SR. However, this strategy has been difficult to implement the small number of EPSs working under the SR and the strong opposition of health worker unions, whose members would have to change their civil servant status to private managed contracts in public hospitals[10]. The public sources for the SSCS, the SR and PSR are financed basically by general tax revenues from central government, Departments and Municipalities. These resources are complemented by copayments and deductibles paid by users. However, public hospitals organized as state social enterprises are also partially financed by the FOSYGA, basically for emergency care.
Health Reform to Date: Positive, but Challenges Remain
The 1993 reforms made significant improvements in coverage and Colombia has become a regional leader in coverage rates. According to official data, coverage rates increased from 58% to 90% between 1997 and 2007 and the absolute number of covered citizens grew from 22 million to 39 million, an increase which primarily benefited the poor.
Coverage grew rapidly, but not equally, and did not follow expected patterns. Under the three schemes (SR, SPR and SSCS), which covers lower income groups, coverage tripled between 1997 and 2007, jumping from 7 to 22 million people. Coverage under the CR regime grew at a slower pace during the same period (from 15 to 17 million), most likely due to the corresponding slow expansion of the formal labor market. Most policymakers believed that strong growth in the formal labor market during the 1990s would lead to reduced use of the public schemes by 2007 but it did not happened.
Health expenditures as a percentage of GDP have fallen slightly. Despite the coverage increase, cumulative health expenditures as a percentage of GDP fell from 7.7% to 7.3% between 2000 and 2005. This decline does not reflect a reduction in health spending but instead the country’s economic growth during this period (average 5.5% per year). In fact, during the same period, the percapita health expenditure in Colombia increased from 485 to 581 American dollars in parity purchasing power basis, according World Health Organization data. The proportion of Colombia’s health expenditures in GDP is about average for all of Latin America, but it is less than most of the South Cone countries.
Out-of-pocket expenditures have also fallen. Compared with other Latin American countries, Colombia has one of the lowest out-of-pocket expenditure rates in the region (estimated at 6.4% of the GDP in 2006, compared with 33.3% and 52.4% for Brazil and Mexico, in the same year, respectively. This low expenditure rate demonstrates the powerful effect of Colombia’s health insurance model on the reduction of catastrophic family health expenditures.
In spite of some variances in data, the trend toward reducing coverage inequities is clear. According to Colombia’s 2005 Demographic and Health Survey (DHS), 68% of the population was covered by health insurance (CR, SR and PSR). This figure contrasts with the 81% coverage rate, presented by the data from administrative records in 2005 given that in these records are registered some population under the SSCS However, the DHS data does show a sharp reduction in coverage inequalities in recent years.
Between 1995 and 2005, all income quintiles experienced increased health insurance coverage and the disparities between the poorest and richest quintiles narrowed significantly. Health insurance coverage in the poorest and richest quintiles increased from 3% to 57% and from 61% to 86%, respectively. In addition, preventive and control care coverage rates increased from 49% to 79% in urban areas and from 29% to 78% in rural areas between 1997 and 2003 according DHS data. An improved performance in the rates and equity of health coverage is usually related to better health outcomes.
In addition, other risk factors have yet to be brought under sustained control. For example, neonatal tetanus mortality rates have bounced between lower and higher rates during recent years, due to the failure to increase coverage of the amplified immunization program (PAI). Between 2003 and 2006, the coverage of tetanus vaccine among children under five years old declined from 93.3% to 88.2% after an increase from 79.5% to 93.3% between 2000 and 2003. Improvements have been made in maternal health, although national-level data can obscure extreme regional disparities. The percentage of mothers receiving post-natal care increased from 46% to 64% between 1995 and 2005. This improvement, combined with an increased share of births attended by skilled personnel (BASP), led to a reduction in the maternal mortality rates (MMR), which declined from 105 to 70 per hundred thousand births between 2000 and 2006.
Part of this achievement could be explained by the percentage of BASP, which increased from 93% to 97% during the same period. However regional differences in MMR are even higher than IMR. Some Departments such as San Andres, Valdes and Vichadas, did not even register maternal deaths in 2005. In the poorest Departments, like Guainia, the MMR reached 386 per hundred thousand in the same year. Some of the health system’s main challenges to improving health outcomes, especially in child and maternal mortality, may be related to the nature of coverage. Considering the three modalities of health insurance affiliation in Colombia (CR, SR and no affiliation), it is easy to demonstrate the correlation between better outcomes and higher rates of coverage (CR, SR).
According 2005 data, infant mortality rates tend to be lower in the Colombian Departments with higher health insurance coverage rates. Of course, other factors could also affect this correlation and more careful data analysis is necessary. Non-communicable diseases are becoming a critical issue. Colombia is in the middle of a rapid demographic and epidemiological transition, and mortality rates for non-communicable diseases (NCDs) are increasing very quickly. Between 1980 and 2005 the mortality rate for cardiovascular disease and stroke increased from 79 to 98 per hundred thousand inhabitants. The rising challenge of NCDs demands new POS designs and strategies in order to include more cost-effective protocols for promotion, prevention and treatment of chronic conditions.
The System under Pressure
Legal and Financing Issues Legal challenges to coverage limitations have created urgent pressure for further reform. In the past two years, the Colombian government has experienced a sharp increase in judicial complaints (tutelas) demanding payment for health procedures not covered by the two insurance plans (CR and SR). Most of these complaints have been successful, and, as a result, insurance providers have been forced to pay corresponding medical bills, creating financial pressure not only on the EPSs, but also the FOSYGA and the public budget.
In response, the Supreme Court issued a 2008 ruling that defines patient rights regarding coverage. The increase in legal challenges prompted the Supreme Court to issue the Sentencia T-760 in July 2008. The Sentencia establishes a Bill of Health Rights and stipulates that the Colombian Government must protect all citizens under the following five circumstances: (a) health services are not delivered because of the patient’s inability to pay, including for catastrophic or high-cost procedures; (b) health services are stopped without clear medical reasons; (c) patients do not receive adequate information about their treatment options; (d) patients face unnecessarily burdensome bureaucracy or administrative procedures that might prevent access to services; and (e) patients are asked to pay separately for services which are part of an integrated treatment plan.
The Supreme Court’s Sentencia also requires the Colombian Government to rapidly establish a strategy to eliminate coverage and financing disparities and to increase portability among EPS. Under the 2008 ruling, the Government must create an Action Plan by February 2009 that will set out the strategy to create a single health package (POS) for all children under 5 years old. This single POS is to become effective by the end of October 2009. The Action Plan must also propose interim actions to eliminate ambiguities in POS guidelines and protocols and must define actions to be taken toward a universal single POS, eliminating differences between plan types, increasing portability among all plans offered by the EPS and creating patient capability to pay in order to assure universal coverage for all Colombian citizens by 2010.
The Sentencia defines two new health challenges facing the country: (i) improving the quality of health care, and (ii) guaranteeing the feasibility of a universal and unified health insurance in a context of increasing labor market informality.
To improve the quality of health spending, the health system needs to establish better incentives for insurers and providers. Many of public hospitals in Colombia have been systematically bad evaluated by poor management performance and outcomes. Most of the causes are related with lack of financial incentives to the main stakeholders and lack of managerial skills to improve quality and timely outcomes. Recent changes in health-related legislation have introduced new quality standards for health services delivery. For example, some payments to providers (IPS) that were previously tied to price margins became, after 2004, dependent on the provider’s quality of health management (including the capacity to follow-up patients after clinic visits or hospitalizations). However, there has been little evaluation of the impact of this new legislation on the achievement of better health outcomes. Other national and international experiences of incentives to improve quality have not been sufficiently applied or tested in the Colombian case.
Given Colombia’s increasing labor market informality, the feasibility of current health system financing should be evaluated, as well as the capability to pay of the large populations covered by the SR or the SSCS. For example, some estimates by Colombia’s National Department of Planning (DNP), based on the 2003 Living Standard Survey (ECV), found that some SR beneficiaries should be part of the PSR according their income. On the other hand, high social contributions, which reached 53% of payroll numbers in 2007, have been identified as one of the factors responsible for the reduction of Colombia’s competitive advantages in the global economy.
The future and feasibility of the Supreme Court ruling on creating a single universal system depends on a broader and equal access to health in Colombia. This process should be conducted by implementing some previous actions as piloting experiences to extend coverage, to improve the quality of health care, to reduce costs, to increase promotion and preventive measures (so scarce in the context of the current Colombian Health System) and to guarantee the financial and institutional feasibility of a single health package. But should be the government able to buy this challenge and does the society have enough willing to pay for it?
NOTES
[1] There are two other health schemes – the voluntary enrollment insurance, which comprise a small segment of the high income families and could be overlapped with the CR, and the special regimes for some civil servants categories as military, judiciary, congress members and others. According 2003 estimates these schemes spent 8% and 2% of the total health expenditure, respectively (See Acosta, Ramirez and Canon, 2005). Given that both schemes are not related with the Colombian Health Reform and represent small portion of the enrollment and health spending, they will not be discussed in this concept note.
[2]The SISBEN (Sistema de Identificación de Potenciales Beneficiarios de Programas Sociales) uses a proxy means test index designed by the National Planning Unit (DNP), conceptually similar to the mechanisms used in Chile’s CAS or Mexico’s PROGRESA beneficiary identification system. The SISBEN index is a function of a set of variables including availability and quality of housing and basic public services, possession of durable goods, human capital endowments and current income.
[3] The contribution to the FOSYGA was 12.0% of the payroll until January 2007, when it increased to 12.5%.
[4} In addition the one percent remaining was financed by other sources as “Cajas de Compensacion”.
[5] Health providers are called IPS (Instituciones Proveedoras de Salud) according the definitions used by the Colombian health system.
[6]In fact, the UPC paid in the SR regime is almost 60% of the value of the UPC paid in the CR regime. Between 1997 and 2003, the real value of the UPC decreased in 20% in the SR and in 11% in the CR.
[7]The SISBEN score allows the ranking and stratification of potential beneficiaries based on the severity of poverty: level 1 for the poorest which roughly correspond to the national definition of extreme poverty; level 2 for the traditional definition of poverty line; and level 3 for three times the extreme poverty line. In total, six levels of SISBEN are calculated, with total scores ranging from 0 to 100. For the subsidized regime, the cut-off score for eligibility is 22 in urban areas and 32 in rural areas which comprises SISBEN levels 1 and 2.
[8]The ultimate definition of procedures and pathologies covered by the POS in the SR is listed in the Acuerdo 000306 issued on August 16, 2005 (published as Diario Oficial 46.096, November 18, 2005). However the POS in the SR still offers less coverage than the POS in the CR, especially regarding ambulatory services and second and third complexity level interventions.
[9]According Acosta, Ramirez and Canon (2003) the distribution of the Colombian health public expenditure was the following: 41.4% to the SR; 9.1% to public health and 50.5% to cover the population enrolled in the SSCS. Using 2003 household surveys we can observe that 35% of the Colombian population is affiliated to the CR; 24% to the SR and 41% are “vinculados”. At least two thirds of the vinculados were covered by the SSCS in 2003 according administrative records and the remaining population was supposedly not covered.
[10] The EPS dedicated to provided services to the SR are called ARS (Subsidized Regime Administrator Companies). Public Hospitals can be organized under ARS schemes, as State Social Enterprises (Empresas Sociales del Estado), but only a few public hospitals in Colombia have fully implemented this management model.
