| Colombia | Sep 06, 2017
Since the early 1990s, Colombia has made remarkable strides in providing health insurance and services to its population. According to the OECD, in 1993, healthcare coverage loomed just over 23%. […]
Since the early 1990s, Colombia has made remarkable strides in providing health insurance and services to its population. According to the OECD, in 1993, healthcare coverage loomed just over 23%. By 2014, this rate had risen to nearly 97%. This shift was a result of groundbreaking governmental reforms built upon the rhetoric of healthcare as a basic human right.
However, systemic weaknesses are rife and a huge gap remains between formal and material healthcare coverage. The Colombian government’s most recent regulatory motion provides a glimpse into its attempts to fix the system and ultimately provide quality and fair healthcare coverage to all social and economic strata of its population.
Universal Health Care History: From HSR to LES
In 1993, congress introduced Health Sector Reform (HSR), also known as Law 100 of 1993, which initiated the spread of healthcare coverage. The reform instituted a mandatory social insurance system in which the General System of Social Security in Health (Sistema General de Seguridad Social en Salud, SGSSS) provides coverage that is intermediated by a market of private insurance providers competing for patients.
The reform established the Mandatory Health Plan (Plan Obligatorio de Salud, POS), a comprehensive list of services, treatments, and drugs to which health service providers (entidades promotoras de salud, EPS) would have access. EPS are private insurance companies that act as an intermediary between health service institutions (instituciones prestadoras de salud, IPS) and their patients.
HSR involves two classifications of coverage: contributive and subsidized. The contributive scheme is funded by payroll taxes from formal employees and employers while the subsidized scheme in financed by public funds. Employees contribute 12.5% of their salaries to the contributive system and 1.5% to the subsidized system. For subsidized coverage, the government funnels funds into local municipalities, which then transfer the money to insurance companies that service the subsidized population. By 2015, some 45% of the Colombian population was receiving healthcare coverage under the contributive framework while 48% of the population—households that are unemployed or informally employed—were receiving subsidized healthcare coverage.
A clear emphasis has been placed on protecting the most vulnerable groups, evidenced by the marked rise of subsidies for this population from USD42 million in 1994 to USD550 million in 1995. The greatest expansion in healthcare coverage was witnessed among the poorest 20% of the population—coverage rose from 4% to 89% between 1993 and 2014. In rural areas, penetration rose from 7% to 93% during the same period. Meanwhile, Colombia’s out-of-pocket spending as part of total national expenditure on health has dropped from 52% in 1993 to some 14%—one of the lowest rates in Latin America and lower than the OECD average of some 19%.
Despite HSR’s promising direction and overall healthcare coverage successes, it ultimately failed to have its intended effect—there emerged a major gap between formal and material coverage that revealed inherent governmental and regulatory agency weaknesses. Public hospitals and private insurance companies failed to fit the bill and left many patients, particularly of the poor population, unable to access treatment. Between 1999 and 2014, patients filed more than 1.3 million lawsuits insisting on access to healthcare services, treatment, and pharmaceuticals.
In February 2015, the government passed the Statutory Health Law (LES), or Law 1751 of 2015, which seeks to strengthen former reforms and narrow the gap between formal and material coverage. LES served as a legal guarantee to the fundamental right to healthcare by all Colombian citizens, establishing a connection between the right to health and essential public health interventions, addressing social determinants of health and stating that fiscal or financial sustainability should not become an obstruction to access to healthcare.
Profit Over Patient
Even with the LES reform, Colombians with the most basic form of coverage—poor and rural populations—suffer from healthcare services and prescription rationing and only receive care from inferior facilities. However, this comes as no surprise when the Colombian healthcare system’s users and health providers continue to be intermediated by an EPS system that is virtually designed to be abused. In theory, EPS keep overall costs down by giving Colombians greater control over the health market. In practice, EPS under-perform their function for the sake of profit. EPS receive government funds upfront and independently of any services they approve for patients. To spend as little money as possible, EPS block patients from receiving health treatments through bureaucratic measures as well as by withholding payments for health services. In this way, the healthcare system remains one of profit instead of one that benefits all Colombians. While many call for the elimination of the EPS role altogether, others note that EPS are the only force keeping down prices. The LES reform introduced a regulatory body to control EPS and outlined that doctors would have the freedom to prescribe medicines needed by patients without taking into consideration EPS budget constraints. Even so, the reform did little to remedy the reality of EPS and their vulnerability to collusion.
Down in Debt
The pairing of private insurers and institutions with nearly universal access to healthcare has stirred competition in the sector, but to a fault. EPS owe some COP5.8 trillion to the IPS. The corruption rampant in the EPS segment has put both the contributory and subsidized regimes in debt while many hospitals face imminent bankruptcy. In 2014, the contributory and subsidized regimes experienced a deficit of USD83 million and USD91 million, respectively. Also in 2014, the government announced that it had fueled 300 of Colombia’s hospitals with USD373 million over the past year in order to avoid bankruptcies. Among other things, from 2006 to 2012, EPS were using public funds to charge double the price for medicines already covered by the Compulsory Health Plan, costing the health system millions of dollars. Strapped for cash, hospitals are forced to resort to unethical practices. Competition among public hospitals has made them eager for economic profit, sometimes in exchange for patients’ health needs. It is common practice for patients with profitable illness to be offered services while patients who are uninsured or lacking proper documentation are denied services. Accessibility is mostly attributable to supply-side constraints.
A Future of Growth
Despite its woes, Colombia’s health sector is eager to put itself on the map for investment and growth. To build its international medical tourism performance, the Ministry of Commerce, Industry and Tourism founded the Productive Transformation Program (PTP) with the purpose of facilitating foreign currency earnings. The PTP anticipates a nine-fold increase in the number of medical tourists—from 31,884 in 2015 to 2.8 million in 2032. This growth hinges on the investments that improve the services of medical institutions in Colombia. Meanwhile, the pharmaceutical market is poised for growth. According to GlobalData, the pharmaceutical market in the country will increase at a compound growth rate of 7.3%, from USD5 billion in 2015 to USD7.1 billion in 2020.