Chiles Private HealthCare System Is On Verge Of Collapse, Testing Boric

(Bloomberg) -- After a crushing defeat in Congress, Chile's President Gabriel Boric is under intense pressure to resolve another political crisis in the country, with the private healthcare system on the brink of collapse.

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Insurers known as Isapres are delaying payments to healthcare providers and facing bankruptcy warnings while ignoring court orders requiring them to repay years of customer overpayments, which they say would wipe out the industry's entire capital base. over the past 33 years. Doctors warned of dire consequences, saying treatment could be interrupted for millions of Chileans.

This means that Bori, a leftist who came to power on promises to tackle inequality and strengthen public services, is in the awkward position of maintaining a private healthcare system that serves the wealthy.

(Read in Spanish.)

This week, government officials proposed extending the schedule for paying excess tolls and introducing stricter toll rules. But they need legislators' approval for a plan that looks increasingly certain after Congress rejected a major tax bill on March 8, dealing an embarrassing blow to the Borik administration.

“There is no room for error now,” said Patricio Meza, president of Colegio Medico, Chile's largest association of medical professionals. “A sense of urgency is important. We need to resolve this issue as soon as possible."

Supporting private business was a difficult concession for Borik at the end of his first year in office, which was marred by deep divisions and slow progress on political proposals. His administration does not want to pose as the savior of a commercial system rooted in the dictatorship of Augusto Pinochet and its ties to global corporations such as UnitedHealth Group Inc. and the British United Provident Association Ltd. - Exactly 16% of the population - public health brings an already overburdened system to a halt.

national health

Strengthening the health system is a challenge facing governments around the world as they grapple with the effects of the Covid-19 pandemic and an aging population. In February, Prime Minister Justin Trudeau pledged $46.2 billion ($33.4 billion) to support Canada's troubled system. The UK National Health Service is in crisis due to lack of money, staff and beds.

It's also a flashpoint in Colombia, where President Gustavo Petra sent legislation to Congress last month to eliminate private insurance companies and turn the government into the head of a $15 billion-a-year healthcare system. Two weeks later, a key aide opposed to the proposal left the government.

Health care in Chile began in 1981, when Pinochet paved the way for willing-to-pay private systems that often offered better terms, shorter waiting times, and poorer quality of service than public institutions. . . Over the years, as Chile has become one of the richest countries in Latin America, insurance companies have expanded their customer base to include more middle-class professionals who want better service.

insurance protection

The decision will not come immediately for people like Cristina Rivera, an engineering teacher and mother of two in Santiago. He heard rumors that his private insurance company was one of the worst financially.

Rivera said the current conditions would make it difficult to switch to another provider. She had a premature baby and has had chronic health problems ever since.

“My hands are tied,” he said. “I have to wait and see what happens. There is little I can do and it scares me.

Private insurers say they are on the verge of bankruptcy due to higher insurance premiums amid rising global inflation and temporary premium freezes and increased demand for medical treatment during the pandemic.

Isapres posted a loss of 128 billion pesos ($160 million) in the first nine months of last year, according to the latest figures from Chile's health regulator. The amount owed by private insurance companies to private clinics rose to 567 billion pesos in November and to 307 billion pesos in March 2022.

This was before the Supreme Court ruled on Nov. 30 that the way companies set bonuses based on gender and age was unconstitutional. In addition, he said that insurance companies cannot charge for the protection of children under the age of 2 because their care is covered by certain laws that provide special protection for all citizens.

Insurance premium

He ordered Isapres to refund additional fees to users from 2020, when the government introduces its own risk factor tables to set the prices that private insurance companies must accept. Regulators have until May to develop a system to compensate companies for inflated prices, which the Ministry of Health estimates will cost $1.4 billion.

Overall, Chile also risks undermining the confidence and investment of foreign companies, according to Gonzalo Simon, president of Asociacion de Isapres, part of the Isapres Industry Group.

“The country must fill the gaps in infrastructure, beds and technology,” he said. "It's done by investing."

In fact, Banmedica, a division of UnitedHealth based in Minnesota, and Bupa, based in the United Kingdom, have warned that they may seek compensation for their activities in Chile under their international agreements with the South American country. . They claim that the Chilean government has changed healthcare rules so drastically that it has hurt their investment.

Medical Delay

During the 2021 campaign, Borik unveiled plans to move to a unified national healthcare system where Isapres would not exist. But the reality is that Chile's public health service, known as Fonasa, which serves the majority of the country's 19 million people, is woefully unable to keep up with demand.

According to a report by Clinicas de Chile, an umbrella group of private healthcare providers, about 2 million public healthcare users are queuing to see specialists, and 300,000 are waiting for surgery.

Given the fallout from Isapres' failure, it's important that they continue to operate, said Senator Javier Macaya, who is also president of the opposition Democratic Union for Independence.

“There were large foreign investors who followed instructions from regulators when they invested in Chile, and now the Chilean government is saying they made a mistake,” Macaya told the Senate health committee this week. "We must pay attention to the role of the state in this matter."

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