HEALTH FINANCING PROFILE - COLOMBIA 89377 Colombia is an upper middle income nation of approximately 46 million which borders the Caribbean Sea and the North Pacific Ocean. Colombia’s post-colonial history has been plagued by persistent civil conflict and social inequality, and the country has the world’s seventh-highest Gini coefficient.1 Colombia’s health outcomes are mixed with considerable progress in some areas (eg: infant mortal- ity, under-five child mortality, acute respiratory infections) and little to no progress in other areas, such as maternal mortality which remains stubbornly high and is largely related to preventable causes.1 A few areas of health have actually shown increases in prevalence and mortality in recent decades (e.g. congenital syphilis and dengue).1 As is the case in many Latin American and Caribbean countries, Colombia is experiencing a marked increase in non-communicable and chronic illness. This dual burden stresses the capacity of the health system. Both access to healthcare and health outcomes vary widely between regions. Access issues are pre- dominantly attributable to supply-side constraints. For example, 70% of health providers are the only providers available for Colombians enrolled in the nation’s subsidized coverage regime in rural areas.1 The government is attempting to resolve these issues through a health system overhaul fo- cused on human resource issues (particularly outside of large metropolitan areas) and an improved finance and capitation system. Health Finance Snapshot Total Health Expenditure (THE) as a share of gross domestic product (GDP) remained steady at between 6 and 7% from 1995 through 2012. General Government Expenditure on Health (GGHE) as a percentage of THE, however, has increased by a net 21 percentage points in the same period with out of pocket spending (OOPS) decreasing proportionately. Table 1. Health Finance Indicators: Colombia 1995 2000 2003 2005 2007 2009 2012 Population (thousands) 36,574 39,898 41,872 43,184 44,498 45,803 47,704 Total health expenditure (THE, in million current US$) 3,442 4,678 4,637 6,147 9,199 11,998 25,275 THE as % of GDP 7 6 6 6 7 7 7 THE per capita at exchange rate 171 148 134 205 320 361 530 General government expenditure on health (GGHE) as % of THE 55 79 83 70 65 73 76 Out of pocket expenditure as % of THE 38 12 8 22 28 19 15 Private insurance as % of THE 7 8 9 8 7 8 9 Source: WHO, Global Health Expenditure Database; National Health Accounts, Colombia Figure 1. Total Expenditure on Health per capita, 4 Out of pocket spending (OOPS) has fallen significantly, drop- Colombia ping 23 percentage points (as a % of THE) from 1995 through 2012 (Table 1, Figure 1). Total Expenditure on Health per capita • OOP costs are point-of-service fees (i.e.: copayments for (USD at official exchange rate) consultations, medications, etc.). • Those in Colombia’s Subsidized Regime (SR) are largely ex- empted from point-of-service fees. • However, those enrolled in the Contributive Regime (CR) through formal employment are subject to two different types of point-of-service fees, both assessed on a sliding scale based on income group. Note: Private insurance expenditure on health was below 1% before 2005. Source: WHO, Global Health Expenditure Database; National Health Accounts, Colombia Health Status and the Figure 2. Demographic Indicators: Colombia Demographic Transition Crude birth rate Non-communicable diseases are on the rise in Co- (per 1,000 40 population) lombia with obesity rates, diabetes and cardiovascu- lar conditions gaining in importance. High mortality 35 from violence continues to be an important issue. 30 25 Infant mortality Demographic Transition rate (per 1,000 20 live births) 4 Birth rates are declining (figure 2). 15 4 Life expectancy is increasing. 10 4 The ‘bulge’ in the population pyramid is moving 5 Under-5 markedly upward (figure 3). 0 mortality rate 4 The total fertility rate (TFR) has fallen from (per 1,000 3.1 in 1990 to 2.3 in 2011. 90 95 00 03 05 07 09 11 births) 19 19 20 20 20 20 20 20 Epidemiological transition Source: World Bank: Health, Nutrition and Population Statistics 4 Mortality from communicable diseases is low while non-communicable diseases, accidents/ injuries and violence account for 84% of all mortality (Figures 4 and 5). Table 2. International Comparisons: Health Indicators Upper Middle Costa Income Country % Difference Rica Average Figure 4. Mortality by Cause, 2008, GNI per capita (year 2000 US$) 2,465.7 1,899.0 29.8% Colombia Prenatal service coverage 97 93.8 3.4% Contraceptive coverage 79.1 80.5 -1.4% Skilled birth coverage 99.3 98.0 1.3% Sanitation 78.1 73 5.1 TB Success 79 86 7% Infant Mortality Rate 18.1 16.5 9.7% <5 Mortality Rate 21.7 19.6 10.5% Maternal Mortality Rate 92.0 53.2 72.8% Life expectancy 73.4 72.8 2.2% THE % of GDP 6.1 6.1 -- GGHE as % of THE 75 54.3 20.7% Source: WHO, Global Burden of Disease Death Estimates (2011) Physician Density 0.1 1.7 -91.3% Hospital Bed Density 1.4 3.7 -62.2% Source: The World Bank, World Development Indicators database Figure 5. Non-Communicable Disease, Accident & Figure 3. Population Pyramids of Colombia Injury Mortality, Colombia 1950 1980 2010 75-79 60-64 Male 4% 9% 19% 4% 12% 45-49 Female 2% 30-34 7% 15-19 7% 31% 0-4 5% 2000 0 2000 5000 0 5000 5000 0 5000 Source: WHO, Global Burden of Disease Death Estimates (2011) Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision. Health System Financing and Coverage Colombia’s 1991 Constitution established the “Right to Health poor. The system embodied a separation of purchasing and pro- Care” for all. The operationalization of this concept began in vision of health services. Public funds were to be pooled into 1993 with the establishment of the General Social Health In- health plans (EPSs) to purchase services from regulated private surance System, a national compulsory health insurance system and public-sector health care providers. Both service provision modeled after the Dutch system. The government established as well as financial pooling of public funds became the respon- two health insurance regimes, a Contributory Regime (CR) for sibility of municipalities and some Departamentos (state-level formal sector workers, and a Subsidized Regime (SR) for the governments). Figure 6. Timeline of Colombia’s Health Insurance System 1,2 Decentralization of public health services from the central level to more than 1,000 municipalities and Constitution establishes the right state-level governments of all citizens to health care. (Departamentos). 1991 1993 1990s 2013 Law 100 establishes the General Social Law 210 introduces sweeping health reforms Health Insurance System, a national establishing “Salud-Mía”, a public entity compulsory health insurance system assigned the responsibility for managing health based on “managed competition”. system funds and “Mi-Plan”, a new integrated benefits package for all. General Social Health Insurance (SHI) Regimes1 Figure 7. SHI Enrolled by Contributory Regime (CR) Regime, 2008-2011 4 Financed mainly through earmarked payroll taxes pooled by the federal government into a national solidarity fund (FOSYGA). See Table 3. 4 Approximately 21 Health Plans (EPSs) receive risk-adjusted capita- tion payments from the FOSYGA for a Mandatory Benefits Package (MBP) for CR beneficiaries. 4 EPSs perform the purchasing functions for CR beneficiaries’ MBP us- ing public and private providers. Subsidized Regime (SR) 4 Close to 50 EPSs receive capitation payments from municipalities Source: Ministry of Health, Colombia. “Coberturas del Régimen Subsidiado 2008-2011”. (and some Departamentos) and perform purchasing functions for services covered under the SR MBP. 4 These capitation payments are financed by funds pooled at the municipal level consisting of revenues from general and ear- marked taxes, and cross-subsidies from the FOSYGA. See Table 3. 4 Municipalities (and some Departamentos) themselves perform purchasing functions through contracts with public health facili- ties for services not covered under the MBP. Table 3. Regimes and Coverage in Colombia’s Social Health Insurance System Provision and Financing Targeting/Enrollment Health Services Covered Contributions and Payments Channels Formal sector workers + de- A comprehensive ‘Mandatory - FOSYGA is financed entirely from pooled payroll contributions FOSYGA makes capitation Contributory Regime pendents as well as indepen- Benefits Package’ (MBP) (4 percent of salary from workers, 8 percent from employers). payments to EPSs for services (CR) dent workers (non-indigent) covering primary, secondary covered under the MBP. - Beneficiaries make co-payments for some services. with steady income. and tertiary services with exclusions mainly for aesthe- tic, elective and scientifically - Pooled funds at Municipal/Departamental level are financed Those not employed in the Municipalities and some Departa- unproven procedures. from: (a) general and earmarked federal taxes; (b) municipal formal sector, members of mentos (state-level) use pooled Subsidized Regime In 2012, the SR MBP was (sometimes Departamental) taxes; and (c) cross-subsidies from low income and poor house- funds to make capitation (SR) holds, indigenous populations expanded to cover the same payments to EPSs for services FOSYGA (no pre-pay contributions from beneficiaries). services as the CR MBP. - Co-payments to health facilities apply in limited circumstances. and vulnerable groups. covered under the MBP. Municipal (Departamental for - Emergency care. Municipalities (and some Departamentos) pool their own tax Public Hospitals and tertiary care) fee-for-service All citizens. - Services not covered by revenues and federal earmarked funds. No user payroll outpatient facilities the MBP. contracts with public health contributions. facilities for non-MBP services. Source: Montenegro Torres, F. and Acevedo, O.B. Colombia Case Study: The Subsidized Regime of Colombia’s National Health Insurance System. The World Bank UNICO Studies Series No. 15, 2013. Targeting and Enrollment1,4 Figure 8. Percentage of Eligible Population Covered by the SR 4 In 2008, the federal government abandoned targeting mechanisms previously used to enroll SR beneficiaries in order to increase enrollment and coverage. See Figure 8. 4 This particularly increased enrollment of the poor from 47% in 2003 to 98% in 2010. 4 Population coverage (total in the SR and CR) has increased from 83.2% in 2008 to 90.9% in 2010. Source: Ministry of Health, Colombia. “Histórico Cobertura del Régimen Subsidiado Año 1998 - 2010”. Financial Sustainability 4 There has been an increasing share of enrollees in the SR relative to the CR. See Figure 7. 4 In 2012, the MBP of the SR was expanded to match the MBP of the CR. 4 This increase in the SR MBP was not matched by an increase in capitation payments from the government to EPSs serving SR beneficiaries leading to widespread bankruptcy of EPSs. 4 Both the increase in SR enrollees as well as the expansion of the SR MBP have highlighted the seriousness of supply-side factors that constrain access for SR beneficiaries, particularly in rural areas. Point-of-Service Fees 3 4 Some SR beneficiaries may face a co-payment for services 4 CR beneficiaries may face two types of point-of-service fees. at public health facilities. Only one may be assessed for any given health event. Both • This co-payment is a maximum of 10% of the cost of all are assessed on a sliding scale based on the beneficiary’s services rendered per health event in a limited number income group. of cases. • Co-payments are assessed as a percentage of the cost of • NO copayments for infants under 1 year of age, indige- services rendered for a particular health event. nous populations, displaced populations, rural migrants, - Co-payments are often charged for complex and high- and the indigent, elderly or disabled. cost services. • NO copayments for mother and child health care (in- • A flat fee (referred to as a “moderator fee”) is assessed in cluding prenatal care, deliveries and potential complica- other instances. tions), health prevention and promotion services, com- - The flat fee is often charged for primary care and municable disease programs, high-cost and catastrophic lower-cost services. services, medications, urgent consultations, and many specialist services. Challenges and Pending Agenda2 Many see Colombia’s health system as being in a deep financial and institutional crisis. The pending agenda aims to2: 4 Increase capitation payments to EPSs for SR beneficiaries to match the higher levels paid for CR beneficiaries follow- ing the 2012 reforms that expanded the MBP for SR bene- ficiaries to match that of CR beneficiaries. The expanded References SR coverage without sufficiently increased capitation pay- ments has led to bankruptcy of many SR EPS institutions 1 Montenegro Torres, F. and Acevedo, O.B. and an unwillingness of CR EPSs to accept SR beneficiaries. Colombia Case Study: The Subsidized Regime of 4 Move from managing inputs to managing for results with Colombia’s National Health Insurance System. The World Bank proactive resolution mechanisms that avoid current per- UNICO Studies Series No. 15, 2013. verse incentives for physicians to prescribe medicines that 2 Ministry of Health and Social Services, Colombia. “Hacia un nuevo modelo de do not follow international medical guidelines for evi- salud”. 2013. Accessed at http://www.minsalud.gov.co/Documents/Ley%20Reforma%20 dence-based interventions. a%20la%20Salud/ABC-nuevo-modelo.pdf 3 Ministry of Health and Social Services, Colombia. “Cuotas Moderadoras y Copagos 4 Restructure SHI debts particularly those involving bank- 2013”. Accessed at http://pospopuli.minsalud.gov.co/LinkClick.aspx?fileticket=IE_hkW- rupt SR EPSs and those requiring urgent intervention to 3wQS8%3D&tabid=737&mid=1819 avoid bankruptcy. 4 Ministry of Health and Social Services, Colombia. “Coberturas del Régimen Subsidiado”. 4 Increase health system capacity, particularly through en- hanced focus on human resources outside of large metro- This profile was prepared by Dr. Deena Class, A. Sunil Rajkumar and Eleonora Cavagnero politan centers, one of the greatest supply-side challenges with inputs from Fernando Montenegro Torres. in the nation and a significant barrier to access.