Explicit Health Guarantees for Chileans: The AUGE Benefits Package 74958 Ricardo Bitran Universal Health Coverage Studies Series (UNICO) UNICO Studies Series No. 21 1 UNICO Studies Series 21 Explicit Health Guarantees for Chileans: The AUGE Benefits Package Ricardo Bitran 1 The World Bank, Washington DC, January 2013 1 The author would like to thank Gonzalo Urcullo, who helped gather some of the information presented in this report and who contributed to the drafting of the questionnaires that gave rise to it. The author is grateful to Daniel Cotlear for his helpful insights. He also thanks André Médici for his comments on an earlier version of this report, and the following reviewers: Verónica Vargas, Luis Pérez, Joana Godinho, and Julie McLaughlin. Gonzalo Urcullo was research assistant and Diane Stamm was the editor. The World Bank’s Universal Health Coverage Studies Series (UNICO) All people aspire to receive quality, affordable health care. In recent years, this aspiration has spurred calls for universal health coverage (UHC) and has given birth to a global UHC movement. In 2005, this movement led the World Health Assembly to call on governments to “develop their health systems, so that all people have access to services and do not suffer financial hardship paying for them.� In December 2012, the movement prompted the United Nations General Assembly to call on governments to “urgently and significantly scale-up efforts to accelerate the transition towards universal access to affordable and quality healthcare services.� Today, some 30 middle-income countries are implementing programs that aim to advance the transition to UHC, and many other low- and middle-income countries are considering launching similar programs. The World Bank supports the efforts of countries to share prosperity by transitioning toward UHC with the objectives of improving health outcomes, reducing the financial risks associated with ill health, and increasing equity. The Bank recognizes that there are many paths toward UHC and does not endorse a particular path or set of organizational or financial arrangements to reach it. Regardless of the path chosen, successful implementation requires that many instruments and institutions be in place. While different paths can be taken to expand coverage, all paths involve implementation challenges. With that in mind, the World Bank launched the Universal Health Coverage Studies Series (UNICO Study Series) to develop knowledge and operational tools designed to help countries tackle these implementation challenges in ways that are fiscally sustainable and that enhance equity and efficiency. The UNICO Studies Series consists of technical papers and country case studies that analyze different issues related to the challenges of UHC policy implementation. The case studies in the series are based on the use of a standardized protocol to analyze the nuts and bolts of programs that have expanded coverage from the bottom up—programs that have started with the poor and vulnerable rather than those initiated in a trickle-down fashion. The protocol consists of nine modules with over 300 questions that are designed to elicit a detailed understanding of how countries are implementing five sets of policies to accomplish the following: (a) manage the benefits package, (b) manage processes to include the poor and vulnerable, (c) nudge efficiency reforms to the provision of care, (d) address new challenges in primary care, and (e) tweak financing mechanisms to align the incentives of different stakeholders in the health sector. To date, the nuts and bolts protocol has been used for two purposes: to create a database comparing programs implemented in different countries, and to produce case studies of programs in 24 developing countries and one high-income “comparator,� the state of Massachusetts in the United States. The protocol and case studies are being published as part of the UNICO Studies Series, and a comparative analysis will be available in 2013. We trust that the protocol, case studies, and technical papers will provide UHC implementers with an expanded toolbox, make a contribution to discussions about UHC implementation, and that they will inform the UHC movement as it continues to expand worldwide. Daniel Cotlear UNICO Studies Series Task Team Leader The World Bank Washington, DC ii TABLE OF CONTENTS Abbreviations ............................................................................................................................................... iv Executive Summary........................................................................................................................................v 1. Introduction ..............................................................................................................................................1 2. Health Coverage for the Poor in Chile: A Historic Overview .................................................................2 3. The Chilean Health System Today ..........................................................................................................2 4. Coverage for the Poor under SHI.............................................................................................................3 5. SHI Benefits .............................................................................................................................................4 6. The AUGE Health Reform of 2005 .........................................................................................................5 7. Financing and Service Flows in SHI........................................................................................................8 8. Targeting, Identification, and Enrolment of Beneficiaries in Fonasa ....................................................12 9. Management and Public Funding of the AUGE Benefit .......................................................................12 10. Impact of AUGE ....................................................................................................................................14 11. The Health Coverage for the Poor Information Environment ...............................................................16 12. Equity and Fiscal Implications of Expanding the AUGE Benefits ........................................................17 13. Pending Agenda .....................................................................................................................................18 Annex A The Market for Health Services in Chile ......................................................................................19 Annex B Additional Information..................................................................................................................21 Annex C Spider Web ....................................................................................................................................23 References ....................................................................................................................................................26 FIGURES Figure 1 Coverage in Chile’s SHI System, 2011............................................................................................2 Figure 2 Beneficiary Population and Financing of Social Health Insurance in Chile ....................................8 Figure 3 Flow of Funds in Chile’s Health System, circa 2011.......................................................................9 Figure 4 OOPS and Total Monthly Household Spending, 2006 (Ch$ of 2006 and percent) .......................10 Figure 5 Total and Government Health Expenditure, 2000–11 (%) ............................................................10 Figure 6 Total Health Expenditure Per Capita, 2000–11 (Ch$ of Dec. 2011 and US$)...............................11 Figure 7 Health Financing Structure in Chile, 2000–11 (%) ........................................................................11 Figure 8 Fonasa’s Estimated Cost per Beneficiary for AUGE and Non-AUGE Services, 2001–09 (US$ of June 2009) ....................................................................................................................................................13 Figure 9 Trends in the Production of Selected AUGE Health Services for Fonasa Beneficiaries, 2001–09 ......................................................................................................................................................................16 TABLES Table 1 Coverage, Contributions, Benefits, and Provision in Today’s Health System ..................................5 iii Abbreviations AUGE Universal Access with Explicit Guarantees, Acceso Universal con Garantías Explícitas FFS fee-for-service Fonasa National Health Fund GES Explicit Health Guarantees GHP Guaranteed Health Plan Isapres for-profit private insurers MOF Ministry of Finance MOH Ministry of Health OOPS out-of-pocket spending PBS Government-subsidized Pension and Disability Subsidy, Pensión Básica Solidaria Sermena National Employees Services SHI social health insurance SIGGES Reporting System for the Management of Explicit Health Guarantees, Sistema de Información para la Gestión de Garantías en Salud SNSS National Health Services System THE total health expenditure UHC universal health coverage iv Executive Summary Chile relies on social health insurance (SHI) to provide nearly universal health coverage to its 17 million people. Its SHI system has long been criticized for having two separate subsystems: a large public insurer (the National Health Fund, Fonasa) covering three-fourths of the population, including the indigent and low-and middle-income citizens, and providing health services mostly through public providers; and several for-profit private insurers (Isapres) that cover about one- sixth of the better-off population and providing services almost exclusively in the private sector. Further, until 2005 the SHI system lacked an explicit benefits package that allowed for large differences in the content and quality of services between Fonasa and the Isapres. It has also made it possible for Isapres to engage in risk selection. A reform implemented in 2005, known as Universal Access with Explicit Guarantees (Acceso Universal con Garantías Explícitas, AUGE), defined a basic package for SHI consisting of guaranteed and explicit treatments for 56 priority health problems. In 2010, these were expanded to 69 priority problems and a current government initiative will further broaden the package to cover 80 health problems. The AUGE benefits package not only guarantees treatments, but also sets upper limits on waiting time and out-of-pocket payment for treatment. Coverage for the services left out of the AUGE benefits package is not guaranteed by Fonasa, although the public insurer devotes more than one-half of its budget to finance non-AUGE services. Isapres provide coverage beyond AUGE, but this additional coverage varies from beneficiary to beneficiary depending on their premium contribution and the health plan purchased. The AUGE reform has been accompanied by a sizable increase in total health spending in the country, both from public and private sources. Total real health spending per capita grew by 155 percent, from Ch$283,000 (US$542) to Ch$721,000 (US$1,384), 2 although it has stabilized as a share of gross domestic product at around 7.5 percent. Out-of-pocket health spending has dropped 10 percentage points as a share of health financing in the country, from nearly 50 percent in 2000 to about 38 percent in 2011. AUGE has improved access to health services for all, including the poor and the other beneficiaries of Fonasa. In Fonasa, this phenomenon has not only been observed for AUGE- covered services, but also for other health services not included in the AUGE benefits package. The government has expanded public providers’ capacity to meet the growing demand for AUGE and non-AUGE benefits. The generous benefits package offered by Fonasa to its indigent population (AUGE plus non- AUGE services) has led hundreds of thousands of individuals to underreport their income in order to qualify as indigent beneficiaries. Fonasa has recently taken measures to limit this abuse. A current reform proposal seeking to limit risk selection and enhance beneficiary mobility in Isapres may further expand the benefits package of Isapres beyond AUGE. This would legitimize a large difference in health benefits between the public and private insurers and may lead to political pressure to further expand AUGE for all citizens. Such a scenario may not be fiscally possible and poses the risk that efforts to guarantee all services in the SHI system will eventually 2 In Chilean pesos of December 2011. The exchange rate was 1 US$ = Ch$ 521.46. v revert to the pre-2005 situation, where rationing in the form of denial, queues, and demand deflection again become the prime mechanisms to contain demand. vi 1. Introduction Most countries that have adopted the social health insurance (SHI) model to achieve universal health coverage (UHC) took an incremental approach, first enrolling civil servants and formal sector workers, and later covering the poor. Chile, which reached nearly universal health coverage through SHI in the mid-20th century, instead offered publicly subsidized coverage for the poor early on in the evolution of SHI. Chile was also a pioneer in the development of a national health service that comprised a countrywide network of public primary health care centers and hospitals. 3 This paper focuses on recent and significant health reform implemented in 2005, known as Universal Access with Explicit Guarantees (Acceso Universal con Garantías Explícitas, AUGE or GES), 4 which mandated SHI insurers to adopt a broad benefits package defined via explicit legal guarantees for all beneficiaries. This innovative reform is a policy reaction to that which previously existed in Chile and which is widespread in many developing countries, whereby the health rights of citizens remain largely undefined or implicit. Limited public resources imply in those countries that access to health care is rationed through queues, patient deflection, legal or under-the-table user fees, and low-quality care. The new policy legally requires that all SHI insurers deliver preventive and curative health guarantees for priority diseases according to treatment protocols, within specific time limits, and with copayment ceilings. Thus, Chile’s previous, fiscally convenient policy of vague health benefits has been replaced by one that requires strict public commitment to the financing of SHI health benefits because they are now a legal right of all. The AUGE law governs the entire Chilean SHI system. It therefore applies to the indigent covered by the large public insurer known as the National Health Fund (Fonasa), the nonindigent members of Fonasa, and the higher-income beneficiaries of the private SHI insurers known as Isapres. This paper describes the AUGE reform, its implementation, and the functioning of AUGE for the poor and for nonpoor citizens. This paper is organized as follows. Section 2 provides a brief historic overview of health coverage in Chile’s SHI system. Section 3 describes the SHI system in existence today. Section 4 describes the services offered and mechanisms in place to cover the poor under SHI, while Section 5 spells out the benefits of SHI. Section 6 introduces the AUGE health reform of 2005, which sought to broaden and make explicit the rights of all SHI beneficiaries. Section 7 offers information about the flows and magnitudes of health financing in SHI. Section 8 focuses on the system used by Fonasa to target the poor. Section 9 explains how Fonasa manages AUGE. Section 10 comments on the information environment of AUGE. Section 11 addresses the equity and fiscal implications of expanding the AUGE benefits. Finally, section 12 proposes a pending policy agenda related to the coverage of the poor under SHI and the definition and management of benefits. 3 See Bitrán and Urcullo (2006) and Bitrán (2008) for more about key features of Chile’s health system and its evolution. 4 The name first given to the reform was Universal Access with Explicit Guarantees (AUGE). The name subsequently given to the reform was Explicit Health Guarantees (GES). 1 2. Health Coverage for the Poor in Chile: A Historic Overview Chile has a long-recognized history of running welfare programs, including health ones, focused on the poor, vulnerable, and unemployed. Between the 16th and the 19th centuries, there emerged several formal, nonprofit health care organizations, both public and private. In 1886, the Statute of the Welfare Board (Junta de Beneficencia) was enacted to unify local health care organizations and hospitals. In 1917, social welfare agencies participated in a national congress that sought to improve the organization of the health system. In 1924, the Ministry of Hygiene, Assistance and Social Welfare and the Mandatory Worker’s Insurance were created to cover the risks associated with illness, disability, old age, and death. The National Employees Services (Sermena) was established in 1942 to provide health coverage to formal sector employees. The National Health Service, created in 1952, unified several public health care providers, reaching significant territorial coverage and serving mainly workers and the indigent. A reform adopted in 1981 created the National Health Fund (Fonasa), a large public insurer that superseded Sermena, with financing coming from a 4 percent mandatory payroll health tax and public subsidies. Its mandate was to cover the formally employed and the indigent. The law also made it possible for private insurers to participate in the SHI market by collecting the 4 percent health tax plus additional voluntary contributions. 5 3. The Chilean Health System Today Today, Chile’s health system is mixed, Figure 1 Coverage in Chile’s SHI System, 2011 with public and private entities Other insurance or no insurance participating in both health insurance and 9.6% Fonasa Group A (the "indigent") the provision of health services. In the 26.4% health insurance market a distinction must Isapres be made between insurers who belong to 16.4% the SHI system and commercial health insurers who are not part of it. In the SHI market, the public, nonprofit Fonasa is dominant in size; at the end of 2011 it Fonasa Group coved 13.2 million people, or just over D three-quarters of the country’s population, 12.6% while seven for-profit private insurers Fonasa Group B Fonasa Group (known as Isapres) covered 2.9 million C 23.1% 11.9% Chileans, or one-sixth of the population Sources: Author from National Statistical Institute for total (figure 1). Approximately 1.1 million population, www.ine.cl; Fonasa (2010) Statistical Bulletin Chileans are either insured through other 2010, www.fonasa.cl; and National Health Regulator (2010) welfare systems, such as the Armed Forces Estadísticas básicas comparadas del sistema Isapre en and the Police, or have commercial health diciembre, www.supersalud.gob.cl. insurance only, or have no insurance. Chileans outside of SHI are not subject to the AUGE law. The majority of those without any insurance are nonpoor. 5 In subsequent years this 4 percent was deemed insufficient to finance health benefits. It was therefore increased progressively to reach its current value of 7 percent. 2 As of December 2011, private commercial insurers (not shown in the figure) had about 4.6 million beneficiaries, surpassing coverage by Isapres. While there are no studies about the profile of individuals with private commercial insurance, it is presumed that the majority are middle- and upper-income individuals covered by an Isapre who seek further financial protection through private insurance. The Chilean Association of Health Insurers (AACh 2012) estimates that 87 percent of the health premiums collected by its members come from firms that purchase collective health coverage for their employees and families, while the remaining 13 percent comes from premiums paid by individuals. These insurers provide either catastrophic health coverage or offer additional financial coverage over and above that conferred by Fonasa and the Isapres. They also cover individuals who are outside of the SHI system. By law, all dependent and independent workers with a retirement fund must enroll with Fonasa or an Isapre by making a monthly contribution equal to 7 percent of their salary, up to a monthly salary ceiling of US$2,700 (see Table 1). 6 Other individuals may join SHI as well. They include independent workers, who can voluntarily enroll with Fonasa or an Isapre conditional on their 7 percent contribution; legally certified indigent citizens; legally unemployed workers, who are entitled to free coverage by Fonasa; and retired individuals who, starting in 2010, were exempted from the 7 percent contribution in Fonasa. In addition, Isapre beneficiaries may voluntarily make an extra contribution to purchase supplementary coverage. Fonasa beneficiaries, instead, cannot make such an additional, voluntary contribution beyond their legal 7 percent. Since the advent of AUGE (see description in section 6), Isapres now also charge an AUGE premium beside the 7 percent legal premium and the additional voluntary contributions made by the insured. In contrast, Fonasa does not charge an AUGE-specific premium beyond the 7 percent payroll tax. The public and private insurers that belong to SHI (Fonasa and the Isapres) operate in competition and are regulated by the Health Regulatory Agency (Spanish is Superintendencia de Salud), established in 2005. Private commercial insurers, instead, are regulated by the Securities and Insurance Regulatory Agency (Superintendencia de Valores y Seguros). That SHI and non- SHI insurers are subject to different regulatory frameworks is a matter of growing concern among some law makers, who fear that this asymmetric regulation may not permit appropriate solutions to market failures and equity problems that arise in health insurance markets. 4. Coverage for the Poor under SHI Coverage for the poor is guaranteed through Fonasa. About 36 percent of Fonasa’s 13.2 million beneficiaries are classified as indigent (also known as Group A; see figure 1), and to qualify they must be certified as such through an official targeting process (described below). They can claim full health coverage from Fonasa at no cost; they do not have to pay a premium for enrolment and they are exempt for all copayments to public providers. The remaining 64 percent of Fonasa’s beneficiaries are formal or informal sector workers who contribute 7 percent of their salary to the insurer, up to the monthly salary ceiling. They are classified into groups (B, C, and D) according to their monthly income. Periodically Fonasa revises the income brackets that define these groups, using the consumer price index. 6 The maximum legal monthly contribution to Fonasa or an Isapre is therefore US$140. 3 5. SHI Benefits In Fonasa, the health benefits of SHI for groups B, C, and D, and the retired, include the following: (a) all AUGE health care services, both preventive and curative, mostly from public providers, but also from private ones when the public supply of such services is not available; (b) all non-AUGE health care services, also including preventive and curative care with public providers; (c) a voucher to cofinance health care from private health care providers selected by the beneficiary from a list of preferred providers maintained by Fonasa; and (d) sick and maternity leave subsidies, which are payments made by Fonasa to the insured worker to replace his or her income while away from work due to illness or childbirth. This income subsidy has a ceiling equal to about US$2,700 per month. Fonasa’s indigent population currently can obtain benefits (a) and (b), but not (c) and (d), although a recent proposal by Fonasa’s management is to also grant them benefit (c). Isapres offer similar services except that the AUGE and non-AUGE health services are all predominantly delivered by private providers. The almost exclusive use of private providers by Isapre beneficiaries is due to two reasons. First, by law, public hospitals have stringent limits on the number of hospital beds they can make available to non-Fonasa beneficiaries; and second, Isapre beneficiaries seldom want to use public providers, because through their regular coverage they can obtain better-quality and more timely care. Until 2005, Fonasa did not have an explicit benefits package and there was rationing of health services for its beneficiaries through queues, denial of care, and low-quality services, particularly for specialty care and for expensive hospital services. In addition, Chile’s SHI system did not have a legally defined benefits package, and therefore different Isapres could offer different health plans, without a minimum or reference plan, and each Isapre could offer multiple health plans. The lack of a national benefits package for SHI beneficiaries was seen by many as a weakness of the system, which allowed for differences in coverage between Fonasa and the Isapres and for risk selection and limited risk pooling in the Isapres. Table 1 summarizes the information presented above regarding the coverage, contributions, benefits, and providers of health services in the country. The remainder of this document focuses on the adoption of the AUGE benefits package and some of its consequences on access to services and health spending by Fonasa beneficiaries. 4 Table 1 Coverage, Contributions, Benefits, and Provision in Today’s Health System Fonasa (public insurer of SHI) Isapres (private People Outside of The Indigent Other beneficiaries insurers of SHI) SHIb Coverage (%) Population 76.5% 17.0% 6.5% 27.3% 49.2% Contributions Mandatory 7% No Yes Yes contribution Separate AUGE No No Yes contribution Additional voluntary No No Yes contributions Benefits package AUGE benefits Mandatory, without Mandatory, with Mandatory, with Not mandatory. packagea copayments. legally defined legally defined Coverage by Armed copayments. copayments Forces and Police exceeds AUGE’s. Non-AUGE health Services offered Explicit benefits Services offered more services without explicit defined in Isapre generously than in guarantees and insurance plan. Fonasa. rationing resulting Variable deductibles, in queues. copayments, ceilings, and exclusions depending on plan. Provision Provision of AUGE Exclusively with public providers, except Exclusively with Armed Forces and health services when public supply is unavailable, in which private, preferred Policy have their own case Fonasa purchases services from providers. providers. People not private providers. covered by SHI must Provision of non-AUGE Exclusively with Mostly with public Exclusively with use public or private health services public providers. providers, but Fonasa private, freely providers on fee-for- offers small voucher selected providers. services basis. for private care. Note: a. Interventions guaranteed in the law to prevent and treat 69 priority health problems. See list of those problems in Annex B. b. Includes people covered by the Armed Forces and Police, people without any health insurance, or those with private, commercial health insurance but not affiliated with SHI. 6. The AUGE Health Reform of 2005 In 2005, the reform known as AUGE or GES (Law No. 19.966) formulated an explicit benefits package for all Fonasa and Isapre beneficiaries. The AUGE package set out to initially cover 56 priority health problems and explicitly defined four legal guarantees for beneficiaries, including: • Their right to health care for the priority problems • The definition of treatment protocols and the explicit definition of the interventions to be guaranteed under the law for each health problem • The adoption of maximum waiting times for health treatment • The adoption of limits on out-of-pocket spending (OOPS) for health care. 5 The AUGE guarantees apply to both Fonasa and Isapre beneficiaries. The significance of this reform stems in part from its definition of explicit and legal health rights for Fonasa beneficiaries, including the poor and the nonpoor. Its significance also results from the legal obligation for Isapres to adopt—at a minimum—the exact same legal guarantees as Fonasa. Although Isapres have had from their very beginnings explicit and legally regulated health contracts with their beneficiaries, and a large share of beneficiaries obtained more coverage than what AUGE requires, the advent of AUGE has also defined minimum benefits for these insurers. Thus, no Isapre beneficiary can get less coverage than what AUGE requires. AUGE has therefore set up a coverage floor, or standard, that all SHI insurers must abide by. By mid-2007, 56 AUGE priority health problems, with their respective guarantees, were in place; they increased to 69 by mid- 2010 (see list in Annex B); currently a study is underway to determine whether 11 additional priority health problems should be added, for a total of 80. Contents of AUGE. In the early 2000s, President Ricardo Lagos established an interministerial health reform commission that conceived the AUGE policy and managed the process leading to the formulation of the first 56 AUGE priority health problems. The Ministry of Health (MOH) and the Ministry of Finance (MOF) determine the contents of the AUGE benefits package, taking into account several criteria, including the burden of disease, the share of the population suffering from the disease, the expected cost per beneficiary, the supply capacity of the health network, and the effectiveness of the interventions. Vargas and Poblete (2008) discuss the prioritization criteria used by the reform commission. Once a decision is made about any potential additions to or subtractions from the AUGE package, the law requires that a costing study be carried out to assess the consequences of any such changes on the cost of AUGE for Fonasa and the Isapres. If the new cost is within the legally defined bound given by the so-called “universal premium,� whose amount is currently set by law at US$177 per beneficiary of SHI per year, then the MOH issues a decree specifying the revised benefits package. Financing of AUGE. In 2005, the congress approved a law whereby the main source of public financing for AUGE benefits in Fonasa would be a 1 percentage point increase in the value-added tax, which increased from 18 percent to 19 percent. Whereas some studies have demonstrated that Chile’s value-added tax is regressive in its incidence, others have shown that it is progressive in the benefits it finances (Engel, Galetovic, and Raddatz 1997). While no specific studies are available, it is likely that this tax increase is progressive in the financing of AUGE benefits in Fonasa. Providers. Fonasa purchases AUGE benefits mostly from public providers in all three levels of care (see a description of Chile’s health care delivery system in Annex A). This is in accordance with an explicit policy adopted by Fonasa to minimize spending on AUGE by obtaining the highest possible share of services from the relatively less expensive public providers. However, in those situations where there is insufficient public supply, Fonasa may be forced to purchase AUGE services from a private provider at a higher price. In 2010, Fonasa responded to rising waiting lines for AUGE services with a new policy known as the AUGE voucher, which offers beneficiaries a nominal voucher to obtain AUGE services from private providers when such services are not available among local public providers. However, limited evidence shows that use of the voucher has been modest because the voucher’s value is too small to be attractive to private providers. At the end of 2011, Fonasa claimed that all AUGE waiting lines had been 6 resolved, a claim that has been contested by many and that remains a subject of policy controversy. Compliance monitoring. The National Health Regulator (Superintendencia de Salud) has the responsibility to monitor compliance by Fonasa and the Isapres with the AUGE guarantees and to sanction those insurers that fail to meet one or more guarantees. It is also responsible for accrediting public and private health care providers engaged in the provision of AUGE services. Copayments for AUGE. The reform permits the adoption of copayments by Fonasa and the Isapres for AUGE services. But to prevent impoverishment and large financing shocks from health events, it sets a limit on the magnitude of these copayments. In Fonasa the indigent and low-income beneficiaries in Group B are exempt from copayments. Beneficiaries in groups C and D, instead, must make a maximum copayment of 10 and 20 percent, respectively, computed on the basis of Fonasa’s price list. In addition, the sum of all copayments over any 12-month period cannot exceed two monthly salaries, if the family has an AUGE health problem, and three monthly salaries, if the family it has two or more AUGE health problems. Once this deductible is reached, Fonasa and the Isapres fully cover the cost of any additional AUGE services, thus exempting families from any additional copayments until the annual period is complete. Referral system. Fonasa beneficiaries, both the indigent and the rest, wishing to obtain care for an AUGE medical problem, must first obtain health care from a primary health care doctor as the entryway into AUGE. The doctor will make any necessary referrals to higher levels of the delivery system in accordance with AUGE protocols. Beneficiaries can request confirmation of their AUGE diagnosis via medical exams, as stated in the law. Isapre beneficiaries wishing to obtain AUGE benefits must obtain a certificate from their physician stating that they have an AUGE medical problem. They must then present this certificate to their Isapre, and this insurer directs the patient to the preferred providers from its network for appropriate treatment. If the beneficiary refuses to go to these providers, then he or she may opt out of AUGE by freely selecting a different provider, thus getting the standard coverage (copayments, deductibles, and ceilings) of its health plan. In case of vital emergencies, both Fonasa and Isapre beneficiaries may obtain care at the closest facility, whether public or private, and must promptly inform their insurer, who will later transfer the stabilized patient to a facility from its preferred provider network. The MOH (2009) has shown evidence that the majority of Fonasa beneficiaries choose to obtain AUGE services with Fonasa’s designated preferred providers, most of which are public, and that most Isapre beneficiaries tend to opt out of AUGE, to get what they consider is better care from the non-AUGE providers, with standard Isapre coverage. Payment for AUGE services. Fonasa pays public hospitals with a combination of prospective payment per case and fee-for-service (FFS). It pays health centers via a combination of capitation, FFS, and annual payment per case treated (for example, for the ambulatory management of chronic conditions). Isapres pay private providers for AUGE health services mostly on an FFS basis for ambulatory care and through a combination of payment per case and FFS for hospital care. Information to consumers. The government has disseminated the mechanics of AUGE through mass communication campaigns. Since the inception of AUGE in 2005, Chileans have been becoming familiarized with their health rights under AUGE, and their growing utilization of 7 AUGE services attests to this. Medical doctors in both the public and private sectors have the legal obligation to inform their patients in a written statement when their health problem has some AUGE coverage. 7. Financing and Service Flows in SHI This document has described the structure and agents of Chile’s SHI system, its financing sources, and health benefits. It now provides a description of the financing flows, structure, and amounts. Figure 2 presents the funding and health service flows in Chile’s current SHI system. Government subsidies to Fonasa are intended to fully finance coverage for the indigent and the retired. Fonasa also receives the 7 percent contributions made by its members. It pays public providers through a combination of historic budgets (hospitals), capitation (health centers), fee- for-service (FFS), and case-based payment. It pays private providers FFS and case-based payment. Isapres get financing exclusively from the 7 percent mandatory contributions of their members, the additional mandatory AUGE premium (Isapres have the right to charge it and freedom to set it), and additional, voluntary premiums that the insured pay to obtain better plans—ones with smaller copayments, deductibles, and ceilings; greater provider choice; or better-quality providers. Isapres pay private providers mostly FFS. By law, Isapres are not allowed to own health providers, so that vertical integration is not possible. Yet, the largest Isapres are owned by business consortiums that also own health care providers. Figure 2 Beneficiary Population and Financing of Social Health Insurance in Chile Central government Subsidies to finance coverage for the indigent population and the retired Public Social Insurer Private Social Insurers (National Health Fund, Fonasa) (Isapres) Budgets 7% 7% AUGE Additional and output- mandatory mandatory mandatory voluntary based premium premium premium premium payments Lower- and lower- Mostly Indigent The middle-income workers Upper-middle and high fee-for- population income workers and service (Group A) retired and their families their families payments (Groups B, C, and D) Co- Co- payments payments Public providers Private providers Fee-for-services and case-based payments AUGE benefits Non-AUGE benefits 8 Figure 3 shows the flow of funds in Chile’s health system. It comprises sources of funding, agents that manage these funds, and service providers. The system receives funding from the central government, municipalities, workers, and households. Household financing includes both OOPS (37.2 percent) and additional voluntary contributions to Isapres (6.5 percent), and represents the largest funding source, totaling 43.8 percent of resources. It is followed in importance by funding from the central government (29.3 percent) and the 7 percent mandatory contribution of workers to SHI (26.0 percent). Resources are transferred to the agents, which concentrate and allocate system revenue. The agents are Fonasa, the Isapres, the MOH, and private insurers. The agent that channels the greatest proportion of resources is Fonasa (39.9 percent), which receives resources from the central government and mandatory premiums of workers. The second most important are the Isapres, with a 16.5 percent share coming from mandatory 7 percent contributions and additional voluntary contributions of members. Finally, these agents channel their financial resources to public and private providers using different payment methods. Private providers capture 59.5 percent of all system resources while public providers capture the remainder. Figure 3 Flow of Funds in Chile’s Health System, circa 2011 Sources Agents Providers Municipalities Ministry of Health (0.9%) (3.9%) Budget + Public Social Insurer Case-based Subsidies Central government (National Health Fund, + FFS Public Providers (29.3%) Fonasa) (58.0%) (39.9%) Mandatory SHI contributions FFS and case-based Private Social Insurers prospective Workers payments (Isapres) (26.0%) Mandatory SHI contributions (16.5%) Mostly FFS Voluntary additional SHI contributions Households Private Insurers Private Providers (43.8%) Voluntary premiums (1.6%) (42.0%) Mostly FFS Out-of-pocket spending (37.2) 9 Chile’s health system relies heavily on Figure 4 OOPS and Total Monthly Household OOPS for health financing. A 2007 MOH Spending, 2006 (Ch$ of 2006 and percent) study concluded that nearly one-third of 14.0% all spending was in the form of OOPS by Quintile 5 (richest) households to purchase medicines, to 11.3% make copayments to providers under their Quintile 4 SHI plan, and to purchase private health 9.0% care not covered by their insurers. It also Quintile 3 7.8% found that OOPS health financing is Quintile 2 progressive; the proportion of household 4.2% spending devoted to OOPS is smallest for Quintile 1 (poorest) the poorest income group (4.2 percent; 1,000,000 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 see figure 4) and grows with income to - reach 14 percent for the richest income Out-of-pocket spending Total spending group. Source: MOH 2007. The following analysis of national health Figure 5 Total and Government Health Expenditure, spending uses data reported by Fonasa 2000–11 (%) (2012) for 2000–11. The figures presented are estimates. Total health expenditure (THE) has fallen as a share of gross domestic product (GDP) from 8.4 percent in 2000 to 7.3 percent in 2011. This drop occurred at the same time that the share of the health sector in the government budget grew from 12.2 percent in 2000 to 13.9 percent in 2011. In absolute, real terms, THE per capita has grown by 48 percent (figure 6), from Ch$266,000 to Ch$395,000 (Chilean pesos of December 2011). Sources: Author from Dirección de Presupuestos 2010 for TGE and GHE; and Fonasa 2012. 10 The largest source of health Figure 6 Total Health Expenditure Per Capita, 2000–11 financing is OOPS (figure 7). (Ch$ of Dec. 2011 and US$) Between 2005 and 2011, OOPS 407,477 grew in real terms but dropped as a 430,000 800 395,268 share of THE in the country, from 410,000 375,093 750 41.6 percent to 38.2 percent. Over 390,000 781 758 the 11-year period shown in the 370,000 719 700 figure, OOPS as a share of THE 333,829 323,315 dropped by about 10 percentage 350,000 317,448 US$ Ch$ 650 303,399 points from an initial value of 48.8 330,000 297,064 296,080 640 290,611 percent. A share of THE, mandatory 281,587 620 310,000 600 609 SHI contributions, have remained 265,659 290,000 582 rather stable over the 11-year period 570 568 550 557 540 and since the adoption of AUGE in 270,000 2005. Government health spending 250,000 509 500 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 outside of Fonasa grew as a share of THE by almost 10 percentage points between 2000 and 2001. Thus, the Source: Fonasa 2012. largest change in health spending structure over the period was a 10 percentage point reduction in OOPS coupled with a similar increase in government health spending outside of SHI Figure 7 Health Financing Structure in Chile, 2000–11 (%) 100% 5.4 5.6 5.8 6.4 6.2 3.8 6.9 7.1 7.2 7.0 6.7 6.8 90% Voluntary contributions to Isapres and commercial insurers 80% 38.2 36.7 38.3 39.5 39.9 40.2 41.6 42.9 43.7 48.8 48.3 49.4 70% Out-of-pocket spending 60% 50% Mandatory 27.8 26.2 24.5 contributions to SHI 27.2 27.6 27.7 40% (Fonasa and Isapres) 28.2 27.6 28.2 25.9 26.6 26.0 30% Direct public spending 20% 30.9 30.8 30.2 26.5 25.8 25.1 23.0 22.4 21.2 20.1 19.2 18.8 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Author using Fonasa 2012 data. 11 8. Targeting, Identification, and Enrolment of Beneficiaries in Fonasa By definition, Fonasa Group A beneficiaries are individuals who lack resources or formal employment, and those who receive a Unique Family Subsidy (Subsidio Único Familiar) or a Government-subsidized Pension and Disability Subsidy (Pensión Básica Solidaria, PBS). Likewise, pregnant women, and children under six years of age, can apply to become Group A beneficiaries and obtain free health care from all providers in the public network. Application for Group A status takes place in public health centers where the individual must be registered. A special application form known as Accreditation of Indigence (Clasificación de Carencia de Recursos) must be available for this purpose in all these facilities around the country. Fonasa Group A beneficiaries represent over one-fourth of Chile’s total population (see table 1), yet poverty in Chile is only 14.4 percent (UNDP 2012). The distance between these two figures led Fonasa authorities in 2010 to inquire about the existence of the so-called “false indigents.� The inquiry involved first an analysis of the 2009 national Socioeconomic Characterization Survey (Encuesta de Caracterización Socioeconómica, CASEN), followed by cross-checking of the Fonasa beneficiary roster with those of the Internal Tax Service (Servicio de Impuestos Internos). The result of this effort was that approximately 400,000 individuals were found to be illegally enrolled in Fonasa’s Group A. Most of them were temporary workers and independent workers who did not make any pension contributions. Contributing to the pension system is a legal requirement for all Chilean workers, except if they are considered indigent. This confers a perverse incentive for some who choose to qualify as indigent, thus relieving themselves of the burden of having to put income away in the form of a pension contribution. In reaction to this information, Fonasa announced in July 2012 that the majority of Group A beneficiaries who declared to be temporary workers would be reclassified as Group B beneficiaries and, thus, required to contribute 7 percent of their income to Fonasa. Independent workers with regular income will be required to join an Isapre. Fonasa estimates that its efforts over the last two years to improve the reliability of the classification of its beneficiaries has enabled the public insurer to save about US$600 million in two years. This is a significant figure, since it represents about 10 percent of Fonasa’s annual budget. Fonasa will use the savings from these targeting measures to grant about 660,000 Group A beneficiaries, who currently are in that group because they receive a PBS, to join Fonasa’s voucher system for its preferred provider network with private sector providers. 9. Management and Public Funding of the AUGE Benefit As noted, the AUGE law states that AUGE’s average cost per beneficiary should not be significantly different from the so-called “universal premium.� Since 2005, the MOH has commissioned several studies to estimate the cost of AUGE. Results from these studies have fed into the joint decision by the MOH and the MOF to expand the AUGE guarantees. Participation by the MOF in the studies’ committees reflects the finance authority’s concern with the fiscal implications of AUGE. Four such costing studies have been conducted since the implementation of the reform in 2005 and a fifth is underway. That year, the first 56 guaranteed health problems were included in the benefits package. In 2010, an additional 13 priority problems were added, 12 for a total of 69. Currently, an ongoing study will help determine whether an additional 11 guaranteed health problems should be added. Until 2010, the MOH costing Figure 8 Fonasa’s Estimated Cost per Beneficiary for AUGE studies of AUGE did not compute and Non-AUGE Services, 2001–09 (US$ of June 2009) the incremental cost of AUGE, but 350 instead calculated the total cost of Pre-AUGE period Post-AUGE period 287 AUGE. These two quantities may 300 257 256 differ because many of the services 234 250 that have become AUGE 213 212 US$ of June 2009 199 198 157 189 guarantees since 2005 were already 200 126 139 being provided by Fonasa (without 126 116 117 100 150 legal guarantees). The figure that 114 107 should matter to Fonasa, the MOH, 100 and the MOF, should be the 131 130 118 108 incremental, not the total, cost of 99 96 50 94 83 AUGE, because it is the additional 81 - cost of the guarantees that will have 2001 2002 2003 2004 2005 2006 2007 2008 2009 an impact on public finances. A AUGE services Non-AUGE services study commissioned by the MOH Source: Author using MOH 2012 data. (2012) set out to estimate that incremental cost. The main study findings are summarized in figure 8. Fonasa’s total spending per beneficiary, expressed in current U.S. dollars, has grown significantly since 2005. AUGE spending was US$116 in 2005 and increased to US$157 in 2009—a 35 percent increase. Non-AUGE spending by Fonasa also increased, and by an even greater percentage (36 percent), over the same period. It seems ironic that guaranteed health services in the AUGE benefits package would bring about a per capita increase in Fonasa’s spending about equal, in percentage terms, to the increase in spending on nonguaranteed health services. The explanation probably lies in the following phenomenon: When the AUGE guarantees were adopted in 2005, Fonasa’s population was not familiar with a culture of guaranteed health care. Beneficiaries would get the services they could and waited for weeks or months for the needed services that were unavailable due to supply constraints in the public health care delivery system. Progressively, Fonasa beneficiaries understood their new rights and began to exert them, demanding a growing amount of AUGE services (see below). But at the same time, they also started to demand that non-AUGE services also be provided to them with equal promptitude. The political noise that waiting lists for non-AUGE services caused led the previous and the current governments to increase Fonasa spending on non-AUGE services, as well. The above figures attest to this phenomenon. Yet, while there seem to be few instances of noncompliance with AUGE guarantees by Fonasa, it is publicly known that there are long waiting lines for non- AUGE services. Fonasa and the MOH have expressed their willingness to reduce these lines, but have also declared that their ability to do so will be limited by the availability of public financing and a shortage of medical services in the public sector, particularly medical specialists. The reduction in waiting lines for AUGE services is partly the result of the “AUGE voucher� policy, already described in this document. 13 10. Impact of AUGE In late 2009, the Ministry of Health (2009) released to the press results from one of its first evaluations of AUGE’s health impact (not including any of the chronic conditions selected for this research). It found that mortality from several types of cancer (testicular, gall bladder, and breast cancers) dropped from 125.8 per 100,000 inhabitants in 2005, before AUGE, to 114.5 in 2007, two years into the reform. Drawing on information from various sources, Bitran et al. (2010) assessed the impact of AUGE on access to care, treatment outcomes, hospitalization rates, and medical leave rates for six chronic diseases. They found that for some of those diseases, such as hypertension, diabetes type 1 and 2, and depression, the reform was linked to growing access to services and increased coverage. For those diseases and for child epilepsy and HIV/AIDS, the hospital case fatality rate dropped. A study by Valdivieso and Montero (2010) assessed AUGE’s performance from the perspective of accessibility to guaranteed services. They found that AUGE’s access guarantee has been successful overall, and a powerful instrument to improve equity in health. About 95 percent of all Fonasa beneficiaries and three-fourths of those who belong to Fonasa’s poorest groups (groups A and B) have experienced improved access to care with the reform. Patients under 15 years of age and those over 60 years of age are particularly favored. They also found that the waiting time guarantee has generally been met, although for some diseases there are noticeable delays, including for cataracts, correction of both refractive defects and bilateral hearing loss in adults, preventive cholecystectomy of vesicular cancer, and the treatment of prostatic hyperplasia. Overall, in the first five years of implementation of the reform in the public sector, there is a record of more than 10 million guaranteed health services provided to Fonasa’s insured, with only about 150,000 delayed services, equivalent to 1.5 percent of total demand. Valdivieso and Montero (2010) also examined Fonasa’s compliance with the quality guarantees of AUGE, and found that quality assurance has not yet become effective, partly because the processes of accreditation and certification of health care providers is not yet completed. Public providers may need several more years to meet accreditation standards, since significant additional investments in infrastructure, equipment, and human resources are required to do so. In addition, the delivery of guaranteed medicines has been irregular for several AUGE health problems. In contrast, Valdivieso and Montero concluded that the financial protection guarantee has worked well in Fonasa and constitutes a significant step forward for achieving equity in access to care, particularly for the poorest members of society. In the Isapre system, they found management problems have limited access of beneficiaries to some AUGE guarantees, a reason that would partly account for the still low levels of AUGE use by this group. Only 5 percent of the 10 million AUGE services delivered to date have benefited Isapre beneficiaries, even though that population group represents 18 percent of all SHI beneficiaries. It is expected that as the Isapre population becomes more acquainted with AUGE and as the costs of health care continue to rise, they will increasingly turn toward AUGE to contain both their Isapre premium and their OOPS. 14 Figure 9 illustrates different patterns of health service utilization for four selected AUGE health problems from the above-mentioned study by the MOH (2012). The problems are breast cancer (panel A), scoliosis (panel B), HIV/AIDS (panel C), and cholecystectomy (panel D). Since the implementation of AUGE in 2005, the number of breast reconstruction surgeries has tripled in response to growing demand by beneficiaries. The number of biopsies did not change immediately after the implementation of AUGE, but nearly doubled in 2009 relative to the amount in the year of implementation. The number of surgeries to correct scoliosis has more than tripled since the advent of AUGE. Total lymphocytes count (OKT3 and OKT11) and immunophenotyping exams for HIV/AIDS patients increased well before AUGE, and have fluctuated thereafter. The annual number of HIV/AIDS patients discharged from public hospitals has remained rather constant. 7 The number of cholecystectomies with or without surgical cholangiography has remained more or less stable whereas the number of laparoscopic cholangiographies has increased by a factor of four. Overall, the MOH (2012) found significant evidence that AUGE has expanded beneficiary access to health care for guaranteed health treatments. No data are available, however, to permit this analysis by the Fonasa group. Paraje and Vásquez (2012) used data from Fonasa and from a national household survey to examine trends in the utilization of health services after the implementation of AUGE. They found that specialized care, lab tests, X-rays, and ultrasounds have had, since 2003, strong pro- rich distributions, but that in all cases this decreased between 2003 and 2009. Visits to general practitioners went from a moderately pro-poor concentration index to moderately pro-rich over the same period. By contrast, emergency care and inpatient days have concentration indexes showing a pro-poor distribution, which is relatively stable over time. The overall assessment of AUGE by the general population, as measured with opinion polls by an independent firm contracted out by the National Health Regulator is positive. About 80 percent of respondents evaluated the AUGE system with a grade of 85 to 100, where the latter is the maximum. The consequences of AUGE for health system efficiency have not been measured. There are, however, elements in AUGE’s design and mechanics that suggest that allocative efficiency may have improved as a result of the selection of cost-effective treatments in AUGE’s benefits package. In addition, productive efficiency may also have improved through the adoption of explicit treatment protocols for all of AUGE’s interventions. Further, AUGE’s approach to disease management, which considers explicit criteria for medical referrals and counterreferrals along different levels of the delivery system, may also contribute to improved allocative and productive efficiency. Currently, Fonasa is considering mandating the use of around 100 generic, bioequivalent drugs for the treatment of AUGE diseases. 7 AUGE includes not only exams but also antiretroviral treatment for HIV/AIDS patients. 15 Figure 9 Trends in the Production of Selected AUGE Health Services for Fonasa Beneficiaries, 2001–09 Panel A Breast Cancer Panel B Scoliosis Panel C HIV/AIDS Panel D Cholecystectomy Source: MOH 2012. 11. The Health Coverage for the Poor Information Environment In anticipation of the AUGE reform, Fonasa developed an information system, the Reporting System for the Management of Explicit Health Guarantees (Sistema de Información para la Gestión de Garantías en Salud, SIGGES). It was intended to capture the most significant utilization statistics for guaranteed health services and also information about the stages of each priority disease, from suspected cases to diagnostic confirmation to treatment and control. SIGGES was initially faulty because the system that Fonasa sought to develop was overly ambitious, but Fonasa officials claim that, over the years, SIGGES has become more accurate. SIGGES, however, was not specifically designed for Fonasa’s indigent, but was designed to record information equally for all Fonasa beneficiaries. The National Health Regulator has two main functions: (a) to ensure that social health insurers (Fonasa and the Isapres) comply with the SHI law; and (b) to accredit, certify, and perform quality assurance of public and private health care providers around the country. With regard to (a), the agency keeps track of all complaints made by Fonasa and Isapre beneficiaries regarding failure by the insurer to comply with the AUGE and guarantees and with all other, non-AUGE legal benefits. The regulator follows up on all complaints, although its ability to follow up with 16 Fonasa has encountered legal problems. As regards (b), the regulator must accredit all public and private health care providers that wish to provide AUGE services. The regulator is far behind in its second function, primarily because vast amounts of public investments are necessary to bring public hospitals to a level where they may be accredited. The government seems to want to phase out these investments in order to spread the fiscal impact of these investments over time. Thus, it may take several years for all public hospitals, to be accredited as AUGE providers. 12. Equity and Fiscal Implications of Expanding the AUGE Benefits While the overall assessment of the AUGE reform is positive, as argued above, there is a challenge ahead that may complicate the policy scenario. Its origin is in the Isapre system. Isapres have been criticized for cream skimming—selectively deciding who they cover and who they reject. They have also been accused of price discrimination—setting their premium in accordance with each individual’s or family group’s risk—thus defeating the principle of solidarity. 8 Those in their situation are called Isapre “captives.� Isapres have also successfully been challenged in the Constitutional Tribunal for increasing their prices with a person’s age in a way that, according to constitutional experts, violates the constitution. Thus, in 2011 the Constitutional Tribunal ordered Isapres to stop increasing their premiums with the insured’s age. All these factors have led lawmakers to propose a legal change that would force all Isapres to offer the same benefits package, known as Guaranteed Health Plan (GHP), while allowing them to sell complementary insurance above the GHP. It turns out that the contents of the GHP would largely exceed the contents of AUGE. In fact, the GHP would contain AUGE, plus catastrophic coverage, plus coverage for preventive care, plus coverage for all non-AUGE services. The AUGE-like guarantees would apply only to the AUGE component of the GHP. Other coverage would have less stringent conditions for the insurer. A proposal to adopt the GHP policy is currently pending approval in congress. Some think tanks and trade groups, as well as the government, have estimated that if the GHP law were approved, as many as one-third of Isapre beneficiaries would leave the Isapre system to join Fonasa. The reason for this expected exodus is that to be able to offer the GHP, Isapres would have to raise their premium considerably, and this would result in a drop in the demand for coverage from these insurers. In the debate, some policy makers have argued that it would be unfair for Isapres to have a legal benefits package much broader than Fonasa’s. They have, therefore, proposed that the GHP should be extended to Fonasa, as well. The fiscal implications of AUGE are unclear but seem moderate to date. Although government spending on AUGE and non-AUGE services has increased in real per capita terms, government health spending as a share of total government spending has been increasing mildly since AUGE’s adoption, from around 13 percent to about 14 percent. The future fiscal impact of AUGE will depend on the degree to which AUGE guarantees are expanded. Yet, an orthodox policy by the MOF has set a limit on the cost of AUGE, by defining an upper limit, in real terms, for the actuarial cost of AUGE per beneficiary. 8 See differences in age and sex profiles between Fonasa and Isapre beneficiaries in figure AB.1 of Annex B. 17 The impact of AUGE on OOPS appears to have been positive if the National Health Account data reported by Fonasa are correct. The only national household study of health service utilization and OOPS was conducted in 2007. A new study is needed to assess the consequences of AUGE on OOPS and on access to health care by socioeconomic group. The logic of AUGE has been the progressive and explicit coverage of guaranteed health services. To date, the evidence suggests that AUGE has been a positive reform. Key to its success is the incremental nature of the guarantees: 25 priority problems were covered in 2005, 40 in 2006, 56 in 2007, 69 in 2010, and, possibly, 80 in 2013. Broadly expanding the benefits package in Fonasa, from AUGE to GHP, would probably result in the breakup of the system of guarantees. Fonasa’s limited resources would not be compatible with such a large benefits package. In the end, if it were forced to guarantee all services, then probably guarantees would no longer be met as systematically as they have been under AUGE. 13. Pending Agenda Implementation of a reform as far reaching as AUGE has challenged most key actors in the health system. Fonasa is still striving to meet some guarantees while having to live within its limited budget. It also has to improve its main information system, SIGGES, to track AUGE’s performance. The National Health Regulator must still gain full power to regulate Fonasa in much the same way as it has been regulating the Isapres. It must make more progress in the regulation of health care quality in the public and private sectors, an initiative that has turned out to be much more difficult, costly, and hard to implement than it had originally envisioned. Isapres, in turn, are experiencing an increase in the demand for AUGE benefits by their beneficiaries and have been increasing the AUGE-specific premium year after year. 18 Annex A The Market for Health Services in Chile The market for health care services in Chile is mixed. In 2005, there were 39,135 hospital beds in the country of which 72 percent were public and 28 percent were private (PAHO 2007). In 2009, the country had 2,464 public and private health care facilities, including 2,288 in the public sector (known as the National Health Services System, SNSS) and 176 in the private sector. Among the public sector facilities, 226 were hospitals and 2,062 were ambulatory health centers. All 176 private sector facilities are hospitals or clinics. A large but unknown number of private doctor’s offices and ambulatory centers are not accounted for (INE 2011). The country has approximately 30,000 medical doctors, 44 percent of whom are employed in the public sector and 56 percent of whom work exclusively in the private sector. A large but unknown share of the publicly employed medical doctors also has a private practice (MOH 2012). The SNSS is a decentralized network of primary, secondary, and tertiary facilities managed and technically supervised by 33 decentralized Regional Health Services (RHS). Each RHS manages several secondary and tertiary facilities while primary health centers are managed by municipal corporations. Primary care facilities offer preventive and curative health care and health promotion on an ambulatory basis. There are 2,062 such facilities in the country, in both urban and rural areas, including health centers, rural health posts, and rural-medical stations. These facilities must comply with technical and ministerial norms of care prescribed by the Ministry of Health (MOH) and must offer the services defined by it. Secondary care facilities may be stand alone, such as Reference Health Centers and Diagnostic and Treatment Centers, or they may be part of a public hospital. There are four types of public hospital according to the complexity of the services they can treat. The referral system in the public sector has experienced problems over time, the result of a lack of coordination between provider systems that are managed by different operators; municipalities run primary health care facilities and Regional Health Services manage secondary and tertiary level facilities. The AUGE reform (see description below) has helped improve referral patterns, because the AUGE treatment guarantees define referral patterns that the health system must comply with by law. For example, the treatment guarantee for diabetic patients involves initial consultations with a specialist to confirm the diagnosis and to define the course of treatment, followed by subsequent controls at the primary health care level, followed by occasional visits to the specialists and, when necessary, by hospitalization. Since the 1981 reform, which split financing from provision in the public sector, Fonasa has not owned or run any health facilities. Fonasa purchases health care services on behalf of its beneficiaries in both the public and private sectors. In the public sector, it pays public hospitals through a combination of historic budgets (50 percent), FFS, and prospective payment (the other 50 percent). It pays municipal health centers mostly a capitation but also FFS. In the private sector, Fonasa pays ambulatory and inpatient providers on an FFS basis via a voucher system. Chile has a long-standing strategy to attract and retain doctors in rural areas. Known as the Rural Practitioner Program, it was launched in 1955 with the main objective of attracting physicians to work in rural primary care hospitals and health centers for a minimum of three and a maximum of six years. The program’s main incentive is a grant for the doctor’s residency in a university hospital plus attractive salaries and benefits that increase with the remoteness of the workplace 19 and the doctor’s clinical responsibilities. The program considers both direct and indirect financial incentives to retain doctors in rural areas. Still, there is a shortage of specialists in rural areas, which is hampering Fonasa’s ability to deliver AUGE and non-AUGE benefits there. In 2010, Chile’s infant and child mortality rates, at 7.7 and 8.8 per 1,000 live births, respectively, were among the lowest in Latin America and the Caribbean, second only to Cuba’s. Together with a life expectancy at birth of 78.9 years, these indicators put Chile at nearly the same level as industrialized countries. Yet, other indicators do not compare favorably with developing or industrialized countries. These include a rapidly growing prevalence of diabetes, a high prevalence of hypertension among adults, and the world’s highest prevalence of smoking among female adolescents. Many of Chile’s noteworthy health achievements are attributable to its publicly run primary care system and to an institutional coverage of deliveries that reached over 99 percent more than three decades ago. A nationwide network of rural health posts, standard health centers, family health centers (CESFAM), and community family health centers are staffed with doctors, nurses, midwives, laboratory technicians, and social workers. Their aim is to achieve high rates of coverage of pre- and postnatal care, child growth monitoring, and child immunization, and to deliver several other health services that are part of a primary level benefits package known as the Family Health Plan (Plan de Salud Familiar). In addition to these facilities, the MOH operates emergency primary health care services, which are facilities designed to solve low-complexity emergencies on an ambulatory basis, thus improving the ability of the primary care system to resolve medical problems and relieving hospitals, while reducing transportation and time costs for beneficiaries. Aside from their engagement in maternal and child health, standard health centers have, for nearly 30 years, operated managed care programs for diabetes, hypertension, and other chronic conditions. Until 1981, standard health centers were operated by the MOH. With the health reform of that year, management of these facilities was transferred to municipalities’ health corporations, although the MOH retains its role as the health authority for these facilities, defining standards of care and services to be provided. To obtain services from the public primary health care network, individuals must formally register with a health center. The registration list serves as the basis for the computation of the capitation payment that Fonasa transfers to municipal corporations. The latter can top up per capita revenue with own financing. By law, all Chileans have free access to public primary health care services, including individuals who are not beneficiaries of Fonasa. Thus, Isapre beneficiaries could in principle obtain services from these providers at no cost. Yet, their use is infrequent because beneficiaries prefer to obtain ambulatory care from private providers, who are perceived as offering better-quality care and whose fees are largely covered by their Isapre plan. 20 Annex B Additional Information Table AB.1 Current 69 Priority Health Problems in the AUGE Benefits Package Health Problem Health Problem 1. End-stage chronic renal failure 36. Acute stroke 2. Operable congenital heart disease (under 15 37. Chronic obstructive pulmonary disease years of age) 38. Bronchial asthma 3. Cancer of the uterus or cervix 39. Newborn respiratory distress syndrome 4. Cancer pain relief and palliative care 40. Orthesis and aids (65 years of age or more) 5. Acute Myocardial Infarction 41. Deafness (65 years of age or more) 6. Diabetes Mellitus Type I 42. Ametropia (65 years of age or more) 7. Diabetes Mellitus Type II 43. Eye trauma 8. Breast cancer (15 years of age or more) 44. Cystic fibrosis 9. Spinal Dysraphia 45. Severe burns 10. Scoliosis surgery (under 25 years of age) 46. Alcohol and drug dependency (10 to 19 years of 11. Cataract surgery age) 12. Total hip replacement in people with severe 47. Pregnancy and delivery integral care osteoarthritis of the hip (65 years of age or 48. Rheumatoid arthritis more) 49. Knee arthrosis (55 years of age or more) and 13. Cleft palate hip arthrosis (60 years of age or more) 14. Cancer (under 15 years of age) 50. Intracranial aneurysm and venous malformation 15. Schizophrenia rupture 16. Testicular cancer (15 years of age or more) 51. Central nervous system tumors 17. Lymphoma (15 years of age or more) 52. Herniated nucleus pulposus 18. HIV/AIDS 53. Dental emergencies 19. Ambulatory care lower ARI (under 5 years of 54. Dental care (65 years of age or more) age) 55. Politrauma 20. Ambulatory pneumonia (65 years of age or 56. Traumatic brain injury more) 57. Retinopathy of Prematurity 21. Primary or essential arterial hypertension 58. Bronchopulmonary dysplasia of prematurity 22. Epilepsy (non-refractory) (1 to 15 years of age) 59. Bilateral sensorineural hearing loss of 23. Prevention and education for oral health (6 prematurity years old) 60. Epilepsy in patients over 15 year 24. Prematurity-Retinopathy of prematurity- 61. Bronchial asthma in patients over 15 year Deafness of prematurity 62. Parkinson 25. Conduction disturbance for those with 63. Juvenile idiopathic arthritis pacemakers (15 years of age or more) 64. Secondary prevention of chronic renal failure 26. Bladder cancer preventive cholecystectomy 65. Hip dysplasia 27. Gastric cancer 66. Integral oral health in pregnant women 28. Prostate cancer 67. Multiple Sclerosis 29. Adult leukemia 68. Hepatitis B 30. Strabismus (under 9 years of age) 69. Hepatitis C 31. Diabetic retinopathy 32. Retinal detachment 33. Hemophilia 34. Depression (15 years of age or more) 35. Benign prostatic hyperplasia 21 Figure AB.1 Age and Gender Distribution of Fonasa and Isapre Beneficiaries, 2010 60.0% 1.5% 0.2% 1.6% 50.0% 5.1% 0.9% 6.7% 0.3% 1.7% 8.5% 4.0% 6.9% 40.0% 7.2% 80 and more 24.0% 65-79 30.0% 19.1% 19.7% 50-64 14.9% 25-49 15-24 20.0% 0-14 8.8% 8.1% 9.1% 7.3% 10.0% 10.8% 11.3% 11.5% 11.0% 0.0% Men Women Men Women Fonasa Isapre 22 Annex C Spider Web I. Outcomes comparisons: Chile and Upper Middle Income Countries Note on interpretation: In this plot ‘higher’ is ‘worse’ – since these indicators are positive measures of mortality / morbidity. Life expectancy is converted to be an inverse measure. The values on the radar plot have been standardized with respect to the average upper middle income country value. The table below summarizes outcome comparisons with the average upper middle income country (UMIC). IMR: Infant mortality rate (2010). U5MR: Under-5 mortality rate (2010). Stunting: prevalence of low height-for-age among children under 5 (2010). MMR: Maternal mortality rate (2010) per 100 000 live births. Adult mortality: Adult mortality rate per 1000 male adults (2010). [100-(life expectancy)]: Life expectancy at birth (2010) subtracted from maximum of 100. Neonatal mortality: Neonatal mortality per 1000 living births. CD as cause of death: Communicable diseases as cause of death (% total). All data from World Bank's World Development Indicators. Income averages for stunting calculated by Bank staff and are unweighted. II. Inputs comparisons Chile and Upper Middle Income Countries Note on interpretation: This plot shows indicators which measure spending on health or the number of health workers per population. The values on the radar plot have been standardized with respect to the average upper middle income country value. The table below summarizes inputs comparisons with the average upper middle income country (UMIC). THE as % of GDP: Health expenditure, total (% of GDP) (2010). Hospital bed density: Hospital beds per 1,000 people (latest available year). Physician density: Physicians per 1,000 people (latest available year). Nurse/midwife density: Nurses and midwives per 1,000 people (latest available year). GHE as % of THE/10: Public health expenditure (% of total expenditure on health) (2010). All data from World Bank's World Development Indicators. 23 III. Coverage comparisons Chile and Upper Middle Income Countries Note on interpretation: In this plot ‘higher’ is ‘better’ – since these indicators are positive measures. In this case, all are percent of the population receiving or having access to a certain health related service. The values on the radar plot have been standardized with respect to the average upper income country value. The table below summarizes coverage comparisons with the average upper middle income country (UMIC). DPT immunization: % of children aged 12-23 months with DPT immunization (2010). Prenatal services: % of pregnant women receiving prenatal care (latest available year). Contraceptive prevalence: % of women ages 15-49 using contraception (latest available year). Skilled birth attendance: % of all births attended by skilled health staff (latest available year). Improved sanitation: % of population with access to improved sanitation facilities (2010). TB treatment success: Tuberculosis treatment success rate (% of registered cases). All data from World Bank's World Development Indicators. IV. Infrastructure comparisons Chile and Upper Middle Income Countries Note on interpretation: In this plot ‘higher’ is ‘better’ – since these indicators are positive measures of provision of certain good / service, and a measure of urban development. The values on the radar plot have been standardized with respect to the average upper middle income country value. The table below summarizes infrastructure comparisons with the average upper middle income country (UMIC). Paved roads: % of total roads paved (most recent). Internet users: users per 100 people (2010, with some estimates from prior years). Mobile phone users: mobile cellular subscriptions per 100 people (2010). Access to improved water: % of population with access to improved water source (2010). All data from World Bank's World Development Indicators. 24 V. Demography comparisons Chile and Upper Middle Income Countries Note on interpretation: Indicators here measure births per woman, the extent of rurality, and the number of dependents. The values on the radar plot have been standardized with respect to the average upper middle income country value. The table below summarizes demographic indicators comparisons with the average upper middle income country (UMIC). TFR: total fertility rate (births per woman), 2009. Dependency ratio: % of working-age population (2010) aged less than 15 or more than 64. Youth dependency: % of working-age population (2010) aged less than 15. Rurality: % of total population in rural areas (2010). All data from World Bank's World Development Indicators. 25 References AACH (Asociación de Aseguradores de Chile). 2012. Boletín Estadístico Salud 2002– 2011.Bitrán, R. 2008. Scaling Up Health Insurance in Latin America. Washington, DC: World Bank. Bitrán, R., and G. Urcullo. 2006. Good Practice in Expanding Health Care Coverage – Lessons from Reforms in Chile. Washington, DC: World Bank. Bitrán, R., J. Muñoz, P. Aguad, M. Navarrete, and G. Ubilla. 2000. “Equity in the Financing of Social Security for Health in Chile.� Health Policy 50 (3) (January): 171–196. Bitran, R., L. Escobar, and P. Gassibe. 2010. “After Chile’s Health Reform: Increase in Coverage and Access, Decline in Hospitalization and Death Rates. � Health Affairs. Dirección de Presupuestos, Gobierno de Chile. 2010. “Ley de Presupuestos del Sector Público 2000–2011.� Engel, E., A. Galetovic, and C. Raddatz. 1997. Taxes and Income Distribution in Chile: Some Unpleasant Redistributive Arithmetic. Santiago: Centro de Economía Aplicada, Universidad de Chile. Fonasa. 2012. “Estadísticas e Indicadores.� http://www.fonasa.cl/wps/wcm/connect/ecc92d9b- 8d15-4c27-ba12-0558ebdb2b06/02+-+Indicadores_pagina_web_%2826-07- 2011%29JAV.xls?MOD=AJPERES&attachment=true&id=1313788250730, 2012.INE (Instituto Nacional de Estadísticas). 2011. “Compendio Estadístico 2011.� Santiago. MOH (Ministry of Health). 2007. “Primer Estudio Nacional sobre Satisfacción y Gasto en Salud. Informe de Resultados. Módulos ‘F’ ‘Y’ ‘G’ Gasto de Bolsillo en Salud.� ———. 2009. “GES AUGE…su historia.� (“AUGE…Its Story.�) PowerPoint presentation, circa 2009, Santiago. ———. 2012. “Impacto de las Garantías Explícitas en Salud en producción y en gasto en la Red Asistencial de Salud: Informe Final.� Santiago. ———. 2009. “Estudio de verificación de costos AUGE esperados por beneficiario.� Santiago. ———. 2010. “Estudio de Brechas de.� Santiago. PAHO (Pan-American Health Organization). 2007. Health in the Americas. Paraje, G., and F. Vásquez. 2012. “Health Equity in an Unequal Country: The Use of Medical Services in Chile.� International Journal for Equity in Health 11: 81. UNDP (United Nations Development Programme). 2012. “Reducción de la Pobreza y la Desigualdad.� http://www.pnud.cl/areas/ReduccionPobreza/datos-pobreza-en-Chile.asp. Valdivieso, V., and M. Montero. 2010. “The AUGE Plan: 2005 to 2009. Revista Médica de Chile Scielo 138. Vargas, V., and R. Poblete. 2008. “Health Prioritization: The Case of Chile.� Health Affairs 482. 26 World Bank. 2007. “Project Performance Assessment Report Ghana. Second Health and Population Project (Credit No. 2193).� Health Sector Support Project (Credit No. 2994). Washington, DC. World Health Organization. 2010. The World Health Report 2010. Geneva. 27 28 29 The World Bank supports the efforts of countries to share prosperity by transitioning toward universal health coverage (UHC) with the objectives of improving health outcomes, reducing the financial risks associated with ill health, and increasing equity. The Bank recognizes that there are many paths toward UHC and does not endorse a particular path or set of organizational or financial arrangements to reach it. Regardless of the path chosen, the quality of the instruments and institutions countries establish to implement UHC are essential to its success. Countries will face a variety of challenges during the implementation phase as they strive to expand health coverage. With that in mind, the World Bank launched the Universal Health Coverage Studies Series (UNICO Studies Series) to develop knowledge and operational tools designed to help countries tackle these implementation challenges in ways that are fiscally sustainable and that enhance equity and efficiency. The UNICO Studies Series consists of technical papers and country case studies that analyze different issues related to the challenges of UHC policy implementation. The case studies in the series are based on the use of a standardized protocol to analyze the nuts and bolts of 27 programs in 25 countries that have expanded coverage from the bottom up, starting with the poor and vulnerable. The protocol consists of 300 questions designed to elicit a detailed understanding of how countries are implementing five sets of policies to accomplish the following: • Manage the benefits package • Manage processes to include the poor and vulnerable • Nudge efficiency reforms to the provision of care • Address new challenges in primary care • Tweak financing mechanisms to align the incentives of different stakeholders in the health sector The UNICO Studies Series aims to provide UHC implementers with an expanded toolbox. The protocol, case studies and technical papers are being published as part of the Series. A comparative analysis of the case studies will be available in 2013. 30