The Chilean Health Care System: From Successful Socialized Medicine



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The Chilean Health Care System: From Successful Socialized Medicine
To Unproven Free Market Reforms

Dean Pedersen

Health Services 534

May 25,1999


This paper will describe the Chilean health care system emphasizing some aspects of it’s historical development and the recent changes it has experienced. The Chilean health care system evolved into a predominantly socialized medicine model to serve the needs of a moderately developed Latin American country. In 1973 this socialized medicine model was abandoned with the overthrow of Salvador Allende, and privatized medicine was espoused by the subsequent military regime. A return to democratically elected governments in 1989 brought increased government spending for social services including health care, but has not eliminated the private medical system that was by then in place. Health status indicators for Chile such as maternal and infant mortality and life expectancy were high by Latin American standards during the years of socialized medicine, and have remained so with the move towards a privatized system. What may not be clear at this time is whether a socialized medicine model of health services delivery is more effective than a privatized model in serving countries with large disparities in income such as Chile and it’s fellow Latin American nations.

The setting under which health care occurs in Chile will first be described. A very brief description of Argentina is provided, so that Chile’s achievements is reducing infant and maternal mortality and increasing life expectancy can be compared to perhaps it’s most similar Latin American nation. Population and health status indicators for Chile will be presented. Descriptions of some aspects of the Chilean health care system will be followed by a brief summary of it’s historical development. Successes and failures of the Chilean health care system will be presented, as well thoughts regarding applying Chilean health care system successes to other Latin American nations.


SETTING
Geography and Climate: Chile is a long narrow nation. It’s eastern side is comprised of the western slope of the Andean mountain range, and it’s western side is the Pacific coast. It extends for 2,650 miles from 17 degrees latitude south to Cape Horn, the southern tip of the South American continent. The total area is 302,778 square miles. Climates range from the Atacama Desert in the north, cool, cold and damp coastal and mountainous climates particularly in the south, to the Mediterranean climate of the fertile central valley. Natural disasters including earthquakes, flooding, and drought are associated with it’s location along a geologically active zone and it’s coastal climate.

Capital: Santiago (population 5.2 million in metropolitan area)

other major cities: Concepcion-Talcahuano (pop 840,000) Vina del Mar-Valparaiso (pop 800,000)



Economy: Chile has one of the strongest economies in Latin America, although there are concerns about possible adverse effects related to the recent Asian economic crisis and economic problems affecting Brazil and other Latin American trading partners. It is increasingly difficult to obtain financing from more developed countries due to uncertainty about the health of the Latin American economies. The GDP growth rate has been 7.5% for much of the past decade but fell to 3.3% in 1998, and is projected to fall further to 2.0% in 1999. Inflation in 1999 is expected to reach a record low of 4.5%. Unemployment increased from 6.1% in 1997 to 7.2% in 1998. Mining makes up almost 50% of exports and copper comprises 87% of mining exports. The price of copper reached a record low in March of 1999. The government is encouraging diversification into non-traditional exports such as fruit, wine, and seafoods.

36% of workforce is employed in services and government. 17% of workforce is employed in manufacturing.

18% of workforce is employed in agriculture, forestry, and fishing. 2% of workforce is employed in mining.

History


  1. Beginning of Spanish colonial Period

1810-1826 War of Independence from Spain

    1. War of the Pacific results in acquisition of Peruvian and Bolivian lands

    1. Salvador Allende pursues socialist policies

    1. Augusto Pinochet overthrows Allende and forms military/police state, murdering and persecuting liberals and leftist, implements Free Market economic policies including more privatization of the health care system.

1989-present Democratically elected civilian governments moderately increase support for social programs

Government: Democratically elected president Judicial branch with various courts

Legislative Branch consisting of 120 member Chamber of Deputies and 46 member Senate

The present government is a center-left coalition headed by president Eduardo Frei, with right-wing parties

in control of the Senate.



Sociocultural: Spanish is the official language. Adult literacy rate is 94%.

Educational is free and compulsory between the ages of 6 and 13, and enrollment was 86% in 1997.

85 percent of population is Roman Catholic while much of the remainder are Evangelical Christians.

Traditional family structures are still common including three generation households.

Female participation in labor force 33.7% (1996)

12.4% of work force was affiliated with a trade union in 1996, compared with 32.5% in 1973.

European immigrants from Ireland, England, and Germany have been particularly influential.

People: Population 14.6 million total (1997)

Growth rate 1.64 % (1992)

Birth rate 19.7 per 1,000 (1995) Fertility rate 2.5 children per woman (1995)

Age Distribution: 9.71% of population over age 60

84% reside in urban areas (40% residing in greater Santiago area)

Ethnicity Spanish-Native American (mestizo) 92%

Indigenous Native-American groups 1.2 million or approximately 10% (1992)

Mapuches 920,000 (1992) 90% live in poverty, infant mortality rate 34 per 1,000(1988-1992)

Aymaras 48,500 (1992) infant mortality rate 40 per 1,000 (1988-1992)

Rapa Nui 22,000 (1992) infant mortality rate 32 per 1,000 (1988-1992)

(Above indigenous group infant mortality rates were based on study of 39 communes where

20% or more of population is indigenous1)

43% of total indigenous population lives in Santiago Metropolitan Region, with 13% in the

Biobio region and 14.5% in the Araucania region.



Income: per capita US$ 4,987.00 (1996)

23% or 3.3 million live in poverty (1996)

1994 Income distribution: 56.1% of country’s wealth earned by richest 20% of population

4.6% of country’s wealth earned by poorest 20% of population



Comparisons With Argentina

Argentina is perhaps the Latin American nation most comparable to Chile. It is over three times as large with an area of 1,073,518 square miles. It’s population is greater at close to 36 million (1997). It too is highly urbanized with 88% living in urban settings. Like Chile it has a Roman Catholic and Spanish sociocultural background with strong influences from European immigration. It went through recent periods of military dictatorship, with similar human rights abuses directed at a large segment of society, in 1966-1972 and 1976-1983. It is a moderately industrialized nation. It’s health care system differs from that of Chile’s, by the predominance in Argentina of obras mutuales, employment based systems, privately financed mainly by employer contributions and employee withholdings.



Chilean Health Care System Facts

Coverage

Drinking water: 98% of urban population and 67.3% of rural has access to safe water.

Sanitation: the coverage of sewer systems is 84.7% in urban areas.

Immunization coverage is 95%

99.5% of births were attended

Physical Resources

40,000 hospital beds, in 198 hospitals and 265 clinics, 90% of which are available through

SNSS ( National Health System) (1996)

3.0 beds per 1000 beneficiaries public sector 3.5 beds per 1,000 private sector

1,102 rural health outposts, managed by SNSS through municipalities (1998)

Health Care Personnel

Physicians 13,857 0.54/1,000 physician/population (1996)

Specialists: General Surgery 561 OBGYN 506

Nurses 6,738 (1996)



Financing

Total national spending towards health 5.02% of GDP (1997), grew by 15.1% 1993-1998.

Government expenditures towards health are 44% of national total (1992)

Compulsory health insurance premium of 7% (1994) of salary is collected from workers and covered 46% of total national health expenditures (1989).

ISAPREs consumed nearly 40% of all health care expenditures in 1990 but served only 18% of

the population. In 1998 ISAPREs covered 23.7% of the population.

64.47% of population are beneficiaries of the public health care system (1998)

Public sector employs 68,400 persons directly (SNSS) and 16,500 indirectly (1998)

Chilean pharmaceutical industry produces approximately half of drugs sold, the other half is imported.


Historical Development of the Chilean Health Care System


The following paragraph is a brief summary of Reichard’s analysis of the social and labor climate that led to the beginnings of Chile’s first movements towards a socialized model of providing health care services2. Nitrate mining in northern Chile started in 1873 after the seizure of Bolivian mines. Nitrate mining reinforced an export economy subservient to foreign interests, and gave rise to a elite class in Chile that had little interest in internal social investment in schools or public health. It employed a large labor force, which experienced great hardships during cyclical downturns in the industry. These hardships created a large proletariat that demonstrated for better working conditions. This labor movement made significant gains in the 1920s following the collapse of the nitrate mining industry after World War I. Chilean “infant mortality in 1918 was the highest in the hemisphere. In 1918 Chile became the first nation in the western hemisphere to provide comprehensive medical coverage for non-military workers when railroad workers began to receive free and low-cost medical care”2. A social security plan for blue collar workers was implemented in 1924, and one for white collar workers in 1925. At this time it was recognized that Chilean workers had a legal right to health care. An income tax was also introduced in 1925. Free medical coverage, sick pay, and disability payments were authorized for all citizens, however low levels of state financing restricted actual access to only a small percentage of workers.

From 1952 when the Chilean National Health Service was created, until the overthrow of the Allende government in 1973, Chile followed a socialized medicine model of health care. Extensive commercial relations between Chile and Europe, Chile’s European immigrant population, a belief by the business community that a healthy labor force would increase productivity, and the examples set by the British National Health Service and other European socialized medicine systems, were influential in creating public support for the creation of a Chilean National Health Service, which was established in 19523. “The SNS (Servicio Nacional de Salud) was created to coordinate the delivery and financing of more than 50 medical programs and replaced the functions of many charitable organizations (beneficencias), which had been significant sources of medical care since the nineteenth century”3. “The National Health Service was in charge of providing preventive services for all of the population and free curative services to the estimated 65 per cent of the population consisting of blue collar workers and indigents”4. It provided over ninety per cent of all hospital beds. Another system SERMENA, was established in 1968 as a government administered plan for white collar workers and their dependents and covered about twenty per cent of the population. In 1969 seventy per cent of ambulatory care and ninety per cent of inpatient care was provided by the public health sector2. “The development of the health sector prior to 1973 was based on: (1) the provision of health care as a basic human right, (2) the State’s responsibility to assure access to adequate preventive and curative care to the entire population and (3) State subsidy of lower income groups unable to pay for their health care”4. Until 1973 the National Health Service was financed by central government contributions (65 per cent) and by compulsory insurance contributions of employers and workers (20 per cent)5. Salvador Allende’s government from 1970-1973 increased government spending for health and sought to expand services for the economically disadvantaged segments of society.

Augusto Pinochet seized power in 1973 and began implementing free market policies through out the economy. The National Health Service was reorganized in 1979, transferring policy making powers to the Ministry of Health and shifting administration of preventive and curative services to the regional and local levels. The financial functions of the National Health Service and those of SERMENA were unified into one agency, the National Health Fund. Pinochet’s government began implementing policies that decreased the public portion of health expenditures and increased the importance of private insurance plans and their associated clinics.

Separate systems and privately funded systems of medical care existed during the years of socialized medicine and continue to exist today. A private medical system has always existed in Chile serving the wealthier segment of society, approximately ten percent of the population. The military continues to receive care from a separate health care system serving approximately 2.7 per cent of the population. “Since the 1930s, sectors of the public bureaucracy and private industry have operated medical programs (cajas) exclusively for their employees. Private firms in banking, construction, and finance provided these services as employee benefits, offering empleados (white collar salaried workers) alternatives to the more crowded and less attractive public facilities used by obreros (blue collar workers)”3. Pinochet’s government promoted the formation of ISAPREs, a system of medical insurance systems and clinics largely modeled after American HMOs. “ISAPREs are funded by wage withholdings, employer contributions, monthly premiums, and nominal co-payments at the time of service”3. These ISAPREs in 1994 covered twenty-five per cent of the population according to Montoya-Aguilar and Marchant-Cavieres5.

With the return of democratically elected governments in 1989 there has been a continuation of the free market economic policies implemented by Pinochet’s military government. However these subsequent governments have increased the percentage of government spending towards health care, although not to the levels reached prior to 1973. Tax increases and foreign assistance have been used towards restoring the public health system which had deteriorated during the Pinochet regime. “The 1991 budget called for the hiring of an additional two thousand staff drawn largely from lists of those who were fired or blacklisted under General Pinochet”2.

Successes and Failures of the Chilean Health Care System


Chile’s health care system has made remarkable progress since 1918 when the country had the highest infant mortality rate in the western hemisphere. “In 1945 the infant mortality rate was estimated at 165 per 1,000 live births, whereas in 1995 it was only 11.1 per 1,000 live births”1. Maternal mortality has declined from an estimated 300 per 100,00 live births in 1960 to 30 per 100,00 live births in 19951. Life expectancy at birth in 1996 was 78.3 years for women and 72.3 years for men1. These mortality indicators are significantly lower than those of Argentina and are indicative of the success of the Chilean health care system during the latter half of the twentieth century. Chile has entered a developmental stage where diseases of the respiratory and circulatory systems, cancer, and accidents are the leading causes of deaths.

Although the above mentioned mortality indicators continued to decline after the transition from a socialized medicine approach to health services delivery towards the promotion of privatized medicine in 1973, there are indications that Chilean health and the health care system deteriorated during this transition. It is generally accepted that the Pinochet regime maintained government support for programs such as the infant milk program in order to maintain an improving infant mortality rate, which was considered to be a politically sensitive measure of progress in Chile. However Montoya-Aguilar and Marchant-Cavieres were able to correlate periods of decreased government spending towards health in 1975-1976 and 1983-1987, with stagnation of the trend towards declining infant and maternal mortality rates5. Scarpaci proposes that in a more developed country such as Chile, that has greatly reduced it’s rate of infant and maternal mortality, morbidity is a more pertinent index of the health status of the population6. He concludes that the emphasis towards privatized medicine after 1973 brought about a rise in infectious diseases, and specifically cites a decline in the numbers of food inspections by Chilean public health officials in 1974 that was associated with increased cases of typhoid and hepatitis6. The ISAPREs promoted by the Pinochet regime failed to attract the numbers of enrollees that were projected, likely due to their higher costs than alternative government care, and their prevalence of exclusionary policies towards women who could incur high maternity expenditures. The promotion of privatized medicine in Chile brought greatly increased costs for health care to middle income workers. Decreased government expenditures towards health care resulted in deterioration of the National Health Service infrastructure and human resource base.


Implications for the Future of Health Care in Chile and Latin America


The two recent democratically elected governments in Chile have increased government support for health care. However the promotion of a privatized system of health services financing and delivery was already accomplished by 1990. In the present era of free market economics being espoused and practiced worldwide, and enforced by international monetary lending bodies, it is unlikely Chile will lean towards socialized medicine again in the near future. A Chilean human rights group states that “throughout the 1990-1995 period, unions continually reported abuses by management, anti-union practices and dismissals, following negotiations and the formation of unions” and further notes a decline in work force trade union affiliation from 32.5 per cent in 1973 to 12.4 per cent in 19967. The labor movement was very influential in initially moving Chile towards a socialized system of medicine, however the decline in it’s numbers and continued oppression of it’s membership will lessen it’s ability to encourage the government to return towards socialized medicine. Poverty levels remain high in Chile, and the poor continue to endure compromised health, particularly in rural and impoverished urban areas. Chile has a sizable indigenous population which has lagged behind the gains achieved by the rest of the population in measures such as infant mortality. Increasing need for psychiatric services and a growing elderly population that will consume more health care resources will be future problems for the Chilean health care delivery system. A study of maternal death and morbidity in Argentina, which may also be applicable to Chile, found high risks associated with illicit abortions and the lack of social support experienced by women migrating to urban areas8. English language studies of the current health care environment in Chile were not available, and although many previous studies of the Chilean health care system exist, analysis of the period after the early 1990s is lacking. The Associated Press reporting on the campaign of Ricardo Lagos, a leading candidate for the Chilean presidency and a member of the Socialist party, states “he spoke of the need for unemployment insurance and better health care for the underprivileged”.

Chile’s powerful working class encouraged it’s government to adopt a socialized model of health care. This led to a health care system where Chile ranked second behind only Cuba, in having achieved the lowest prevalence of infant mortality and the highest longevity amongst Latin America nations. Clearly a socialized medicine system of health care was effective in achieving improved health status for the Chilean population. The disparity in income between groups in Chilean society is great, but is considered less than that found in many Latin American nations. In Latin American nations, where large segments of the population are commonly impoverished and can’t afford access to health care, socialized medicine approaches to health care may be very effective in improving the health status of these large under served populations. The Chilean health care system, founded largely on socialized medicine, proved to be successful in elevating the health status of such a population. Privatization of medical care is an approach that has yet to prove itself to be as effective in improving the health status of any Latin American nation.


References




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1 Pan American Health Organization. Health in the Americas, Chile (1998):2,p.163-180.

12 Reichard, Stephen. Ideology Drives Health Care Reforms In Chile. Journal Of Public Health Policy 17 (1996):1,p. 80-98.

3 Scarpaci,Joseph L.. HMO Promotion and the Privatization of Health Care in Chile. Journal of Health Politics, Policy and Law 12 (1987):3,p.551-567.

4 Viveros-Long, Anamaria. Changes In Health Financing: The Chilean Experience. Soc. Sci. Med. 22 (1986):3,p.379-385.

5 Montoya-Aguilar, Carlos and Marchant-Cavieres, Luis. The Effect Of Economic Changes On Health Care and Health In Chile. International Journal Of Health Planning And Management 9 (1994) p. 279-294.

6 Scarpaci, Joseph L. Restructuring Health Care Financing In Chile. Soc. Sci. Med. 21 (1985):4, p.415-431.

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7 http://www.derechoschile.com/english/profile.htm

8Szmoisz, Sara et al, Argentina:Risk factors and Maternal Mortality in La Matanza, Province of Buenos aires,1990. World Health Statistics Quarterly 48 (1995)p.4-6.


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