CHILE: Why a National Health Service is not the same as a Single Insurance
Camilo Bass del Campo and Mario Parada Lezcano 1
Chile has a long tradition of developing access to healthcare. During the 19th century, the people organized themselves into Mutual Aid Societies (1), as an alternative expressly opposed to charity/benevolence. Their primary objective was to provide solidarity-based protection against illness, death, and family hardship by creating a social protection system founded on the savings of its members.
Then, in 1924, the Compulsory Workers' Insurance Law was enacted, requiring employers and workers to make monthly contributions to a solidarity fund for illness and disability. This law marked the introduction of state involvement in providing healthcare to workers and the beginning of social security in health (with the self-exclusion of public and private sector employees).
Subsequently, in 1952, the National Health Service (NHS) was created, a public body responsible for carrying out all health actions: health promotion and development, disease prevention, treatment and rehabilitation, which maintains the self-exclusion of employees and the wealthy class (2).
As a consequence of the policies implemented by the civic-military dictatorship, neoliberal reforms were carried out, bringing about radical changes. Social security in health was privatized through for-profit private health insurers called Private Health Insurance Institutions (ISAPREs), as was social security in pensions through Pension Fund Associations (AFPs). All these changes created a disincentive towards public systems and diminished the size of the State (3).
Currently, the healthcare system is in a serious crisis. It is composed of several fragmented and segmented systems: the public system (with its public insurance: the National Health Fund and the Armed Forces System) and the private system (ISAPRE), which leads to segmentation of the population in access to healthcare, establishing one system for the poor and sick and another for the rich and healthy (in addition to the Occupational Health Insurance and the Telethon) (see table). The public sector is chronically underfunded and losing capacity, while private insurance discriminates based on economic status, health condition, sex, age, and other arbitrary factors, lacking solidarity and efficiency. This situation is associated with high out-of-pocket expenses for families, which account for at least 32% of total healthcare spending (the World Health Organization proposes that out-of-pocket expenses should ideally be 10%, with a maximum of 15%).
Furthermore, as a result of the latest health reform process (2005), which did not alter the system's structure, the Explicit Health Guarantees (GES) program was implemented, currently listing 85 diseases with access to specific healthcare interventions for certain age groups. Its positive effects have been limited, and its problems significant: excessive bureaucracy, the creation of discrimination (those not covered by GES), and a substantial diversion of public resources to the for-profit private healthcare system.
Table 1: Current State of the Health System in Chile (2019)
| System | Administration / Type | Sources of Financing | Providers | General Characteristics |
| SNSS – FONASA | Bismarckian State | Individuals: – Mandatory contributions – Co-payments – Other out-of-pocket expenses State: Subsidies for the “indigent” and Public Goods for the entire population (health campaigns, etc.) | State (Institutional Care Modality – MAI) Private for-profit (Free Choice Modality MLE and purchase of services) | Solidarity Coverage 77% Population Without discrimination Supervised by the Superintendency of Health (SIS) of the MINSAL |
| ISAPRE | Private for-profit. Open and closed. Liberal | Individuals – Mandatory contributions – Prepayments – Copayments – Other out-of-pocket expenses | Private for-profit | Non-solidarity coverage: 17% of the population. Discriminates based on income, health status, sex, and age. Supervised by the Health Superintendency (SIS) of the Ministry of Health. |
| Armed forces | Bismarckian State | Individuals: – Mandatory contributions (5,5%) – Co-payments – Other out-of-pocket expenses State as employer: – 1,5% of the mandatory contribution – 1% for the preventive medicine fund | State (own network) | Solidarity Coverage 3% Without oversight from the Ministry of Health, only from the Ministry of Defense |
| Work Accident and Illness Insurance Professionals | Private Non-profit: Bismarckian Mutuals | Employers Individuals – Other out-of-pocket expenses | Private Non-profit (own network) | Solidarity-based within each mutual insurance company. There are no inter-mutual redistribution mechanisms, nor with the ISL (Institute for Occupational Safety and Health). Coverage is 70% for salaried workers. They are overseen by the Superintendency of Social Security (SUSESO) of the Ministry of Labor and Social Welfare. |
| State: Bismarckian Institute of Occupational Safety (ISL) | Individual Employers: – Other out-of-pocket expenses | Private for-profit and public | Solidario ISL has several programs for vulnerable populations, implemented in conjunction with the Ministry of Health (MINSAL). These programs are overseen by the Superintendency of Social Security (SUSESO) of the Ministry of Labor and Social Welfare. | |
| State-run: Administration delegated to large state-owned enterprises (e.g., CODELCO) Bismarckian | Individual Employers: – Other out-of-pocket expenses | Private for-profit and public | Joint and several liability within each delegated administration. Supervised by the Superintendency of Social Security (SUSESO) of the Ministry of Labor and Social Welfare | |
| Telethon | Private, non-profit, liberal | Individuals: through charity (televised national fundraiser) | Private non-profit (own network) | Solidarity-based: Provides 100% coverage for children with physical disabilities. No discrimination. Oversight by the Health Superintendency (SIS) of the Ministry of Health. |
Source: Parada and Moraga (2019)
Among the proposals to address these serious problems are several alternatives, ranging from continuing with the ISAPRE (private health insurance companies), to implementing a single insurance system, or moving towards a Universal Health System (National Health Service). The differences between these options are significant, and although a single insurance system and a National Health Service may sound similar, it is important to be very careful not to confuse them.
Basically, universal insurance is limited to an economic reform through the creation of a pooled fund of resources derived from individual contributions, which may incorporate general taxes. Universal insurance, therefore, distributes risks, consolidates financing, and can reduce discrimination based on health risks. However, the service delivery system can be public or private, for-profit or non-profit (4).
The disadvantages of having a single insurance system are significant, as it perpetuates the logic of insurance, maintaining the commodification of healthcare and profiting from public resources. Furthermore, it can weaken the public health system because the fund's direct purchase of services might not be based on sound medical criteria, among other negative externalities.
The idea of restoring the National Health Service or promoting a Universal Health System, characterized by general taxation, is still quite distant. This system is universal, establishing a single national funding mechanism that distributes risks without discrimination based on age, sex, or illness. It is accompanied by a robust public system (private providers should only be complementary and non-profit).
The advantages of a National Health Service are highly significant: it represents the most equitable financing possible (within the context of a progressive tax system) and, therefore, a fairer health outcome. Its financing is more protected against economic cycles and labor market fluctuations. Guided by the principles of universality, comprehensiveness, and equity, it ensures improved health for all, with a holistic understanding of health, illness, care, and treatment, thus making it more feasible to end the commodification of healthcare and the profiteering from public resources.
There are interesting international experiences that have shown that it is possible to successfully transition from social security schemes (financed by contributions linked to work) to systems financed by general taxes, as in the case of Spain. The National Health Service was created 30 years after the Chilean experience and is still maintained, achieving a position among the best health systems in the world (4).
Another advantage in a National Health Service context is that planning should be simpler and free from market influence. One example would be the possibility of reducing the significant human resource gaps, especially among medical professionals. According to the Department of Studies, Planning, and Management Control of Human Resources at the Ministry of Health, there is a shortage of 4.900 medical specialists. In the case of primary care, the average deficit is 4.500 44-hour medical shifts, which could be implemented with the current number of professionals in the country, following the guidelines of models with strong primary care, where a minimum of 40% of the country's physicians work at the primary care level.
In this context, where for 45 years Chilean society has followed the path of neoliberalism with rampant inequality and exclusion, it is essential to cultivate the capacity of political and social movements to forge alliances so they can implement the transformations required for a new, public National Health Service, based on the principles of universality, solidarity, equity, comprehensiveness, free access, and non-profit status. And once and for all, let us have the first Constitution of the people, for the Chilean people, and cease being a country where health is a commodity traded on the market, and therefore a privilege rather than a right.
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* Members of the Health Systems and Policies Network of the Latin American Association of Social Medicine and Collective Health (ALAMES Chile) and members of the CLACSO Working Group on International Health and Health Sovereignty.
Highlighted
1. Llanes, MA. (2003). The Solidarity Revolution. The Mutual Aid Societies of Artisans and Workers: A Popular Democratic Project, 1840-1887. July 22, 2019, from POLIS, Latin American Journal Website: http://www.redalyc.org/articulo.oa?id=30500514
2Parada-Lezcano, M. and Moraga, F. (2019) Crisis of Health Insurance in Chile: Socially Transmissible Chronic Disease. Electronic Journal Tempus, Actas de Saúde Coletiva, Brasília, 13 (2). Jun/2019 ISSN 1982-8829
3. Tetelboin, C. (2009). Evaluation of health and social security reforms in Latin America. XXVII Congress of the Latin American Sociological Association. VIII Sociology Conference of the University of Buenos Aires. July 30, 2019, from the Latin American Sociological Association, Buenos Aires. Website: http://cdsa.aacademica.org/000-062/1495.pdf
4. Cid, Camilo; Aguilera, Ximena; Arteaga, Óscar; Soledad Barría; Pedro Barría; Carmen Castillo; David Debrott; Marcelo Dutilh; Pedro García; Tomás Jordán; Osvaldo Larrañaga; Fernando Matthews; Mario Parada; Guillermo Paraje; Orielle Solar; and Andras Uthoff. Final Report. Presidential Advisory Commission for the Study and Proposal of a New Legal Framework for the Private Health System. 2014. 2nd Edition. 2016. https://www.minsal.cl/wp-content/uploads/2016/05/INFORME-FINAL_COMISION-PRESIDENCIAL-ISAPRES.pdf
