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Since Gustavo Petro assumed the presidency of Colombia in August 2022, the reform of the country's health system has become a frequent topic in the Colombian news. As one of the main promises of the Petro government, efforts to make reform happen are frequent. However, the approval of some measures suffers from a lack of consensus between the government and the population.
To understand what is happening in Colombia, the economist and professor at the National University of Colombia, Jorge Armando Rodríguez, suggests that we first look at what the Colombian constitution says about access to health.
Practice vs. Law
The 1991 version of the Colombian Constitution provides - in article 49 of Chapter IV of Title I to Fundamental Rights - that health is a fundamental right of every citizen. However, on a daily basis, the reality is different.
The farther away you are from large cities, the more difficult it is to obtain access to health services, even the most basic ones. And this scenario occurs because, “the way in which the Colombian health system was designed differs from what the constitution provides,” explains economist Jorge Armando.
Consequently, as in Brazil, the country began to see a significant increase in legal proceedings related to health rights, as explained This article. However, the judicialization is just a symptom of something much bigger: the growing awareness that many citizens are having that they are unable to enjoy a right that is guaranteed to them by constitution.
Everyday life in Colombian health
Rodríguez explains that health services are concentrated in the central region of Colombia. This means that those in large cities have a wide range of clinics and hospitals. Meanwhile, the farther away from the center of large cities, the more difficult it is to find health services - and when they exist, the infrastructure is usually not adequate, the lines are long and the service as a whole is not the best.
The way in which Colombians access health services is one of the factors that most reinforces social disparity. The economist explains that most of the medical services in large cities are offered by private companies. In this case, we are talking about services offered through medical insurance or private care.
Like any health insurance plan, it is possible to find plans with relatively affordable prices. However, in Colombia it is common for the cheapest plans to have considerable limitations, such as the lack of coverage for hospitalization, complex procedures, and medications considered to be of high cost.
Embedded in this issue is the reality of workers in informal employment. In addition to the often low salaries, informality also prevents this portion of the population from enjoying the services of the Contributive Regime (RC). As explained in previous article Regarding Colombia, the Contribution Regime is supported by fees paid by employers and workers, which allows offering services with higher quality and completeness.
However, the country has a large portion of the population in irregular jobs. During the Covid-19 pandemic, data from DANE (National Administrative Department of Statistics) indicated Colombia as the record country for informal employment, with 61.3% of the population working in irregular conditions — to see some of this reality, we suggest reading of this article.
Therefore, taking advantage of the best quality health services - offered by the Contributive Regime - is not a possibility for a large portion of society. All of these dynamics are directly related to the way in which the system was designed, thus bringing us to the moment where carrying out health reform is considered an urgent measure.
However, although urgent, the debate about the reform is heated and brings up the controversial proposal to completely eliminate the participation of private companies. To better understand the issue, read excerpts from the interview with professor and economist Jorge Armando Rodríguez below.
What economist Jorge Armando Rodríguez says
In addition to being an economist and professor of Economic Sciences at the National University of Colombia — one of the main and oldest educational institutions — Jorge Armando Rodríguez was also minister of the Ministry of Finance and Public Credit of Colombia during the term of Ernesto Samper (1994-1998; Colombian Liberal Party).
- Briefly, how can we explain access to healthcare in Colombia today?
Jorge Armando: To understand the Colombian health system, it is necessary to understand a little bit about the legal part. In Colombia's constitution, access to health is considered a fundamental right and this has several implications.
The first is that it generates the expectation that everyone will be cared for by the health system, with access to at least basic services. The second is that in 1993, Law 100 established that the system would provide health resources according to demand. Therefore, we have the aspiration of universal health care, while our system offers resources based on demand and not on supply. What does that mean? Basically, the idea was to separate resources according to the needs of the population instead of providing hospitals and clinics completely.
We also have a third element, which is: the way in which health insurance was implemented (EPS) made private companies responsible for financing hospitals and clinics and also for agreements with other insurance companies and other services that were offered to the population.
Therefore, the aspiration for universal access to health, the financing of the demand-based system, and the position of health insurance as intermediaries led to the fourth element: the creation of two systems to provide health to the population. In other words, the Colombian population has two ways of accessing health services. The first path is for those who can pay, so they are part of the Contributive Regime (RC). The other, on the other hand, is intended for those who are unable to contribute, so they use the Subsidized Regime (RS).
Since its origin, the quality of the services has not been the same in both systems. Quality and quantity are much better in the contributory scheme than in the subsidized one, which was made especially for the poor part of the population. So the system has these parallels, a contradiction between what is aspired to and what the constitution actually offers. This led the country to a political crisis, because the population realized that if you strive for access to universal health, but you have two systems to serve different social classes, then the right is being violated. Middle and lower class people were irritated by the system, which incited the political crisis, which began even in 2015.
- I see that this is a trending discussion and that a lot of consequences come out about it every day. Can you explain to us if what's happening is aligned with what people want?
Jorge Armando: There are many points, but let's get to the main ones: the first is that, according to the government - which is on the left and very critical of the current system - and with people who live in poorer regions, the constitution places health as a right, but in practice it is not. And then they question the real quality of the system.
The second element is that they blame private companies for this situation. They believe that universal health is not achieved because the private health system is more concerned with business than with offering services to everyone. They believe that the root of the problem is that health insurance is made for profit, so they point to several cases of corruption and diversion of public resources to private institutions to support the claim that the system is not working.
In other words, basically, the way in which the health system was designed ended up giving too much power to private companies and they believe that, since the amount of resources that the government allocates to health entities is high - about 6% of GDP -, much more could be done for the health of the population. That is why the proposal to eliminate private health initiatives is circulating in the government.
- And what is your opinion about all of this?
Jorge Armando: The regulations are very permissive and are not well designed enough to prevent the diversion of public resources. Therefore, instead of eliminating the EPS regulation, it is possible to modify it, improve it and change the incentives according to the challenges they face in each region, reorienting them to health care and not to profit-oriented activities.
- Are people moving towards a consensus with regard to health reform proposals?
Jorge Armando: This is not easy to answer, because some people agree, especially those who are in poorer regions of the country. When people from big cities received the news that the main proposal is aimed at ending private services, many of them were angry, while others supported the legislation. That is, there are people who are in favor of both. In less poor areas of the country, people tend to recognize that, despite system failures, improvements have been introduced. Even so, there is this political divergence, the population is divided on both sides.
- Finally, if you had that power, what would you do?
Jorge Armando: What we have today is the government's proposal to create a health system controlled only by the government, taking all the participation of private companies away. In my opinion, this is somewhat extreme, it's a mistake to eliminate companies that way.
I believe that we need to have limits on the budget, about 6% or 7% of GDP. Then, the regulatory basis for health companies would change, to ensure that the amount of insurance is not disproportionate and that there is no way to take advantage of public transfers.
Another big issue is also that many cities lack basic structure, there is not even access to water. In other words, it's no use just blaming private institutions for everything, we need to improve infrastructure and resolve other regional issues, to create specific strategies that encourage companies and professionals to serve those regions.
The Colombian health system in numbers
Also to help you visualize the current situation of the Colombian health system, let's look at some numbers.
Medical costs
As stated before, “about 6% of Colombia's GDP is spent on the health sector,” explains Jorge Armando Rodríguez. The number is considered neither low nor too high. Even so, the financial issues of the Colombian health sector must experience delicate moments in the coming months.
With regard to medical costs alone, there must be an increase of 12.4% this year, according to an analysis by the consulting firm AON. According to the projection, the increase in cost should be seen throughout Latin America and the Caribbean, due to inflation and new medical technologies - but reaching the level of 11.7%.
However, the estimate for Colombia presents a slightly higher percentage because the country is still influenced by late payments to EPS (Health Promotion Companies), insufficient funding from the Public Collection Payment Units (UPC) and the possible changes that the health reform may cause later this year.
Accident Rates and Gaps
According to the report “Current Affairs and Perspectives of the Health Sector”, prepared by Sectorial, between costs and income, Colombian health insurance showed a rate of 104.9% accident rate in 2023. When the accident rate was associated with expenses, the percentage rose to 109.5% throughout the system.
The data on the number of accidents are only elements of a larger picture: the gap that exists in the financial health of the health system. This is because, according to the report, a significant imbalance is detected when analyzing the resources of non-UPC entities.
In 2022, non-UPC entities received 1.9 billion dollars in transfers, but there were excess costs anyway. Then, in 2023, EPS saw a Deficit of 1.5 billion pesos, since the expenses were higher than the amounts transferred by ADRES (Administrator of Resources of the General Social Security System in Health).
Overall, the analyses indicate that the funding gap has reached 15.9 billion dollars — caused by the non-payment of debts, as well as insufficient transfers to cover costs and expenses of the entire system ——, but it fell to 13.9 billion dollars in 2024, thanks to the payment of the Maximum Budgets made in previous periods.
Reform and the future of the system
With regard to health reform, the Ministry of Finance presented a report to the Congress on how much the reform should cost the country over the next 10 years. According to projections, it is estimated that starting the reform this year would bring spending to the level of 91.3 billion Colombian pesos - and could reach 92.2 billion pesos. During the first few years, expenditures are expected to be high and generate a deficit of up to 3.2 billion dollars, but the scenario must be reversed starting in 2036.
On the other hand, the Sectorial analysis indicates that the health system must need 99.6 billion dollars to function properly in 2024. To achieve this amount, it would be necessary to increase the resources of the Payment by Capture Unit (UPC) by 21%.
If it persists at the current pace, the deficit is expected to be 9.5 billion dollars later this year. In addition, the lack of correction of other historical deficits could bring this amount to 23.4 billion dollars — equivalent to 1.5% of the GDP projected for this year.
The Colombian health system is going through a period of defunding. In practice, this means that EPS depends on its net reserves (7.6 billion dollars) and may collapse as early as September of this year.
Political influence in the health sector
As excerpts from the interview with Jorge Armando Rodríguez showed, Law 100 is one of the bases for the functioning of the Colombian health market. Established in 1993, during the administration of economist César Gaviria (1990-1994; Colombian Liberal Party), the law established the reform of the health system at the time and regulated the health care market, giving health insurers a prominent role in the system.
At the time, the Gaviria government was seen as center-left and this was not an impediment to strengthening the market. However, the government of Gustavo Petro (2022-2026; Humana Colombia) sometimes presents slightly more extreme trends, such as the proposal to completely eliminate the participation of private health companies as intermediaries. Although the need for a new reform is already a consensus, the same is not yet the case with the measures proposed to consolidate it.
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