69743 ”—‰—ƒ› • Â?–‡‰”ƒ–‡† ƒ–‹‘Â?ƒŽ ‡ƒŽ–Š ›•–‡Â? ‹˜‡ ›‡ƒ”• Žƒ–‡” An analysis of progress in the health insurance expansion. May 2010 Revision of the sectoral changes generated by the Health System reform process, progress made with the proposed objectives and the opportunities and alternatives for future progress. This is the final report for the World Bank non-lending technical collaboration with the Government of the Republic of Uruguay, ( NLTA HD Reforms- TA-P106878-TAS-BB), carried out between November 2007 and June 2010. The objectives of this collaboration were to provide technical assistance in order to: (i) strengthen the National Ministry of Health’s (MSP) health economy, the National Ministry of Economics and Finance’s (MEF) health area, JUNASA in specific issues related to the SNIS’s legal regulations, support for the development of a system to monitor the reform and (ii) analyze the sectoral changes caused by the Health System’s reform process, the progress made with the proposed objectives and the opportunities and alternatives for future progress. The document includes an Executive Summary and the main body of the report. In both, and in the same order, the following are analyzed: (i) Progress made with the implementation of the sectoral reform; (ii) Future challenges that continuance of the reform presents, organized into four strategic areas, all strongly interrelated: a) Institutional; b) Coverage; c) Service Provision; and d) Economic-Financial; (iii) Aspects of the monitoring of the reform and (iv) Main conclusions and suggestions for analytical action. This report was carried out by a World Bank technical team lead by Luis Perez, Senior Public Health Specialist, LCSHH, LCC7, and composed of the consultants Marcelo Barg, Political Scientist; Jorge Gosis, Doctor of Medicine; Alfredo Perazzo, Economist and Juan Sanguinetti, Economist, with logistical and administrative support from Santiago Scialabba, Program Assistant, LCC7 and Sarah Bailey, Team Assistant, LCSHD. This study was made possible by the cooperation of a large number of people, mainly the authorities and officials of Uruguay’s National Ministry of Health and National Ministry of Economy, especially the Health Economy Department in the DIGIESE and the Ministry of Health’s Budget Department and the Management of ASSE. Special thanks to them. A brief note Those responsible for the study adhere to a policy of no gender discrimination and are conscious that the use of non neutral language from that perspective may constitute a sexist bias. However, to lighten the text a conventional composition was used, with the idea that this makes reading easier without altering the spirit of the principle described above. TABLE OF CONTENTS TABLA DE CONTENIDOS PAGE ACRONYMS 4 EXECUTIVE SUMMARY 7 INTRODUCTION 7 1. Progress made 8 1.1 Institutional area 8 1.2 Coverage area 9 1.3 Service provision area 10 1.4 Financial and economic area 11 2. Progress opportunities for the reform and main analytical aspects to be 14 considered. 2.1 Institutional area 13 2.2 Coverage area 14 2.3 Service provision area 15 2.3.1 Control of the set of services included in the Integral Programs and 17 the Healthcare Services Catalogue 2.3.2 Consolidation of the preventive care model and the dynamic quality 17 adjustment mechanisms 2.4 Economic and financial area 18 2.4.1 Changes in the system’s global financing plan 18 2.4.2 Risk management plan 19 2.4.3 Economic organization of the sector 20 2.4.3.1 The policy of capita 20 2.4.3.2 The complementary and competitive relationship between public and private 21 providers 2.5 The incentives plan 23 3. Monitoring the reform and its importance. 24 4. Main conclusions and suggestions for critical courses of action and 26 analysis. ACRONYMS ASSE State Health Services Adminstration (Administración de los Servicios de Salud del Estado) AVID Years of Life Lost due to Disability (Años de Vida Perdidos por Discapacidad) BHU Uruguayan Mortgage Bank (Banco Hipotecario del Uruguay) BPC Benefits Database (Base de Prestación de Contribuciones) BPS Social Welfare Bank (Banco de Previsión Social) CRCG Regulating Comission of Administrative Commitments (Comisión Reguladora de los Compromisos de Gestión) DES Health Economy Division (División de Economía de la Salud) DIGESA General Health Office (Dirección General de la Salud) DIGESE General Secretariat Office (Dirección General de Secretaría) DISSE Social Security for Illness Office (Dirección de Seguros Sociales por Enfermedad) ECNTs Chronic Non Communicable Diseases (Enfermedades Crónicas No Transmisibles) ENTs Non Communicable Diseases (Enfermedades No Transmisibles) FNR National Resource Fund (Fondo Nacional de Recursos) FONASA National Health Fund (Fondo Nacional de Salud) FTM Therapeutic Medicine Form (Formulario Terapéutico de Medicamentos) HDS Digital Health History (Historia Digital de Salud) IAMCs Collective Medical Attention Institutions (Instituciones de Atención Médica Colectiva) IMAEs Highly Specialized Medical Institutions (Instituciones Médicas de Alta Especialización) ACRONYMS IMM Municipality of Montevideo City Hall (Intendencia del Municipio de Montevideo) INE National Statistics Institute (Instituto Nacional de Estadística) IPC Consumer Price Index (Ã?ndice de Precios al Consumidor) JUNASA National Resources Board (Junta Nacional de Recursos) MEF Ministry of Economy and Finance (Ministerio de Economía y Finanzas) MEyF Ministry of Economy and Finances (Ministerio de Economía y Finanzas) MIDES Ministry of Social Development (Ministerio de Desarrollo Social) MSP Ministry of Public Health (Ministerio de Salud Pública) OPP Planning and Budget Office (Oficina Planeamiento y Presupuesto) PANES National Social Emergency Plan (Plan Nacional de Atención a la Emergencia Social) PAP Pap test/smear (Examen de células con tinción de Papanicolau.) PIB Gross Domestic Product (Producto Interno Bruto) PNUD United Nations Development Program (Programa de Naciones Unidas para el Desarrollo) RAP Primary Care Network (Red de Atención Primaria) RUCAF Unique Registry of Formal Welfare Coverage (Registro Único de Cobertura Asistencial Formal) SIIS Integrated Health Information System (Sistema de Información Integrado de Salud) SMU Uruguayan Medical Union (Sindicato Médico del Uruguay) SNIS National Integrated Health System (Sistema Nacional Integrado de Salud) ACRONYMS Integrado de Salud) SNS National Health Insurance (Seguro Nacional de Salud) TC Conversion Rate (Tasa de Conversión) TCN National Court of Auditors (Tribunal de Cuentas de la Nación) TOCAF Organised Text for Accounting and Financial Management (Texto Ordenado de Contabilidad y Administración Financiera) TOFUP Organised Text for Public Officials Guidelines (Texto Ordenado de Normas sobre Funcionarios Públicos) Uruguay’s Integrated National Health System The Health Sector Reform EXECUTIVE SUMMARY INTRODUCTION 1. In December 2005 a process of reform began in Uruguay with the aim of achieving a fundamental transformation in the Health Sector. The planned reform implies institutional, financial and public health changes. The main legal framework was promulgated in December 2007 by Bill 18211, thereby creating the Integrated National Health System (SNIS). This initiated a transition process which takes almost five years and during which the sector began to adapt to new rules of operation to as to make improvements which can be better analyzed in the long term. This document analyzes the sectoral changes generated by the process of reform, the advances achieved according to the proposed objectives and the opportunities and alternatives for future advances. 2. The reform is essentially designed to achieve: 1. more access to health services for the population, through the generalization of explicit coverage and reduction of service related costs, 2. better quality and better integrated health services, through better defined services and supply coordination through supplementing public and private services and 3. greater efficiency and sustainability of the system by adapting health system supply to the epidemiological changes generated by the modifications in the registered population’s demographic characteristics over the last few years; which means prioritizing prevention activities without neglecting those activities aimed at recovering health. 3. The reform has observed very significant advances in the transition process, which create a new context for the development of Uruguay’s Health Sector. 4. The progress made and future challenges will be analyzed, organizing the reform in four strategic areas, all strongly related to each other: i) Institutional; ii) Coverage; iii) Service Provision; and iv) Economic and Financial. DEVELOPMENT 1 Progress made 1.1 Institutional Area 5. So as to offer the system governance and sustainability conditions, the reform generates a significant institutional transformation: 1. The creation of new institutes such as the National Health Insurance, the National Integrated Health System and the National Health Fund; 2. The creation of new institutions, such as the JUNASA, responsible for the administration of the three abovementioned institutes; 3. Greater functional specialization, especially in the Ministry of Public, and 4. Adaptation of operation of the service providers, especially the ASSE, subject to a demanding decentralization process. 6. A relevant aspect of the process is the achievement of the necessary social and political consensus for the approval of the reform’s basic legislation; in essence, the creation of the abovementioned institutions. Although the regulations have not progressed continuously, but have been influenced by agreements that were achieved throughout the process, the rhythm and direction of the actions taken are consistent with the strategic vision and the real possibilities of adaptation to the system; which constitutes an important achievement in the management of the reform’s implementation. Public opinion has validated the efforts made for the reform process, which maintains a high percentage of adherence and positive vision. 7. The current relationship outline between the different actors in the Uruguayan Health Sector is shown in the following diagram. Colour codes and shapes are used to differentiate between: institute as a set of aims, objectives and competencies; and institution as an organization that carries out a function of public interest1. The Police and Armed Forces subsectors are not included in the diagram, neither are the patients, nor the exclusively private health service providers and health insurers. 1 Source: http://www.rae.es/rae.html, consulted on March 3, 2010. M IN S A L ( R e g u la c ió n S E G U R O N A C IO N A L S iste m a d e y c o n t r o l) A p o r tes D E SA LU D M e d ic in a la b o r a le s y A lt a m e n t e v o lu n t a r io s E s p e c ia liz a d a JU NA SA A p o r te s (A d m in is t .) p a t r o n a le s O tro s a p o rtes P r esu p u esto FO N A SA B PS FN R (A g en te F in a n c ie r o ) C o m p r a in d ir e c t a d e C r é d it o C O M IS IO N s e r v ic io s y r e s u lt a d o s p re su p u e st. H O N O R A R IA A SESOR A S N IS ( A d m in is t.) P r e sta d o r es ASSE E n tid a d e s P r iv a d o s IA M C s s /f in e s d e P r e s ta d o r a s C A P IT A - G R A T U I- C o m p ra d e p r e e x is te n t e s DO S TO S s e r v ic io s lu c r o A p o rte s I n s c r ip c ió n / Ta sa s m o d era d o ra s A se g u r a m ie n to P r e sta c io n e s IM A E s B e n e f ic ia r io s P r e s t a c io n e s References 1.2 Coverage Area 8. Expansion of coverage to the population through a health insurance plan is one of the proposed mechanisms to improve access to services. In this sense the Government has been implementing a schedule of progressive adherence which, according to the bill 18.211, will end in 2013 with the incorporation of wives and common-law wives without children to coverage of the National Health Insurance Plan (SNS). 9. Currently2, of the country’s 3.3 million inhabitants, 1.87 million are covered by IAMCs (1.31 million through the FONASA and 0.56 million as individuals or groups affiliated that don’t go through FONASA); 1.2 million are attended to by ASSE (of which 1.1 million correspond to the sector of the population financed by the National Treasury with credit from the National Budget –they are not SNS beneficiaries- and only 0.1 million are National Health Insurance beneficiaries and therefore, financed by FONASA), and the rest of the population is covered by other insurance and, to a lesser degree, people without coverage or access to the health system. Table 1: Estimated healthcare coverage, 2004 – 2009 2004 2005 2006 2007 2008 2009 IAMC members and 1,418,427 1,475,409 1,515,862 1,561,025 1,881,539 1,868,040 2 December 2009 private insurance ASSE users 1,554,488 1.510.718 1.484.543 1.301.347 1.210.592 1.201.633 Teaching hospital, police, military and municipal health 214,613 214,872 215,440 216,054 216,713 217,421 Others 114,204 104,724 98,621 245,480 25,208 57,844 Total 3,301,732 3,305,723 3,314,466 3,323,906 3,334,052 3,344,938 Source: Own, based on MSP database Table 2: Progress of SNS Membership 2007 2008 2009 BPS/FONASA members in IAMCs 723,108 1,259,829 1,315,521 FONASA members in ASSE 25,713 93,462 118,040 FONASA members in Private Insurance 24,452 25,912 Total SNS Members 748,821 1,377,743 1,459,473 Source: Own, based on JUNASA database 1.3 Service Provision Area 10. The Reform aims at improving healthcare services, which means important changes in provision of services. In this regard, there are two strategic guidelines to be mentioned: (i) the search for more and better homogenous quality levels and, (ii) the adaptation of the service provision system to the epidemiological profile changes made in recent times. 11. The following actions are highlighted out of several carried out: 1. The definition of essential conditions for services taken from the Programas Integrales (Integral Programs) and the Catálogo de Prestaciones de Salud (Health Services Catalogue), endorsed by the Formulario Terapéutico de Medicamentos (Therapeutic Medicine Form) whose medicine coverage must be offered obligatorily and extends to prevention, recuperation, rehabilitation and palliative care. 2. The start of the signing of the Administrative Contracts which all Integral Providers who wish to join the SNIS must sign (in the first round of signing, 46 IAMCs have signed each agreement with the JUNASA and ASSE). 3. The linking of the Administrative Contracts system to the payment of services, which is affected at least partially by the degree of compliance with the health targets proposed by each service provider and accepted by the JUNASA, and of which each one forms a part of the respective Administrative Contracts. 4. The launch of the Previniendo (“Preventingâ€?) Program as a tool to support prevention of non communicable disease services. 5. Facilitation of access to practices for cancer prevention and cardiovascular diseases. 1.4 Financial and Economic Area 12. Important changes have been made in the economic and financial area. First of all, the reform meant an increase of 23%, in constant currency, of the resources assigned to the health sector between 2004 and 2008. However, that increase was less than the GDP growth which is why the expenditure as a proportion of the aforementioned macroeconomic addition dropped 12%. Table 3: Health Spending, 2004 – 2008 var % 2004 2005 2006 2007 2008 08/04 in millions of constant pesos (2008) 41,001 41,315 43,290 45,408 50,494 23% In constant pesos (2008) per capita 12,418 12,498 13,061 13,661 15,145 22% in % of GDP 8.5 8.2 8.1 7.7 7.5 -12% Source: Cuentas Nacionales de Salud, 2005 - 2008 provisional results 13. Around 85% of the increase is explained by the behaviour of the expense registered in the budgets of the MSP and the ASSE and in the IAMCs expense, as can be appreciated in the following table: Table 4: Health Expenditure, 2004 – 2009 in millions of constant (2008) pesos % on Var. total 2004 2005 2006 2007 2008 2009 2004-08 spending 2008 MSP 67 280 538 447 772 744 705 2% ASSE 6,185 6,094 7,115 8,089 9,624 10,994 3,439 19% IAMCs 17,485 18,472 19,116 19,733 21,310 22,301 3,825 42% Rest 17,264 16,468 16,522 17,139 18,788 n/d 1,524 37% Total Spending 41,001 41,315 43,290 45,408 50,494 34,039 9,493 100% Source: Cuentas Nacionales de Salud, 2005 - 2008 Provisional results and data from the MEyF Table 5: Annual spending per beneficiary, 2004 – 2008 in constant (2008) pesos 2004 2005 2006 2007 2008 2009 MSP 20 85 162 134 231 222 ASSE 3,979 4,034 4,793 6,216 7,950 9,149 IAMCs 12,327 12,520 12,610 12,641 11,326 11,938 Total Spending 12,418 12,498 13,061 13,661 15,145 n/d Source: Cuentas Nacionales de Salud, 2005 - 2008 resultados provisorios y datos del MEyF 14. These increases contain an important change in the spending allocation per beneficiary, having produced a strong increase in spending per ASSE beneficiary, approaching that of the IAMCs. 15. Associated with these changes, there were also transformations in the financing plan, essentially as a result of the increase in public financing with respect to private financing3. Table 6: Sources of financing in health spending, 2005 – 2008 In millions of constant pesos (2008) 2005 2006 2007 2008 Public financing 21,078 23,185 24,988 32,134 Private financing 20,237 20,106 20,421 18,361 Total 41,315 43,291 45,409 50,495 Source: Cuentas Nacionales en Salud 2004 and Cuentas Nacionales de Gasto y Financiamiento 1999–2000 16. This phenomenon is associated with a series of policy actions: 1. The increase on public spending, especially in ASSE, as has already been discussed 2. The unification of contributions to social security by means of a contribution that is proportional to income, and the same for all beneficiaries according to the size and composition of the home. Previously, these contributions were differentiated by group. Table 7: Sources of Healthcare financing in Uruguay 2000, 2004 y 2008 2000 (%) 2004 (%) 2008 (%) General taxes 25.5 29.6 33.5 Public Sector and Public Corporations 2.3 2.3 1.0 Social Security 14.2 17.7 29.2 Employer contributions 9.6 11.9 14.7 Passive employee contributions 4.6 5.8 14.5 Privately financed Health spending 53.4 49.6 36.4 Debt 4.6 0.8 0.0 Overall total 100.0 100.0 100.0 Source: Cuentas Nacionales en Salud 2004 and Cuentas Nacionales de Gasto y 3 Private sources of financing are fundamentally composed of households direct spending. It includes any spending on health coverage that households make and is not covered by public financing. For this reason, not only is the “out of pocketâ€? expense included, the expense made at the time the service is received, but also all of the prepayments that the household makes such as the payment of individual and group membership to IAMCs and private insurers. Financiamiento 1999–2000 3. Intervention in the prices of some tickets and vouchers especially aimed at better accessibility to chronic disease prevention programs, which also reduces the burden on the pockets of the families in relation to the cost of healthcare. 4. The fund transfer plan from FONASA to the IAMCs, and more recently, to the ASSE, is made according to a system of the number of people enrolled by which the Insurance beneficiaries’ coverage services are charged. This means that the definition of a form of payment is subject to members adjusted by risk (sex and age) and by fulfilment of targets. In real terms, the amount has reduced. Table 8: Destination of sources of public and private health financing, 2005 - 2008 In millions of constant pesos (2008) Var. % 2005 2006 2007 2008 2005-08 Public Financing 10,595 11,968 12,726 13,663 29.0% ASSE 5,455 6,368 7,394 8,507 55.9% MSP 354 582 526 746 110.5% University 790 860 904 1.015 28.5% Honorary Commissions 179 184 314 179 0.0% IMM 481 490 483 485 0.9% Provincial Councils 325 333 327 329 1.1% FNR 1,851 1.642 1,541 1,428 -22.8% Other Public Org. 1,160 1,509 1,237 974 -16.0% Private Financing 20,234 20,060 20,334 18,030 -10.9% Prepaid 11,187 11,418 11,865 9,549 -14.7% Moderating rates and co- payment 2,477 2,291 2,294 2,303 -7.0% Paid directly from households 6,570 6,351 6,175 6,178 -6.0% Total 30,829 32,028 33,060 31,693 2.8% Source: Cuentas Nacionales en Salud 2004-2008 2 Progress opportunities for the reform and main analytical aspects to consider. 17. The reform has implied, as previously mentioned, a process of significant transformation that has been well received in public opinion, providing a solid political platform to advance towards the achieving of the changes hoped for in the long term. However, the degree to which these results and the ability to maintain the community’s adherence depend largely on the future decisions made regarding the complex issues involving opportunities to perfect the reform process in central strategic aspects, which require a deeper analysis. 18. As a contribution to this discussion, this section analyzes these strategic aspects, characterized by the way in which they affect the system as a whole, this is why they are analyzed in relation to the different areas. At the end of this section there will be a more global approach which will allow on the one hand for us to identify the government’s control variables better and, on the other, better appreciate the areas of impact of these variables. 2.1 Institutional Area 19. It is worth noting two aspects regarding the institutional area of the reform process: (i) the administration of the Seguro Nacional de Salud and (ii) the complexity of the regulation framework. 20. Administration of the National Health Insurance. The National Health Insurance is a cornerstone of the system and is a tool administered by the National Health Board. This organization has a great virtue which is the representativeness by which it is composed (made up of representatives of the Ministry of Health, the Ministry of Economy and Finances, the Banco de Previsión Social (Bank of Social Welfare), service providers, workers and users). 21. Despite having the administration responsibilities, the Board doesn’t have its own structure and its members, who are officials and representatives, are not full time, nor do they receive payment for this function. This could be a potential weakness of the SNS’s central organization and means that for operational purposes it requires administrative support from the represented organizations. This is especially evident in the case of the Ministry of Public Health, which provides support to the running of the Board through its general offices and in this way keeps hold of functions that in a context of separation and role differentiation it shouldn’t carry out. Another consequence is that the users are those who, a priori, have less possibilities of backing their representative’s management. 22. The Board’s executive management is carried out through a collegial organ, with a President figure (role carried out by one of the two MSP representatives) whose functions are limited to formalizing the Board’s decisions or dealing with urgencies. In the context of an organization with strong executive functions, the balance between the collegial decisions and those of an operative person in charge constitute a central aspect to be considered and, consequently, regulated accordingly. 23. Although the representation of service providers is a minority (one of 7 members), the sense of many of its functions places them in a conflict of interests. This conflict of interest situation could also arise for other representatives on the Board (e.g. the MSP and the ASSE), especially during the transition process when the roles of the different actors have not yet been clearly differentiated. The regulations of the law could foresee a specific rule for certain cases in which the representatives have a conflict of interest. 24. Complexity of the regulation framework. Regulations related to the Health System Reform and the composition of the National Health Insurance and its regulations are to date composed of a set of more than one hundred and thirty rules of differing hierarchy (Laws, Decrees, Resolutions, Bylaws, etc,) announced over a period of more than five years, and that modify old legislation from the health sector which is still partially valid. 25. The current complexity that this regulation plexus requires an organized text with all of the regulations directly or indirectly related to the health system, which allows them to be consolidated in one unique text, as was achieved with the Texto Ordenado de Contabilidad y Administración Financiera (T.O.C.A.F.), the Texto Ordenado de Normas sobre Funcionarios Públicos. (T.O.F.U.P.), the Texto Ordenado de Procedimiento Administrativo and other similar cases. 2.2 Coverage Area 26. In accordance with the affiliation timetable provided in the bill, after 2013 there will still remain the challenge of universalizing the Insurance which will mean the incorporation of the segment financed by the National Treasury with credit from the National Budget to FONASA’s financial model. This can lead to two kinds of problem. On the one hand, the financial kind, which could be resolved if the ASSE budget is the same as the capita of potential beneficiaries that are in the current system and must be attended to using National Treasury budget. Even in that case, the coverage fluctuations linked to formal employment would generate size fluctuation situations of the size of the population covered by the State that would have an effect on public resources. 27. The second problem is more complex and would arise if universilization allowed for the beneficiaries to freely choose a healthcare provider. In this case, the option that the beneficiaries would have could mean a competitive challenge for the ASSE, which could lead to, among other things, the need to adapt to a different demand than the one they supply today. 28. Over the last few years, ASSE’s budget has increased by 77% while production in total volume hasn’t changed significantly, although it has changed in relation to the size of the population it attends to. This means that the rate of consumption per beneficiary has progressively increased which could be a first sign that access to healthcare has improved. Table 9: ASSE. Production indicators, 2004 – 2008 2004 2005 2006 2007 2008 2009 ASSE users 1,554,488 1,510,718 1,484,543 1,301,347 1,210,592 1,201,633 Number of beds 6,395 6,485 6,480 6,450 nd Nd Numbers of consultations Nd (in thousands) 6,361 6,299 6,179 6,218 6,053 Nd Number of consultations per user 4.1 4.2 4.2 4.8 5 Nd Discharges 167,747 170,792 166,949 167,691 161,787 Number of discharges per 10,000 users 1079 1131 1125 1289 1336 Nd Surgical interventions 47,338 46,266 46,941 42,871 48,716 Number of surgeries per 10,000 users 0.030 0.031 0.032 0.033 0.040 Nd Births 21,550 19,967 19,713 18,194 17,843 Source: ASSE 29. Most of ASSE’s budget increase was related to staff, which allows for promotion of significant change in quality of service to align with the objectives planned for the reform; the objectives are now more feasible. Improving access to services (opportunity) and technical quality and perception of the same will be critical factors in the adaptation of the ASSE to a service demand governed by freedom of choice for the insurance beneficiaries, especially in urban areas. 2.3 Service provision area 30. The challenges in this area are very relevant and are closely linked to economic and institutional aspects that will be later commented on. However, it is important to mention the following: 2.3.1 Control of the set of services included in the Integral Programs and the Healthcare Services Catalogue 31. Although the services are legally defined, their dynamics are influenced by several factors: (i) Technological: as a result of the permanent advances in diagnosis, treatments and preventive practices; (ii) Pressure from public opinion that demands services spontaneously and many times without adequate technical support but putting pressure on the service provider package; (iii) Judicial, because the society expressed a growing number of unsatisfied demands through the judicial processed whose rulings resolve such singular demands, whether they are begun by individual people or groups. 32. These factors constitute sources of pressure on the financial sustainability of the system, whose limits cannot be exactly established. For this reason it is necessary to define a clear and specific strategy regarding control of the dynamics of the service provider package, developed with a broad vision and doesn’t just include a periodic revision of the same based on evidence, but also incorporates methods and strategies that are capable of having an influence on, either partially or indirectly, the factors that influence them. (Clinical effectiveness analysis; technological advice, bioethics committee, obligatory second opinion, targeted advertising, ethical regulation of advertising, etc.) 2.3.2 Consolidation of the preventive care model and the dynamic quality adjustment mechanisms 33. Consolidation of the Ministry of Health’s regulatory role in terms of the service provider package and, possibly in relation to attention protocols although necessary probably would not constitute sufficient conditions for the achievement of the attention model’s change objectives. In this sense, permanent administrative practices are those that mainly determine the results. It can be observed that it is not just about direct management of the services but also management by objectives, for which the organization of the Administrative Contracts through JUNASA and development of institutional capacity for monitoring and control of the system’s operation constitute central elements for the future management strategy so as to support the change in model as well as the quality policy. 2.4 Economic and financial area 2.4.1 Change in the system’s global financing plan 34. The information available indicates that the reform has produced a tendency to change regarding the system’s financing. This tendency is defined by two main characteristics: (i) Reduction of out of pocket expenses for the individuals and (ii) Increase in financing through tax instruments. This generates a tendency towards a more supportive financing tan in the situation before the reform. This issue, as well as having macroeconomic consequences could have had an effect on the perception of an increase in the individual’s available income, which could have contributed to achieving adherence to the new proposal. 35. One aspect to be considered in the future would be to determine what the effects would be if the system supports the costs of the health system. In other words, the consequences for the economy should be evaluated jointly if financing will go from a system based on family contributions, the budget contribution of funds to the National Treasury and the labor contributions (labor tax) to a different system where these last contributions don’t exist and are compensated by assigning the largest proportions on the current taxes; or a tax increase, whether it be general taxes or by creating new taxes. This analysis is of a complex nature: although the elimination of a labor tax would surely generate an incentive to intensive workforce activities, the fact is that we are not able to foresee the behavior of the replacement tax (whether it is the increase of existing taxes or the creation of new taxes), and that makes the nature of this exercise uncertain. However, an important political fact is that, after the advance made by the reform, an analysis for a change of this kind would be much better founded. 36. Another aspect to take into account is that the system’s sustainability conditions regarding increasing expenditure. In the long term, the financial requirements of the health system will be basically determined by a beneficiary inclusion plan and by the definition of the service package under certain quality requirements. 37. During the transition process, the Government could front the incremental costs by managing somehow the increase in beneficiaries or the service package. However, what will provide sustainability in the future will be other critical policy decisions which will be worked on gradually. These are: (i) the measures that achieve more efficient service provision, and ii) promotion of the health system’s strategic change so as to adjust to demographic and epidemiological tendencies, with a progressive decline in the burden of disease. 38. Some issues regarding competitiveness (that will be discussed in depth later), play a central role in the conditions for service provision efficiency: (i) define clear rules on competitiveness or complementarily between sectoral actors; (ii) have incentive mechanisms for health care providers and for individuals and (iii) reorganization of the ASSE –in its role as the largest health service provider in Uruguay- and occupying a central role in relation to this process improves efficiency. 39. The second course of action (promotion of strategic change in the system to adjust it to demographic and epidemiological tendencies) is the one that will determine genuine adjustments of costs through the achievement of better health for the population through promotion and a better preventive control of deterioration of health. It is important to find an adequate pace in the advancement of financial mechanisms subject to goals that impact directly in morbidity and mortality of high incidence prevalent pathologies in service provider costs. The acceleration and generalization of the Previniendo project could be a way of finding the solution, as well as the starting up of the national health strategy promotion and use of innovative educational technologies such as Plan Ceibal, aimed at citizens and medical education for professionals (e- learning). 40. An additional aspect has to do with sustainability of the financial health of the IAMCs aspect, which implies not only strengthening the role of JUNASA’s management of these institutions but also the regulation of the financial requirements of these institutions (for example, minimum capital, reserves, etc). Given the fragile condition of the IAMCs at the beginning of the SNIS, Bill 18439 was passed, creating the deposit guarantee fund for the restructuring of liabilities for the IAMCs and Bill 18.464 which authorizes the Executive to give a fiscal credit to the Collective Medical Care Institutions and a subsidy to the Fondo Nacional de Recursos. However, it is important to regulate the technical and financial conditions of operation for the system in place, in such a way that the institutions can foresee the final operative framework. 2.4.2 Risk management plan 41. As regards the risk management plan, implicit in when dealing with the health of a country’s population, the reform didn’t introduce significant structural change given that just as much before the reform as now the financial risks originated in events that mean low and medium complexity are absorbed: i) by the IAMCs and the ASSE, in the case of people affiliated to them, given that they receive money for the services; ii) by the ASSE, for those people who lack any other form of coverage, and for which the ASSE receives a sum of Money and (iii) by the Fondo Nacional de Recursos, which absorbs “catastrophicâ€? risks that require a high level of specialization. 42. It should also be considered that the FNR feeds on specific inputs in the form of a capita in the case of people covered by the National Health Insurance, -which since 2007 is channelled through FONASA-; by the Nation – via the budget through the ASSE- and by specific inputs from people who are not SNIS beneficiaries but are covered by other service providing institutions or insurers. This implies that the costs arising from National Health Insurance beneficiaries’ catastrophic events are not internalized for those same beneficiaries in the lower complexity service providers. Since the services provided in the low and medium levels of complexity they could influence in the reduction in usage rate of the higher complexity services, the implemented system does not provide an incentive for this to occur. On the other hand, if the IAMCs were to follow a cost reduction plan, the consequence would be that the service usage rate for high complexity would be much higher. 2.4.3 Economic organization of the sector 43. The reform introduced regulations that have consequences on the economic organization of the Health Sector. In this section the two considered most relevant will be analyzed. 2.4.3.1 The policy of capita 44. The policy of capita establishes values and methodologies that differentiate by risk (by sex and age) and by fulfilment of goals, according to a basic capita. The basic capita for health services is standard for all providers/insurers all over the country. 45. At this point it is noteworthy that there is certain duality in the role of the IAMCs which are, on the one hand, societies of service providers, and on the other, insurance entities in the sense that they have their own members. In this context, the JUNASA appears as a directing entity of insurance entities that fix a capita under standard criteria; and this capita is an insurance premium that the JUNASA buys and pays by account and order from the beneficiaries. However, the JUNASA administers the National Health Insurance, financed through FONASA and the members of the IAMCs are beneficiaries of the National Health Insurance by adhesion. This scenario reinforces the role of the IAMCs as essentially providing entities or providers/insurers with a population in its charge that comes from the affiliation they have. In this case, the capita can be directly considered as payment of the premium so as to ensure access to a set of services. 46. The IAMCs in general have a limited geographical area of influence; there are no IAMCs on a national level. In this context, it seems important to analyze the implicit conditions of efficiency when determining a standard capita on a national level and for all IAMCs. In effect, a sufficient efficiency condition would be the cost of services, for a certain level of quality (here the capacity of the buyer to verify the quality should be taken into account), and standard all over the country and for each IAMC. This is not necessarily the case given that certain costs, especially labour, are not equal between IAMCs since the situations are different. 47. This has a double consequence. On the one hand, the fact that all IAMCs have been able to go through the transition to the new system indicates that the capita has benefited more than just those located in areas where costs are less and those with the least debt. This assumes that a cost of efficiency would have existed in this transition process, acceptable as a policy decision. On the other hand, as not all the IAMCs situations are the same, there is an incentives plan where the following must be considered: i) positive incentives would exist given that the less profitable IAMCs could use the strategy to grow into the more profitable areas; ii) the differential levels of profitability could influence incentives for health prevention policies (associated with a decrease in long term costs, but frequently with start up costs), assuming that in a better financial situation it could weaken its relative weight in microeconomic decisions. 48. In any circumstance, the point is that there is a need for permanent monitoring of the capita definition plan, of its consequences and evaluation of the direct and indirect incentives that it generates. 2.4.3.2 The complementary and competitive relationship between public and private providers 49. The system that the reform aspires to is based on the idea of coordination between public and private providers. Legislation indicates that this coordination tends towards a complementarity between the two sectors4, although the reform’s implementation has proposed a competitive relationship between the public and private sectors and within the private sector, although there have been some examples of complementarity in the service provision organization, especially when incorporating new high complexity technology5. 50. The complementarity relationship can be observed geographically, functionally or socio demographically. This means that the public and private sectors could aim at differentiated markets, either for location reasons on a provider or type of service level or because of the socio-economic level of the beneficiaries. The last consequence of this complementarity would be the specialization of the sectors according to the complementarity criteria, and the fact that a differentiation in the markets exists: the members of the IAMCs and the members of ASSE. If this were the case, the markets would communicate exclusively for the purchase of services between IAMCs and ASSE y ASSE, in methods of organization for service provision from one of the sectors to the beneficiaries in both sectors. 51. This vision would clearly not be totally compatible with the criteria of it being integral that it is hoped characterizes the Uruguayan health system, unless equal access opportunities to any of the markets (real freedom of choice) and levels of capita and similar degrees of quality and efficiency between providers. In these conditions, competition between providers would arise, given that the system’s beneficiaries could choose the best quality, generating market tensions that would lead to efficiency. 52. The idea of the sectors having a competitive relationship ultimately provides the system with an element that tends to make for better efficiency, and could be translated into lower costs and/or improvements in service quality. 53. The Uruguayan health system currently presents a series of characteristics that anticipate that it is still necessary to clarify the complement/competition relationship that the providers have: 1. The financing systems of the public and private healthcare providers are still different: ASSE’s providers receive budget allocations and although these are 4 Art. 264 of the Ley 17.930 5 Experiencias de Guichón entre ASSE y Comepa y experiencia de Sauce, Canelones. applied to capita subject to goals, there is a greater rigidity when transferring these incentives to staff. Additionally, the ASSE providers don’t have to face patrimonial situations as in the case of the IAMCs. 2. Income by moderating rates, although reduced over time still constitutes a difference in access for the beneficiary. 3. Beneficiaries’ mobility rules between providers are still quite restrictive. 54. All of these are asymmetrical factors (and limit competition) between sectors, which presents an interesting policy problem for defining clear rules of competition between both types of providers in the long term and, at the same time, guarantees a transition that allows for the required adjustments for service efficiency and quality. 55. The complementarity alternative also requires as yet unspecified policy definitions, such as the specification of parameters and generation of incentives for the complementarity of the sectors. 56. This leads to the need for a deeper look at the ASSE, its role and organization. Effectively, if the providers have to compete, the ASSE needs to have a specific competitive strategy, attending to its social responsibility as public provider and to being the system’s largest provider. Within this vision, a central element is for an ASSE strategy to lead the process of making the structural changes a reality in services that require a greater balance between health promotion, prevention and treatment. It could also be an active regulator (control of production factors) of the sector in a competitive context. 57. As a result, one the hand we have the reorganization of the ASSE, the evolution of its decentralizing process and its definition of a competitive/complementary strategy, and the package of rules of competition within the system (incentives, benchmarking and a free choice system), and on the other, they are two aspects of the same reality. 2.5 The incentives plan 58. The need to introduce management practices by objectives and by results has been previously established. The reform has gradually incorporated an incentives system that promotes the management by objectives policy. The existence of a liquid capita linked to results is a clear sign of this policy and a distinct and important element in the Uruguayan health reform. 59. A first issue for analysis is the magnitude of the incentive associated to the incentives systems. At the moment, the capita associated with goals is relatively less in relation to the fixed capita or in the case of ASSE, budget mechanisms. 60. It is important to mention that this line of work requires permanent action so as to make the most of the tool’s potential. Work on control and information systems, a more in depth policy on goals in terms of generalization and adaptation to sanitary objectives, implanting and refining audit procedures are all tasks that will continue to be relevant for some time. 61. It is also necessary to consider that the incentives need to be useful for the people or teams carrying out the tasks. In this sense it could be assumed that the ASSE will have greater difficulty getting this type of incentive to be perceived by the parties involved in achieving goals, except of corrective measures are taken on the ASSE’s current administration plan. 3 Monitoring of the Reform and its importance. 62. Health reforms are complex processes that, like other types of public policies, demand a system of follow up, monitoring and evaluation in order to know to what point strategies and actions and their implementation are being effectively carried out and contributing to the achievement of significant impacts; namely, the state of the population’s health, integral medical care policy, orientation towards prevention, financial sustainability. 63. Best practices gathered from international experience indicate that the design of monitoring and evaluation tools is important and should be developed as early as possible in the reform process, with the aim on the one hand of generating an information package that responds to the needs and that allows for an early collection of data and to detect and correct problems on the other. 64. The information system for monitoring and control of a policy, in particular a health reform, must have the following attributes, as well as the abovementioned opportunity: i) relevance, this means that it must have a limited set of variables, critical parameters and key associated processes for the development and consolidation of the policy implemented; ii) methodological consistency, which means an explicit definition of the variables, the collecting method, treatment of the data, etc.; iii) reliability which implies that the processes by which data are collected are adequate and repeatable with a similar level of quality; iv) accessibility where the information should be freely available at the corresponding defined decision making levels. 65. Generally, a follow up and monitoring system for a policy or political activity means selecting a set of information that is relevant and that can be ordered into three kinds of data: (i) Information on context; (ii) Information about the evolution of tools utilized (control variables); and (iii) Information about significant policy results (modification of variables accompanying the use of policy tools). It is important to know that this set of information does not constitute all of that available, it is desirable for this information to be organized and available at the corresponding decision making levels. 66. A tentative list of these three bodies of information is presented in the full version of the report. It is worth mentioning here a few reflections on the second body of information, the policy control tools. As a summary of the previous sections, it is important to conclude that the reform presents a series of problems that could trigger policies and use of variables whose content, immediate effects and impacts are subject to analysis and debate. 67. These policies and control variables can be summed up in three lines which are presented in the following table: (i) those related to aspects of the sector’s formal context (Items 1, 2, and 3 in the table); (ii) those related to financing of services (Item 4 in the table) and (iii) those related to the sector’s regulation formula (Items 5 and 7 in the table). 68. As regards the last set of policies, the discussion should be focused on determining the balance between policy instruments that affect the price of services, quantities and quality of service and the sector’s economic organization, essentially pertaining to competition. Many of these variables are already being used but their revision and discussion, in a context of general balance could benefit from improvements and perfection, as well as the possibility of a clearer policy specification. Table 10: Impactos de políticas y variables de control Item Policies and control variables Areas Policy Control Institutional Coverage Provision Economic and Variable Financial 1 JUNASA’s Perfecting the management Insurance administration model 2 Judicial Better compilation understanding of the reform 3 Universalization Improve Financial impact of the National formal on the budget Health coverage Impact o n rights Insurance guarantee 4 Financing Degree of Macroeconomic policy solidarity in impacts on the financing available income Table 10: Impactos de políticas y variables de control Item Policies and control variables Areas Policy Control Institutional Coverage Provision Economic and Variable Financial 5 Capita and Price Value of the Impact on regulation base capita financial policy solvency and patrimony of the providers Differential Economic capita by efficiency geographical location Magnitude of the Support for the capita by results achievement of service objectives Prices Distributive impact Impact on competitiveness in the system 6 Policy of Administration Support the Alters the regulation by of targets/audits service providers service set and provider economic its quality objectives equation Required degree Orient service Alters the of quality provider providers objectives economic equation Degree of Orient service Alters the practices provider providers covered objectives economic equation 7 Policy of Degree of free Generation of regulation of the choice competition sector’s between health organization care providers Structure of risk Internalization of management high complexity practice costs ASSE Leadership of Competitive and decentralization the new complementary Variabilization management role of ASSE of budget costs model System of incentives 69. The effective development of the recently initiated Integral Health Information System –SIIS-, especially its contextualization in the legal framework and the specification of its future implementation is critical in order to carry out a reform monitoring process as well as to be able to predict adaptive behavior of the sectoral actors in the development of the SIIS. 4 Main conclusions and suggestions for critical courses of action and analysis. 70. The health sector reform is not a landmark in one particular moment of time, but a process in which a long term vision is being developed, completed and perfected. 71. The Uruguayan economic context is a fundamental ally for the implementation of the reform. The increase in employment, stability of macroeconomic variables, improvement in income and the positive social perception of the process has been essential in reforming a sector that bears a significant economic burden on the economy and that has historically shown levels of conflict and resistance to change. 72. In the four principal areas there have been some important advances: 1. institutional: most important is the creation of new institutes and institutions (National Health Insurance, National Health Fund, JUNASA), and roles are differentiated among the actors, especially in the public sector; 2. coverage: specifying and executing a plan for incorporating beneficiaries of the Insurance which means that 60% of the population are covered while the rest are either identified as a user of ASSE or in a smaller percentage, have some other type of formal coverage; 3. service provision: specifying a program of service coverage and a registry of medicine, focusing on the preventive; 4. economic and financial: substantially increasing health expenditure and introducing changes to the financial model for coverage of those formally employed and their family members, unifying the contribution (which depends on the worker’s income and marital status and number of children) and determining a capita to cover payment of services that are determined in terms of risk (by sex and by age) and are adjusted periodically by cost inflation. 73. Although total health expenditure in Uruguay grew steadily between 2004 and 2009, this was proportionally less in terms of economic growth. The fact that health spending has decreased in relation to the gross product is a positive result since it provides a greater sustainability framework and supports the reform. 74. The reform has generated an increase in public resources assigned to the health system to the detriment of private financing or out or pocket expenses. This change towards a mixed public and private reform although with a preponderance to the contributive component (labor taxes) and budgetary (general tax) has given substantial profits in terms of equity and sustainability in Uruguay’s health system. 75. The public health budget executed from the Ministry of Health has expanded and this is consistent with the strategy driven by the Uruguayan authorities to adapt the health system to the changes in the epidemiological profile and with the generation of control tools necessary for it. 76. Budgetary resources assigned to the ASSE have also shown sustained growth throughout the entire reform period. This allowed for ASSE’s spending per user to approach the mutual system’s spending per capita. Despite this larger budget, there hasn’t been more global medical care production but there has been an improvement in beneficiary usage rates which is a sign of better access to services. 77. The mutual system received an unprecedented increase in new users, in employed population with social security contributions as well as in the incorporation of active worker’s family units. This has brought about an improvement in all of the mutual system’s financial and economic indexes. 78. Alongside this, some key prices in the mutual system have been reduced significantly and in the health sector in general, such as in the price of medicines copayments. This generated a decrease in out of pocket spending in Uruguayan households and ample support from the Uruguayan middle class, the main beneficiary of this reform. 79. For the next few years it may possibly be necessary to face a set of critical decisions so as to ensure and perfect the reform’s course. The following are issues that are most significant and upon which it will be necessary to deepen analysis: 1. Turn the JUNASA into an organization (that includes staff, procedures and systems) fit to fulfill the mission that the guideline states. 2. Strongly drive the development of SIIS in order to develop a monitoring and control plan for the sector and for the key variables that determine which policy is to be implemented at which time. 3. Draw up an organized text regarding the regulations corresponding to the reform. 4. Evaluate the pros and cons of deepening the tendency towards a greater endorsement of the sector’s financing. The consequences of competitiveness for the country should be especially evaluated. 5. Evaluate possible improvements in the capita determining policy, in particular those focused on (i) internalizing the costs of high complexity practices currently covered by FNR and (ii) approach efficiency prices that attract possible cost differentials (especially between the interior and the capital of the country). 6. Develop and institutionalize a set of dynamic adjustment mechanisms for the service provider programs and the registry of medicines. 7. Go into greater depth with the management procedures by objective and control as a mechanism for continuous quality improvement. 8. Evaluate the diverse options in the sector’s organization, especially those that involve the ASSE, playing complementary and/or competitive roles in the private sector. ASSE’s improvement in terms of quality of services is critical to reaching the next phase of an integral health system. 9. From a medium term perspective, and in the context of a sustained growing economy and the incorporation of workers in the formal labor market, it will be important to monitor the choice exercised by the beneficiaries of SNIS in terms of providing sector. Improving the quality of ASSE’s services or giving it some degree of geographic or functional specialization could help to avoid new members preferring the mutual system en masse and leaving the ASSE with only the population who receive free medical attention. It would avoid a segmented health system, which could threaten the sustainability of the public subsector as a supplier. 80. The effort made by Uruguay to transform its health system is enormous, with positive results obtained during a short period of implementation and with support from the population and sectoral actors which is unusual in this type of change. For this reason, the setting for change seems promising for continuing on the path of transformation that has already begun, a complex process but one that will allow the health system reform to be consolidated for the well-being of the population.