The Reform

The Colombian Social Security System on Health Care



In December 1993, Colombia began a new and ambitious way to achieve in a decade the health insurance coverage of all its citizens. It is on this date when the Law 100 was expedited. This law intends to transform the old National Health Care System, which was based on the governmental assistance and characterized by its vertical organization, into a General Social Security System on Health Care. The new one based on insuring and on the competence between insurance administrators and between health care providers. It also has an enormous component of redistributive solidarity to finance the most impoverished citizens.

The old System had an important development between 1975 and 1982, when there was a big increase in the number of hospitals, health care centers and functionaries of the sector. However, the fiscal crisis of 1982 reduced the contributions to health care from 8 % of the national budget to less than 4% of it on the following years. Its effective coverage reached 27% of the population but could not grow further.

The old System really showed a deficient coverage for around 50%of the population, with huge regional differences. The financing system, based on historical criteria and institutional demands, succeeded in making the differences between the developed regions and the underdeveloped ones even bigger.

Additionally, in the same period, 15% of the population were covered by the Social Security Institute. This was one of the lowest rates in Latin America and was basically limited to the labor force ; 10% of the Colombian population could afford a private health care, and 5 % were covered by other services, destined to public functionaries and their families. The remainder of the population were considered to have not accessibility to proper health care services.

The Reform started off by defining two régimes: The contributory régime, aimed at people who can afford giving contributions to the social security system, through their work or their independent incomings; and the subsidized régime, aimed at people who cannot afford to give contributions and, therefore, must be subsidized for the total or partial cost of the obligatory insurance by the Government.

The contributory régime, based on the scheme of the old Social Security Institute for workers of the private sector, was modified by four fundamental measures:

1- To increase the contributions to the Social Security System on Health Care from 6% to 12% of the worker’s salary, to cover spouse and children. Four points would be paid by the worker and eight points by the employer.

2- To finish with the monopoly of the Social Security Institute on the administration of the obligatory health care insurance, making it possible for private enterprises - profit or non profit ones - , for cooperative enterprises and also for other public or mixed enterprises, to compete. All these enterprises were named with the following euphemism: "Health Promoter Entities" ( E.P.S. -after their initials in Spanish-). By the end of the year 1996 more than 25 of them were working.

3- Determination of an only average value of the annual obligatory insurance ( capitation unit/ U.P.C. -after their initials in Spanish-), about 150 dollars, resultant from gathering all the contributions and dividing them by the number of beneficiaries. Creating an account of compensation in an Special Fund, which monthly receives the contributions that came from 12% of the payrolls, and which acknowledges to every administrator 1/12 of the U.P.C. value per beneficiary each month. Two powerful labor unions, one for the National Petroleum Enterprise and one for Teachers, searching to protect their extraordinary benefits, remained exempt from this law, as did the military forces.

It must be noted that the maximum contribution corresponds to 12% of 20 minimum monthly salaries (about U.S. $400), and the minimum contribution corresponds to 12 % of a minimum monthly salary (about U.S. $20). The number of workers per family: 1.7, with a historical tendency to increase, and the number of dependent people per worker: 1.8, with a historical tendency to decrease, show a favorable perspective to the U.P.C., if it is not overcome by the increase in the health care services costs.

4 - Creation of a National Social Security on Health Council, a coalition between the Government, the insurance administrators (EPS), the health care services providers institutions, the trade associations and the workers. It is the maximun ruling entity of the System and searches for its equilibrium.

The subsidized régime is more ambitious still, wanting to be able to insure a third of the Colombian population at least in the first decade. It is likewise based on four points:

1 - Obtainment of new resources for its financing. One of the 12 points of the contributions of all the workers is destined for a Solidarity Fund. The Government must give a similar amount of resources to the Fund, resources that came from other taxes. Additional taxes to petroleum are supposed to strengthen this Fund. The municipalities must give 60% of the new resources for health care transfered by the Nation.

2 - Translation of the old resources from the supply to the demand. Gradually, the great majority of the resources that finance the Public Hospitals must be converted into acquired insurances for the impoverished population. The Hospitals must be efficient and competitive, converted into Governmental Social Enterprises in order to achieve their income from the selling of services to several administrators of the subsidized and contributory régimes.

3 - The resources from the Solidarity Fund in the nation, the resources from the financing of the hospitals in the provinces and the municipal resources must be added to achieve the insurance of the whole impoverished population.

4 - The coverage on health of the subsidized health care insurance is planned to be gradual. It must be equal to the contributory one in the year 2002. In the meantime, the services that are not covered by the insurance continue in charge of the Public Hospitals.


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