Financing Health and Social Protection in Latin America and the Caribbean:

Organization, Financing and Sustainability of Social Health Insurance Systems in LAC

Daniel Titelman

Health for All: Can it be financed?“Fiscal Space and the Financing of Universal Health Care

Systems in the Americas: Issues and Policies”PAHO/WHO, IDB, RES

29 - 30 November 2007, Washington DC

Outline

• Health subsystems integration and financing sources

• Perspectives of increase contributory financing

• Non contributive expenditure

• A necessary discussion on tax burden and public expenditure efficiency

Health sector is characterized by

Segmentation between the public, social-security and private systems:• Different sources of financing• Inefficiency, duplications, waste of resource• Different social contracts and a differentiated perception of

health rights, all of which goes against social cohesion: diverse basic packages, contributive and non contributive rights.

• Weak public-private coordination in the provision leads to wrong use of the overall installed capacity

Moving towards universalization requires more subsystem integration: different experiences in the region

Latin America: Total public health expenditure by source, 2004(Percentages)

Source: Core Health Indicators, WHO, 2007

85.8 83.877.2

73.766.7

62.6 60.8 58.3 58.052.1 50.6 50.1

43.2 40.434.7 32.7

9.4

100.0

100.0

100.0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cuba

Brazil

Haiti

Hondu

ras

Domini

can

Rep.

Venez

uela

Nicara

gua

Chile

Parag

uay

Ecuad

or

El Sal

vado

r

Urugu

ayPer

u

Gua

tem

ala

Panam

a

Argen

tina

Colom

bia

Bolivi

a

Mex

ico

Costa

Rica

Public expenditure Social security

Different ways of integrating subsystems depends on history and fiscal stand

Type 1 Public financing expenditure is basically non contributive: Brazil, Cuba and English Caribbean

Type 2 Different explicit ways of integrationon between public and social security: Costa Rica, Chile, Colombia, R. Dom.

Type 3

Systems with low articulation between public and social securitu: Argentina, Bolivia, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay

Source: Economic Commission for Latin America and the Caribbean (ECLAC)

Latin America: Total health expenditure by source, 2004(Percentages)

Source: Core Health Indicators, WHO, 2007

66.960.7

54.9 54.147.1 47.0 46.9 46.4 45.3 44.4 43.5 42.0 41.0 40.7 38.5

33.7 31.6

77.0

86.0

87.8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cuba

Colom

bia

Costa

Rica

Panam

a

Bolivia

Hondu

ras

Brazil

Nicara

gua

Chile

Peru

Mex

ico

Argen

tina

El Salv

ador

Urugu

ay

Venez

uela

Guate

mala

Ecuad

orHai

ti

Parag

uay

Domin

ican

R.

General government Out-of-pocketPrivate prepaid plans Other private

Outline

• Health subsystems integration and financing sources

• Perspectives of increase contributory financing

• Non contributive expenditure

• A necessary discussion on tax burden and public expenditure efficiency

Latin America and the Caribbean: Social security coverage, total employed population

(Percentage paying contributions, ca. 2004)

Nationala Total-urban areas Total-rural areasa

Argentina (2005) … 44.2 …Bolivia (2004) 14.5 19.2 4.6Brazil (2005) 47.8 56.1 17.4Chile (2003) 64.9 67.0 48.8Costa Rica (2005) 65.3 67.7 60.5Ecuador (2005) … 32.2 …El Salvador (2004) 32.9 38.4 14.5Guatemala (2004) 17.8 28.0 8.5Mexico (2005) 55.1 60.1 30.8Nicaragua (2001) 18.3 25.1 7.6Panama (2005) 53.8 57.7 29.3Paraguay (2005) 13.5 20.6 5.0Peru (2003) 13.0 20.1 2.6Dominican R. (2005) 44.7 34.7 32.7Uruguay (2005) … 62.1 …Venezuela (2005) 61.5 60.5 …Simple average 38.7 43.4 21.9

Source: Economic Commission for Latin America and the Caribbean (ECLAC)a Figures from previous round of household surveys.

Latin America and the Caribbean: Social security coverage, only urban wage-based

(Percentage paying contributions, ca. 2004)

Total Formal sector Informal sector With contract Without contract

Argentina (2005) 62.5 74.4 23.0 71.6 12.5

Bolivia (2004) 28.3 45.8 4.5 65.8 8.9

Brazil (2005) 71.5 76.2 35.3 100.0 33.4

Chile (2003) 82.9 88.5 54.7 96.4 32.0

Costa Rica (2005) 80.4 90.4 40.4 … …

Ecuador (2005) 46.4 60.8 14.8 76.8 16.0

El Salvador (2004) 58.9 78.2 6.8 92.4 47.1

Guatemala (2004) 48.7 66.0 7.6 79.6 27.1

Mexico (2005) 62.5 76.2 20.1 84.1 23.8

Nicaragua (2001) 41.0 58.4 6.4 … …

Panama (2005) 76.3 86.3 25.9 87.7 14.9

Paraguay (2005) 32.3 52.1 4.1 65.9 4.5

Peru (2003) 35.2 38.5 2.4 … …

Dominican R. (2005) 58.7 70.0 7.2 85.5 42.8

Uruguay (2005) 77.3 88.9 44.9 … …

Venezuela (2005) 61.7 73.4 15.8 … …Simple average 57.8 70.3 19.6 82.3 23.9

Source: Economic Commission for Latin America and the Caribbean (ECLAC)

Latin America and the Caribbean: Employed persons’ social security contributions, by household income quintile (ca. 2002)

Q1 Q2 Q3 Q4 Q5 Q5/Q1

Argentina (2002, urban) 15.2 38.3 57.7 66.4 76.1 5.0

Bolivia (2002) 3.2 6.3 10.3 16.2 30.3 9.5

Brazil (2001) 20.1 36.1 47.2 55.6 63.5 3.2

Chile (2003) 50.3 60.0 64.5 68.1 71.4 1.4

Costa Rica (2002) 49.6 58.2 63.7 66.2 75.1 1.5

Ecuador (2002, urbana) 11.1 18.8 25.1 33.7 54.5 4.9

El Salvador (2001) 11.5 16.8 29.5 36.1 52.9 4.6

Guatemala (2002) 4.7 15.0 17.1 23.3 24.0 5.1

Mexico (2002) 28.9 46.9 51.8 64.2 73.4 2.5

Nicaragua (2001) 6.4 12.0 13.5 23.5 26.9 4.2

Panama (2002) 22.3 42.7 54.8 61.0 67.0 3.0

Paraguay (2000) 3.1 5.7 11.2 17.2 22.7 7.3

Peru (2001) 2.0 5.7 10.1 15.7 24.9 12.5

Dominican Rep. (2002) 34.9 40.7 37.5 47.6 51.6 1.5

Uruguay (2002, urbana) 25.6 48.1 62.7 75.9 85.3 3.3

Venezuela (2002) 36.9 51.9 59.7 68.1 78.9 2.1

Source: Economic Commission for Latin America and the Caribbean (ECLAC)

Latin America and the Caribbean: Social security contributors

(Percentage of the working-age population, by age and sex)

Source: Economic Commission for Latin America and the Caribbean (ECLAC)

Outline

• Health subsystems integration and financing sources

• Perspectives of increase contributory financing

• Non contributive expenditure

• A necessary discussion on tax burden and public expenditure efficiency

LAC (21 countries): Public social spending, as a percentage of GDP, 1990-1991 to 2004-2005

5,66,36,37,1

7,98,08,99,49,910,2

13,113,4

17,517,718,6

19,4

22,0

28,7

10,811,7 11,6

0

5

10

15

20

25

30

35

Cub

a

Bra

zil

Arg

entin

a

Bol

ivia

Uru

guay

Cos

ta R

ica

Col

ombi

a

Chi

le

Ven

ezue

la

Hon

dura

s

Nic

arag

ua

Mex

ico

Jam

aica

Trin

idad

and

Tab

ago

Per

u

Pan

ama

Par

agua

y

Dom

inic

an R

ep.

Gua

tem

ala

Ecu

ador

El S

alva

dor

1990-1991 2000-2001 2002-2003 2004-2005

Regional average2004-2005: 15,9%2002-2003: 15,8%2000-2001: 15,7%

Regional average 1990-1991: 12,8%

Source: ECLAC, on the basis of information from the Commission’s social expenditure database.

Latin America and the Caribbean (21 countries): Public social expenditure as a percentage of GDP, by sectors,

1990-1991 to 2004-2005a

Source: ECLAC, on the basis of information from the Commission’s social expenditure database.a Weighted average of countries, not including Nicaragua.b The information available is such that the two headings cannot be separated. According to national studies, social security represents around 78% of the resources under this double heading.

Latin America (18 countries): Redistributive impact of public social spending on income, by primary income quintiles,

1997-2004a

(Percentages)

Source: ECLAC, on the basis of national studies.a Weighted average according to the significance of each spending item in each country’s primary income.

49%70%

78%84%

91%

51%

30%

22%

16%

9%

0

10

20

30

40

50

60

70

80

90

100

Quintile I Quintile II Quintile III Quintile IV Quintile V

Per

cent

ages

Social spending

Primary income

(Total income of quintile V = 100)

Latin America (18 countries): Composition of spending, by primary income distribution quintiles, 1997-2004a

(Percentages)

7.4 6.5 6.3 5.9 5.8

5.14.7 4.2 4.0 3.7

2.0 2.8 4.3 6.3

16.5

0.8 0.9 1.11.4

0.9

3.3 2.1 1.61.3

1.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Quintile I Quintile II Quintile III Quintile IV Quintile V

Per

cent

ages

Education Health Social security Housing Social assistance

(Total social spending = 100)

Source: ECLAC, on the basis of national studies.a Weighted average according to the significance of each spending item in each country’s primary income.

Outline

• Health subsystems integration and financing sources

• Perspectives of increase contributory financing

• Non contributive expenditure

• A necessary discussion on tax burden and public expenditure efficiency

Social security as a share of tax revenues, 1990 and 2006

(Percentages)

0

10

20

30

40

50

Argen

tina

Bolivia

Brazil

Chile

Colom

bia

Costa

Rica

Ecuad

or

El Salv

ador

Guate

mala

Hondu

ras

Mex

ico

Nicara

gua

Panam

a

Parag

uay

Peru

Domin

ican

R.

Urugu

ay

Venez

uela

1990 1998 2006

REGIONAL AVERAGE 1998: 16,3%

REGIONAL AVERAGE 2006: 15,7%REGIONAL AVERAGE 1990:

16,2%

Source: Economic Commission for Latin America and the Caribbean (ECLAC)

Per capita GDP and tax revenues as a share of GDP, 2003

(2000 dollars)

Source: Economic Commission for Latin America and the Caribbean (ECLAC)

Latin America and the Caribbean: The tax burden, 1990-2006

(Percentages of GDP)

0

5

10

15

20

25

30

35

40

Argen

tina

Bolivi

a

Brazil

Chile

Colom

bia

Costa

Rica

Ecuad

or

El Sal

vado

r

Gua

tem

ala

Haiti

Hondu

ras

Mex

ico

Nicara

gua

Panam

a

Parag

uayPer

u

Domin

ican

R.

Urugu

ay

Venez

uela

1990 1998 2006

REGIONAL AVERAGE 1998: 15,7%

REGIONAL AVERAGE 2006: 18,3%

REGIONAL AVERAGE 1990: 12,4%

Source: Economic Commission for Latin America and the Caribbean (ECLAC)

Financing Health and Social Protection in Latin America and the Caribbean:

Organization, Financing and Sustainability of Social Health Insurance Systems in LAC

Daniel Titelman

Health for All: Can it be financed?“Fiscal Space and the Financing of Universal Health Care

Systems in the Americas: Issues and Policies”PAHO/WHO, IDB, RES

29 - 30 November 2007, Washington DC