<?xml version="1.0" encoding="ISO-8859-1"?><article xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance">
<front>
<journal-meta>
<journal-id>0036-3634</journal-id>
<journal-title><![CDATA[Salud Pública de México]]></journal-title>
<abbrev-journal-title><![CDATA[Salud pública Méx]]></abbrev-journal-title>
<issn>0036-3634</issn>
<publisher>
<publisher-name><![CDATA[Instituto Nacional de Salud Pública]]></publisher-name>
</publisher>
</journal-meta>
<article-meta>
<article-id>S0036-36342002000100009</article-id>
<title-group>
<article-title xml:lang="en"><![CDATA[The Chilean Health System: 20 Years of Reforms]]></article-title>
<article-title xml:lang="es"><![CDATA[El sistema de salud chileno: 20 años de reformas]]></article-title>
</title-group>
<contrib-group>
<contrib contrib-type="author">
<name>
<surname><![CDATA[Manuel]]></surname>
<given-names><![CDATA[Annick]]></given-names>
</name>
<xref ref-type="aff" rid="A01"/>
</contrib>
</contrib-group>
<aff id="A01">
<institution><![CDATA[,Instituto Nacional de Salud Pública Centro de Investigación en Sistemas de Salud ]]></institution>
<addr-line><![CDATA[Cuernavaca Morelos]]></addr-line>
<country>México</country>
</aff>
<pub-date pub-type="pub">
<day>00</day>
<month>01</month>
<year>2002</year>
</pub-date>
<pub-date pub-type="epub">
<day>00</day>
<month>01</month>
<year>2002</year>
</pub-date>
<volume>44</volume>
<numero>1</numero>
<fpage>60</fpage>
<lpage>68</lpage>
<copyright-statement/>
<copyright-year/>
<self-uri xlink:href="http://www.scielo.org.mx/scielo.php?script=sci_arttext&amp;pid=S0036-36342002000100009&amp;lng=en&amp;nrm=iso"></self-uri><self-uri xlink:href="http://www.scielo.org.mx/scielo.php?script=sci_abstract&amp;pid=S0036-36342002000100009&amp;lng=en&amp;nrm=iso"></self-uri><self-uri xlink:href="http://www.scielo.org.mx/scielo.php?script=sci_pdf&amp;pid=S0036-36342002000100009&amp;lng=en&amp;nrm=iso"></self-uri><abstract abstract-type="short" xml:lang="en"><p><![CDATA[The Chilean health care system has been intensively reformed in the past 20 years. Reforms under the Pinochet government (1973-1990) aimed mainly at the decentralization of the system and the development of a private sector. Decentralization involved both a deconcentration process and the devolution of primary health care to municipalities. The democratic governments after 1990 chose to preserve the core organization but introduced reforms intended to correct the system's failures and to increase both efficiency and equity. The present article briefly explains the current organization of the Chilean health care system. It also reviews the different reforms introduced in the past 20 years, from the Pinochet regime to the democratic governments. Finally, a brief discussion describes the strengths and weaknesses of the system, as well as the challenges it currently faces.]]></p></abstract>
<abstract abstract-type="short" xml:lang="es"><p><![CDATA[El sistema de salud chileno ha sido intensamente reformado en los últimos 20 años. Las reformas bajo el gobierno de Pinochet (1973-1990) apuntaron principalmente a la descentralización del sistema y al desarrollo del sector privado. La descentralización involucró un proceso de desconcentración y la devolución de las unidades de atención primaria a las municipalidades. Los gobiernos democráticos posteriores a 1990 escogieron preservar el núcleo organizacional, pero las reformas introducidas buscaron corregir las fallas del sistema y aumentar la eficacia y la equidad. El presente artículo explica brevemente la organización actual del sistema de salud chileno y revisa las diferentes reformas introducidas en los últimos 20 años desde el régimen de Pinochet hasta los gobiernos democráticos. Finalmente, presenta una discusión breve para describir las fortalezas y debilidades del sistema, así como los desafíos que enfrenta actualmente.]]></p></abstract>
<kwd-group>
<kwd lng="en"><![CDATA[health systems]]></kwd>
<kwd lng="en"><![CDATA[health care reform]]></kwd>
<kwd lng="en"><![CDATA[Chile]]></kwd>
<kwd lng="es"><![CDATA[sistemas de salud]]></kwd>
<kwd lng="es"><![CDATA[reforma del sistema de salud]]></kwd>
<kwd lng="es"><![CDATA[Chile]]></kwd>
</kwd-group>
</article-meta>
</front><body><![CDATA[ <p><font size="2"><b><a name="top"></a>ART&Iacute;CULO DE REVISI&Oacute;N</b></font></p>     <p>&nbsp;</p>     <p align="center"><b><font size=5>The Chilean Health System: 20 Years of Reforms</font></b></p>     <p>&nbsp;</p>     <p align="center">Annick Manuel, MD, MPH.<SUP>(<a href="#back">1</a>)</SUP></p>     <p>&nbsp;</p>     <p>Manuel A.    <br>   The Chilean Health System: 20 Years of Reforms.    <br>   Salud Publica Mex 2002;44:60-68.    <br>   <b> The English version of this paper is available too at: <a href="http://www.insp.mx/salud/index.html">http://www.insp.mx/salud/index.html</a>    </b> </p>     ]]></body>
<body><![CDATA[<P>     <P><b>Abstract    <br>   </b>The Chilean health care system has been intensively reformed in the past    20 years. Reforms under the Pinochet government (1973-1990) aimed mainly at    the decentralization of the system and the development of a private sector.    Decentralization involved both a deconcentration process and the devolution    of primary health care to municipalities. The democratic governments after 1990    chose to preserve the core organization but introduced reforms intended to correct    the system's failures and to increase both efficiency and equity. The present    article briefly explains the current organization of the Chilean health care    system. It also reviews the different reforms introduced in the past 20 years,    from the Pinochet regime to the democratic governments. Finally, a brief discussion    describes the strengths and weaknesses of the system, as well as the challenges    it currently faces. The English version of this paper is available too at: <a href="http://www.insp.mx/salud/index.html">http://www.insp.mx/salud/index.html    <br>   </a>Key words: health systems; health care reform; Chile     <P>&nbsp;     <P>Manuel A.    <br>   El sistema de salud chileno: 20 a&ntilde;os de reformas.    <br>   Salud Publica Mex 2002;44:60-68.    <br>   <b>El texto completo en ingl&eacute;s de este art&iacute;culo tambi&eacute;n    est&aacute; disponible en: <a href="http://www.insp.mx/salud/index.html">http://www.insp.mx/salud/index.html</a>    </b>     <P><b>Resumen</b>    ]]></body>
<body><![CDATA[<br>   El sistema de salud chileno ha sido intensamente reformado en los &uacute;ltimos    20 a&ntilde;os. Las reformas bajo el gobierno de Pinochet (1973-1990) apuntaron    principalmente a la descentralizaci&oacute;n del sistema y al desarrollo del    sector privado. La descentralizaci&oacute;n involucr&oacute; un proceso de desconcentraci&oacute;n    y la devoluci&oacute;n de las unidades de atenci&oacute;n primaria a las municipalidades.    Los gobiernos democr&aacute;ticos posteriores a 1990 escogieron preservar el    n&uacute;cleo organizacional, pero las reformas introducidas buscaron corregir    las fallas del sistema y aumentar la eficacia y la equidad. El presente art&iacute;culo    explica brevemente la organizaci&oacute;n actual del sistema de salud chileno    y revisa las diferentes reformas introducidas en los &uacute;ltimos 20 a&ntilde;os    desde el r&eacute;gimen de Pinochet hasta los gobiernos democr&aacute;ticos.    Finalmente, presenta una discusi&oacute;n breve para describir las fortalezas    y debilidades del sistema, as&iacute; como los desaf&iacute;os que enfrenta    actualmente. El texto completo en ingl&eacute;s de este art&iacute;culo tambi&eacute;n    est&aacute; disponible en: <a href="http://www.insp.mx/salud/index.html">http://www.insp.mx/salud/index.html</a>    <br>   Palabras clave: sistemas de salud; reforma del sistema de salud; Chile     <p>&nbsp;</p>     <p>&nbsp;</p>     <P><font size="6"><b>C</b></font>hile has a total area of 757,000 km<SUP>2</SUP>,    covering a nar row strip of land between the Andes and the South Pacific, and    an estimated population of 15 million. This corresponds to a population density    of 20 habitants per km<SUP>2</SUP>, but with great variation, since 84% of the    population live in urban zones and 40% in the Santiago metropolitan area.      <P>     Chile is an upper-middle-income country with a gross national product (GNP) of US$ 74 billion in 1998 and a  GNP per capita of US$ 4,990, which ranked the Chilean economy  42<SUP>nd</SUP> and 66<SUP>th</SUP> in the world,  respectively.<SUP>1</SUP> In the last decade Chile presented an average economic growth rate of 7.9% <font face="Symbol" size="2">¾</font>almost twice the average annual growth of the  previous decade<font face="Symbol" size="2">¾</font>, which helped to reduce poverty from 45% in 1987 to around 20%  nowadays.<SUP>2</SUP> However, Chile still stands as  one of the countries with the worst income  concentration.<SUP>3</SUP> The unemployment rate also fell considerably during the  nineties, from 10% in 1986 to 5.5% in  1996,<SUP>2</SUP> but increased again to reach 8.2% in the first trimester of 2000. Regarding  education, the adult literacy rate is 95% and the average length of schooling, almost 10  years.<SUP>4</SUP> Finally, Chile ranks  38<SUP>th</SUP> worldwide according to the 2000 Human Development Index of the UNDP, after Argentina  (35<SUP>th</SUP>) and before the other middle-income countries in Latin America.     <P>      <P><b>Health Conditions </b>      <P>     <P>Chile, along with Cuba and Costa Rica, exhibits the best health indicators    in Latin America. The decline of general and infant mortality rates has greatly    increased life expectancy at birth and modified the population age structure.    Infant mortality rates decreased from 82 per 1000 live births in 1970 to only    10 in 1997,<SUP>1</SUP> a figure comparable to that of many European countries.    Life expectancy increased from 63.5 years in 1970 to 75.4 in 1999,<SUP>5,6</SUP>    which changed the age distribution of the population. Chile's demographic changes    have been accompanied by an epidemiological transition that involves the coexistence    of chronic diseases of increasing prevalence and communicable diseases representative    of poor nations (<a href="#tabela1">Tables I</a> and <a href="#tabela2">II</a>).      ]]></body>
<body><![CDATA[<P align="center"><a name="tabela1"></a>     <P align="center">&nbsp;     <P align="center"><img src="/img/revistas/spm/v44n1/8563t1.gif">      <P align="center"><a name="tabela2"></a>     <P align="center">&nbsp;     <P align="center"><img src="/img/revistas/spm/v44n1/8563t2.gif">      <P align="center">&nbsp;     <P>      <P><b>Health System </b>     <P>     ]]></body>
<body><![CDATA[<P><I>Delivery of health services</I>     <P>     <P>The Chilean health system has a public and a private component. The public component covers around 60% of  the population, basically the urban and rural poor, the lower middle-class, and the retirees. The financing part is  administered by FONASA (National Health Fund or  <I>Fondo Nacional de Salud</I>) and delivery is ensured by the National  Health Services System or <I>Sistema Nacional de Servicios de  Salud</I> (SNSS) and the Municipal System for Primary Care. A  small proportion of the Chilean population <font face="Symbol" size="2">¾</font>around 10%<font face="Symbol" size="2">¾</font> is covered by other public agencies (Army Health Services,  Universidad de Chile). The private sector includes basically the private health plans administered through the Health  Provision Institutions or <I>Instituciones de Salud  Previsionales</I> (ISAPREs) that offer services to around 25% of the population,  mostly the upper-middle class. A parallel private system exists for occupational injuries and diseases; three not-for-profit  <I>Mutuales</I> insure and provide health services to more than 2.5 million workers.     <P>     The public system includes the Ministry of Health (MH) and five semi-autonomous bodies created in 1980  (although the Superintendencia of the ISAPREs was created in 1990): the SNSS, FONASA, the Public Health Institute, the  Procurement Center or <I>Central de Abastecimiento  </I>(CENABAST) and the ISAPREs Superintendence.     <P>     The role of the MH includes ensuring Chilean  citizens<I> </I>free and equal access to health services and programs,  and their free choice between the public and private health services. The MH establishes national health policies, plans,  and norms according to government directives and rules listed in the Sanitary Code; also, it supervises the five  organizations that compose the public health sector. In fact, although they are administratively autonomous, these bodies must  exercise their function in accordance with the dictate of the MH.  The<B> </B>SNSS<I> </I>includes 28 Regional Health Services that  cover the whole territory; it provides health promotion and protection plans to patients, as well as health care services  (mainly second and tertiary care), through a network of hospitals and health posts. FONASA is the financing body of the  public sector. It collects, administers and distributes various financial resources.  The<B> </B><I>Public Health Institute</I> is the  national reference center for public health issues; it supervises the public laboratories and is also in charge of all issues related  to drugs and medicines (authorization, quality, importation).  <I>CENABAST</I><B> </B>controls the purchase and delivery of all  drugs, supplies and medical equipment for the SNSS. Finally,  the<B> </B>ISAPREs <I>Superintendence</I><B> </B>regulates the private  institutions called <I>Instituciones de Salud  Previsionales</I> or ISAPREs.     <P>     Most of primary health care in Chile is provided through the Municipal Primary Health Care System. However,  the MH, through the Regional Health Services, supervises the delivery of primary care and ensures that primary health  care facilities comply with the MH technical  norms.<SUP>7</SUP>     <P>     Regarding the private component, the ISAPREs are  private institutions that collect and administer the  mandatory health contribution from the citizens who choose to be insured by the private sector instead of FONASA. ISAPREs  offer health plans on an individual basis to these members and their families, and the benefits are freely determined by  both parties. In addition to the mandatory contribution, members can decide to pay a complementary contribution to  have access to additional benefits. There is a multitude of health plans providing different ranges of medical services.  However, ISAPREs have the legal obligation to cover, in all plans, the  following:<SUP>8</SUP> i) preventive medicine exams; ii) sickness  pay insurance; and iii) protection for pregnant women and children aged under six years.     <P>     For the ISAPREs, health contracts are lifetime agreements, unless the member fails to comply with his/her  financial obligations. Individuals can terminate the contract once a year on the contract anniversary, with a month's  advance notice. The ISAPREs provide outpatient and inpatient services through their own clinics and hospitals or, mainly,  through contracted private or public facilities. The level of freedom of choice for the affiliated varies according to the plans.     <P>     <P><I>Health care financing</I>     ]]></body>
<body><![CDATA[<P>     <P>Overall, Chile spends 6.1% of its GDP on health; half of it is public (49%) and half private (51%), most of it  out-of-pocket.<SUP>9</SUP> <I>Per capita</I> expenditure amounts to US$ 315, a figure greater than that of Mexico (US$ 240) and Venezuela (US$  150), similar to that of Brazil (US$ 319), and smaller to that of Argentina (US$ 676) and Uruguay (US$ 660).     <P>     Since 1981, all employees and retirees make a health contribution equal to 7% of their taxable revenue, up to a  top limit. This contribution is optional for the self-employed. The workers can choose to pay this mandatory contribution  to FONASA or to an ISAPREs.     <P>     As was mentioned before, FONASA is a public agency in charge of financing the health services of the public  sector. The resources of this agency come mostly from general taxes, the mandatory contribution and copayments, and  they finance the SNSS and the municipal services.     <P>     SNSS health facilities receive &quot;diagnosis-based-payments&quot; from FONASA for the most frequent pathologies and  a &quot;prospective-payment-for-service&quot; for other diagnoses. Municipal facilities funding is based on a per-capita system  that takes into account the registered population, its socio-economic characteristics (rurality and poverty), and the volume  of services effectively delivered.     <P>     Citizens affiliated under the &quot;institutional modality&quot; <font face="Symbol" size="2">¾</font>basically the poor who make no mandatory  contribution<font face="Symbol" size="2">¾</font> cannot choose their provider and receive  care only from public facilities. Copayments are related to the income  level and are equal to 0, 10 or 20% of the price of the service. Beneficiaries making the mandatory contribution can use  the &quot;institutional modality&quot; or the &quot;free-choice modality&quot;. Under this pre-paid free choice provider system, users can  choose private providers and the copayment rate depends  on the level of quality of the providers. Three groups  exist and providers register themselves into the group of their choice.     <P>     The funds of the ISAPREs, on the other hand, come from the mandatory contribution, additional voluntary  contributions of the members of the formal economy and voluntary contributions of the self-employed,  the 2% contribution paid by employers for some  low-income employees, and copayments.     <P>      <P><b>Health Reforms </b>     <P>     ]]></body>
<body><![CDATA[<P><I>Health Reforms of the Pinochet Era (1973-1990)</I>     <P>     <P>The foundations of the current health system were designed and implemented during the Pinochet era.  The democratic regimes that followed introduced some  changes, but chose to preserve the core of the system. Moreover, some of  the changes were aimed at strengthening the efficiency of the achieved decentralization. They have also maintained  the coexistence of the public and private sectors and have reinforced the regulatory role of the State.     <P> Until the late 1970s, two parallel public systems coexisted.<SUP>10,</SUP><a name="top1"></a><a href="#back"><sup>*</sup></a>    The National Health Service (SNS), funded by tax revenues and payroll contributions,    covered blue-collar workers and indigents who received medical services and    medicines free of charge. These groups represented 60% of the population. The    National Medical Service for the Employees (SERMENA), financed through payroll    contributions and out-of-pocket payments, covered white-collar workers who had    also access to private providers through a preferred provider program (25% of    the population). Finally, the military health system covered 5% of the population    and the private sector 10%.      <P> In 1979, however, a set of reforms consistent with the new regime's ideology    was designed. These reforms aimed basically at the decentralization of the system    and the development of a private sector (<a href="/img/revistas/spm/v44n1/8563f1.gif">Figures    1</a> and <a href="/img/revistas/spm/v44n1/8563f2.gif">2</a>).      <P>      <P>Decentralization of the health system      <P>     <P>Law 2763, adopted at the end of 1979, redefined the structure of the public sector. It fused the existing SNS and  SERMENA into a single body, the National Health Services System (SNSS). The SNSS was composed of the MH and the  dependent organizations created to achieve  deconcentration<SUP>11</SUP> (currently, the term SNSS refers to the health care  providers network only). The law also separated the normative, financial and delivery functions within the system.     <P>     The MH retained the normative function, defining the health policies and programs and coordinating the  interactions among the different actors and organizations of the health sector. It also controlled these different bodies,  continued to supervise and evaluate the health programs, and prepared and allocated the budget.     ]]></body>
<body><![CDATA[<P>     Deconcentration led to the creation of 26 regional health services covering the whole territory and responsible  for the delivery of health services (a  27<SUP>th</SUP> service was responsible for environmental health hazards). These  decentralized units are in charge of health promotion and protection plans, and deliver health care services to patients through  a network of hospitals and health posts. Although they have an important administrative autonomy, they have to  follow the rules and instructions of the MH.      <P>     Law 2763 delegated the financial function to a new organization, the  <I>Fondo Nacional de Salud</I> or FONASA, which replaced both SNS and SERMENA financial services. FONASA is responsible for collecting, administering, and  distributing the public financial resources allotted to the health sector. It is a legally  autonomous body with its own employees, but has to  exercise its financial role according to the rules, plans and policies established by the MH. Two  other organizations were also created at that time, the National Institute of Public Health and the Procurement Center  (CENABAST).     <P> The second major part of the decentralization process of the public sector    was initiated in 1981 (DFL No 1). It represented the devolution of primary care    centers' administration from the SNSS to the 341 municipalities throughout the    country. The main objectives of the devolution of primary health care were:    i) to transfer decision-making power to the local level; ii) to allow health    programs to be more adapted to local population's needs; iii) to increase community    participation in the health care sector; iv) to mobilize local resources for    improving the infrastructure and functioning of primary care centers, and v)    to allow improved coordination among social programs (health, education) at    the local level.<a name="top2"></a><a href="#back"><sup>**</sup></a><SUP>,12    </SUP>The transfer of control of the primary care sector to the municipalities    occurred in two waves during the eighties, in 1981-1982 and in 1987.      <P>     The agreement between a municipal government and the local representative of the SNSS had a five-year  duration. The agreement defined the responsibilities and duties of both parties. Municipalities were required to provide  primary care and additional health services such as vaccinations, while public facilities dependent on the SNSS had to  provide secondary and tertiary care to patients referred to them by primary  care municipal centers. Municipal governments had to  comply with the norms and programs still centrally established and supervised by the MH, and the local  representatives of the SNSS, the <I>Servicios de  Salud</I>, were responsible for providing technical assistance to the municipalities.     <P>     An additional significant reform related to decentralization was the change in the financing mechanisms of  the public sector providers. Until 1978, public providers received a budget related to their needs and the population  served. The reform intended to establish a closer relation between funding and quantity of services provided. In 1978 a  Payment for Rendered Service System (<I>Facturaci&oacute;n por Atenci&oacute;n  Prestada</I> or FAP) was introduced and hospitals were  reimbursed retrospectively based on a list of prices for medical  interventions. Similarly, the Payment for Rendered Services  per Municipality System (<I>Sistema de Facturaci&oacute;n por Atenci&oacute;n Prestada por  Municipalidades</I> or FAPEM), reimbursed  municipal centers according to a list of fees-for-service for primary care procedures. Due to an explosion in costs, however, a  ceiling was established in 1983 for each municipality on a case-by-case  basis.<SUP>10</SUP>     <P>     <P>Development of a private sector     <P>     <P>The ideological principles of the military regime allowed and favored the development of a private sector. The idea  was to grant citizens the choice to make their mandatory health contribution either to the public financing institution  (FONASA) or to private entities. The existence of such a private sector would guarantee freedom of choice and  would supposedly rely on competition to ensure an efficient management of health resources.     <P>     Law Decree Number 3, enacted in 1981, legalized and defined the status and functions of those  private entities called <I>Instituciones de Salud  Previsionales</I> or ISAPREs.<SUP>13</SUP> The health plan approved by the affiliated and the  institution defined the medical and economic benefits provided, as well as the premium value. The contract was established  every year and the ISAPREs had the right to decline members or deny their renewal.  This right opened the door to extensive selection of risks.     ]]></body>
<body><![CDATA[<P>     During the 1980s, the government made several adjustments to these initial rules:     <blockquote> &#149; The mandatory contribution to the fund, which was initially    fixed at 4% of the taxable revenue, was raised to 6% and to 7% in 1986.<SUP>14</SUP>        <p>&#149; In 1986, Law 18.469 created the General Benefits Regime (<I>Regimen      General de Prestaciones</I>), which defined the rights and responsibilities      of the citizens in the public sector and established the legal basis of the      relationship between the ISAPREs and the public sector (FONASA, SNSS). </p>       <p>&#149; In the initial years, because of the financing of the system, the      ISAPREs were only accessible to highly paid workers. In 1989, Law Number 18.566      introduced the additional contribution of 2% of the taxable revenue. This      contribution is to be paid by the employer, is tax-deductible, and supposedly      allows the middle-class access to the private health sector. </p>       <p>&#149; In 1986, the payment of the &quot;maternal subsidies&quot; was transferred      from the ISAPREs to the State. This measure ended the private institutions'      discrimination against young women.<SUP>14</SUP> </p>       <p>&#149; Eventually, Law 18.933 was enacted in March 1990 and created the ISAPREs      Superintendence. This new body replaced FONASA in the supervision and control      of the ISAPREs. The new Law also regulated the minimum provisions of the health      plans, the benefits excluded and the period of exclusion. Moreover, it changed      the terms of the contract: until 1990 the contract was annual; this allowed      ISAPREs to refuse high-cost members' contract renewal. The new law has made      the contract lifelong and ISAPREs can end it only if the affiliated neglect      their financial obligations. However, it can annually re-establish the benefits      and prices of the contracts, provided that the new conditions apply to all      the affiliated of a given plan and do not lead to the discrimination of high-cost      members.<SUP>13</SUP> </p> </blockquote>     <P>      <P><b>Reforms of the Democratic Governments </b>     <P>     <P>The transition government found a series of problems reminiscent of the Pinochet    government. One of them was the major deterioration of public infrastructures    and quality of care due to an important decline in public health expenditures    during the previous decade. The national government's contribution to public    health revenue had declined from 50% in 1980 to 40% in 1990 while the beneficiaries'    share had increased from 36% to 47%.<a name="top3"></a><a href="#back"><sup>***</sup></a>    The poor quality of public infrastructure was accompanied by inefficient management    in the deconcentrated organizations, particularly the regional health services.    The situation was attributed to the inadequacy of the information and administrative    systems, inexperienced decision-makers, and inefficient allocation of public    resources due to the centralized system of payment and fixed structure of personnel.    Indeed, the FAP system did not favor efficiency and cost-containment, and the    number of health workers and their salaries were fixed by law for each <I>Servicio    de Salud</I>. This system of organization did not suit local needs.      ]]></body>
<body><![CDATA[<P> The municipalization of primary care facilities caused other drawbacks in    the system. First, there was a lack of coordination between the health services    and the municipalities' authorities. Second, work conditions, wages, and career    opportunities of primary care workers deteriorated, since they were governed    by the private sector labor code, and this led to conflicts and lack of motivation.    Third, the FAPEM method of payment, and particularly the ceiling of expenditure    for each municipality introduced in 1982, resulted in many disadvantages. FAPEM    prices, which were supposed to cover all costs, were underestimated and did    not reflect the real costs of the services; ceilings were insufficiently adjusted    for inflation and increase of medical costs. As a result, municipalities were    under-reimbursed and municipal expenditures toward primary care progressively    increased to reach 34% of the total primary care expenditure in 1993.<a name="top4"></a><a href="#back"><sup>****</sup></a>    Due to their inability to find new resources, poor and rural areas were most    affected by the municipalization of primary care financing and witnessed an    eventual deterioration in their level of health expenditure and therefore in    the quantity and quality of services provided. Other disadvantages of the FAPEM    payment system included the lack of incentives for quality and cost-containment,    and favored curative over preventive care, since most health promotion and prevention    services were not reimbursed.      <P>     The private sector grew considerably during the eighties. In 1990, 16% of the citizens were beneficiaries of an  ISAPREs. That year, Law 18.933 was adopted and granted more protection to the consumers. This event was followed  by an important growth in the number of members which reached 25% of the Chilean population in 1995 (workers  and families).<SUP>14</SUP> However, the private system still lacked transparency because of the multiplicity of plans and prices and  the absence of clear rules concerning benefits excluded, refusal of coverage or use of the  excess<I> </I>of contribution (i.e. the amount paid in addition to the mandatory one). It also favored inequity because of the weak regulation  concerning ISAPREs ability to discriminate risks. In fact, even nowadays  3.2% of the patients covered by the ISAPREs are 60  years of age or older, as compared with 12% of the patients seen at public  facilities.<SUP>15</SUP> Law 18.933 was a first attempt to  mitigate the private sector's tendency to favor low risk individuals.     <P>     To resolve the health sector's problems, the transition government of Patricio Alwyn (1990-1994) chose to  maintain the main structure of the health sector (decentralization and coexistence of private and public sectors) while  strengthening the regulatory role of the  state.<SUP>16 </SUP>The objectives of that government's reforms were to increase the equity and  efficiency of the decentralized public system, and to foster community  participation.<SUP>8</SUP> However, the implementation of  several of these initiatives was delayed until the second democratic government (1994-2000).     <P>     <P><I>Investments in the public system</I>     <P>     <P>Owing to the deterioration of the public infrastructures a significant increase in public health expenditure was  instigated, with a 50% increase in the national health budget over a period of four years. A national  program of investment in infrastructure and equipment  in public hospitals was conducted, for a total of US$ 500 million over six  years.<SUP>17</SUP> Financial resources for these investments were provided by the state and through grants and loans from foreign democracies.     <P>     <P><I>Focus on primary care</I>     <P>     ]]></body>
<body><![CDATA[<P>Important investments were made in primary care to  improve the efficiency and quality of the municipalized  primary care facilities, and population's access to health services. The supervisory role of the regional health services  concerning primary care issues was reinforced, to correct the lack of coordination between health services and municipalities.  A Division of Primary Care was created in the MH; its role was  the elaboration of plans and strategies to improve  the development and quality of primary care services in health centers. A Program for the  Reinforcement of Primary Care was implemented and a Project  for Rural Health financed the improvement of  health services management in rural areas of low population  density.<SUP>18</SUP>     <P>     Important strikes of health care personnel in 1990 resulted in a Law that granted primary care workers a new  status, replacing the private sector labor code governing them. It assigned them a centrally determined pay scale and  provided career opportunities as part of a global program of workers re-evaluation.     <P>     Finally, a complete change of the financing mechanisms was progressively implemented during the nineties  (see below).     <P>     <P><I>Administrative modernization of the public system</I>     <P>     <P>The new governments also chose to strengthen the normative and regulatory role of the State, creating new  Divisions at the mh, and to improve the efficiency of the decentralized bodies. Various measures  were taken to improve efficiency in the <I>Servicios de  Salud</I> and public hospitals. For example, &quot;Participation Committees&quot; were created to increase  staff involvement in hospital management. Efforts were aimed at increasing  the<I> Servicios de Salud</I> decision-making  autonomy concerning local investments; they were also  aimed at improving working conditions, salaries and careers  opportunities for health workers.     <P>     <P><I>Reform of the financing systems</I>     <P>     ]]></body>
<body><![CDATA[<P>As mentioned above, the retrospective payment systems of FAP and FAPEM involved disadvantages that included  lack of incentives for quality and cost-containment. Prospective financing mechanisms  were introduced in the nineties to improve the efficiency of public health providers. Health centers and hospitals of the SNSS are, since 1994,  financed according to a Diagnostic Related Group system for the most frequent diagnoses, combined with a Prospective  Payment for Rendered Service for less frequent procedures. For municipalized primary care facilities, a per-capita system  based on the registered population in each health center has replaced the FAPEM system since 1997.     <P>     <P><I>Regulation of the private sector</I>     <P>     <P>Private sector issues were the subject of an intense debate during the first years of the democracy and, as a result,  Law 19.381 concerning the ISAPREs was not enacted till 1995. It strengthened the regulatory role of the Superintendence.  It strictly regulated exclusion periods as well as benefits excluded. It specified the contents of health contracts and  the obligations of the ISAPREs. Finally, it stipulated that the contribution excess remained the propriety of the  affiliated, must be kept on an individual account, and can be used by the beneficiary for specified health purposes.     <P>     The main modification to this Law since 1995 was Law 19.650, enacted in December 1999. It initiated the  progressive elimination of the tax-deductible employer's contribution that benefits mostly employers  and middle-income workers. Its elimination intends to  target public expenditure better. Another very recent innovation is the agreement reached  by the superintendence and the ISAPREs to include catastrophic disease coverage in the private plans. Most ISAPREs  have begun to offer such coverage, for an extra-fee.     <P>      <P><b>Challenges of the Chilean Health System </b>     <P>     <P>The <I>World Health Report 2000</I> analyzing health systems shows a globally favorable performance of the Chilean  health system. Out of 191 countries, Chile is ranked  33<SUP>rd</SUP> for the overall health system performance,  23<SUP>rd</SUP> for the level of health, and  1<SUP>st</SUP> for the equity in distribution of health conditions. However, the injustice of the system concerning  financial contribution is obvious, with a  168<SUP>th</SUP> position for fairness ranking.     ]]></body>
<body><![CDATA[<P>     Chilean health indicators are among the best in Latin America and close to those of industrialized countries. This  is generally explained in the literature by the various governments' commitment toward maternal and childcare since  the fifties, as well as improvement in education and sanitation systems.     <P>     However, one of the important challenges faced by decision-makers is to redefine public health priorities  according to the new epidemiological profile of the country. The Chilean population is aging and the prevalence of chronic  diseases is increasing. Albala<SUP>6</SUP> noted in 1995 that most of the programs still focused  on maternal and child health, without policies related  to other population groups. Some changes seem to have been implemented since then, with more  preventive and early detection programs (cardiovascular health program, early detection of breast and cervical cancer)  or programs focused on the elderly. Further efforts to adapt the health system to epidemiological changes, such as a  stronger focus on risk factor prevention, is a necessary component of current and future public health policies.      <P>     Other challenges involve the actual implementation of the reform to improve health sector equity  and efficiency (discusion based on Carciofi <I>et  al</I> and Larra&ntilde;aga.<SUP>19,20</SUP> The Chilean health system provides health coverage to 100% of  the population and appropriate access is ensured by the extended network of public facilities across the country.  However, there are considerable disparities in the extent and quality of health coverage. Rich people are enrolled in ISAPREs  and receive better health benefits. The poor can only afford the public sector with its lower coverage and quality.     <P>     The dual system is also the source of risk discrimination since ISAPREs can freely adapt premiums to  health risks. In the private sector premiums are 2.5 to  5 times higher for elderly than for young people. Greatest risks are  equally discriminated. Copayments also contribute to these inequities. Annually, around 24% of patients covered by  ISAPREs receive services in public facilities because they cannot afford copayments for certain interventions.     <P>     Inequity of the system comes also from an unfair financial contribution mechanism. The fact that citizens can  choose to pay their contribution to the private sector instead of the public prevents the existence of a redistribution  mechanism within the health sector. The highest income strata do not contribute to the public sector, except through the  general taxes, part of which go to FONASA. The subsidy of health care for the poor is thus (partly) ensured by the  contributions of the middle and lower classes that remain in the public  sector.     <P>     The Chilean health system also suffers from inefficiencies characteristic of public and private sectors. In the  private sector, competition between ISAPREs and the mobility allowed to the affiliated, who  can easily change of institution, result in a system of short-term contracts. This leads to underprovision and coverage of preventive medicine by  ISAPREs that may not benefit from preventive strategies in the long term. Although they have the obligation to provide  regular check-ups to affiliates, they do not encourage their use and, as a result, expenditure for preventive medicine  represented only 0.2% of the total ISAPREs expenditures in 1994. Other consequences of competition and mobility in the  private sector are the high administrative and marketing costs. Moreover, even though the Laws enacted in 1990 and 1995  tried to increase regulation, the absence of clarity and overabundance of health plans result in consumers' lack of  information. In 1995, 8 800 different plans existed in the private sector, making comparisons difficult for consumers. Finally,  the retrospective fee-for-service mode of payment usually used in the private sector induces demand and has no  incentives for cost containment.     <P>     The public sector is not free of inefficiencies either. FONASA still lacks reliable information on the beneficiaries  even if some progress have been made. The collection of copayments is made difficult since there are knowledge gaps  regarding people's ability to pay. Moreover, it is common for ISAPREs beneficiaries to use public sector resources for  expensive procedures not covered by their private health plan. Low efficiency in the production of health services is another  problem. For example, the 70% increase in public expenditures for health, in the early nineties, did not increase  production nor satisfaction levels of the population. Both municipal facilities and hospital  authorities lack legal authority and autonomy for the most efficient management of resources, particularly human resources.     <P>     To specifically address problems due to the decentralization of primary care, some reforms have been introduced  in the nineties. Reforms focused particularly on the unequal and inefficient financing system, and on the personnel  status that was a source of demotivation and conflict. Some problems seem to persist, such as the status of primary care  facilities and personnel in the public network, lack of coordination between primary care centers and hospitals <font face="Symbol" size="2">¾</font>leading  to inefficient management and delivery<font face="Symbol" size="2">¾</font> and lack of integration of primary care personnel in the public career  system, which results in their demotivation and high mobility.     <P>     Last but not least, dissatisfaction of the Chilean  population is high with regard to both the private and  public sector. A study done in 1994 by the Center for Public Studies showed that 55% of public sector and 45% of private  sector beneficiaries were dissatisfied or very dissatisfied with their health system.      <P>     ]]></body>
<body><![CDATA[<P>&nbsp;     <p align="center"><font size="4">Acknowledgements </font></p>     <P>     <P>Many thanks to Octavio G&oacute;mez-Dant&eacute;s (INSP, M&eacute;xico), Edmundo Beteta (Universidad de Chile) and Ra&uacute;l Koch  Barbagelata (SEREMI de Salud X Regi&oacute;n, Chile) for reviewing the article and making invaluable comments and  suggestions. This article has been written while the author was participating in the International Clearinghouse of the Health  System Reform Initiatives.     <P>     <P>&nbsp;     <p align="center"><font size="4">References </font></p>     <P>     <!-- ref --><P>1. World Bank. World Development Indicators 2000. Washington D.C.: World Banck. 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<body><![CDATA[<p><a name="back"></a>(<a href="#top">1</a>) Centro de Investigaci&oacute;n en    Sistemas de Salud, Instituto Nacional de Salud P&uacute;blica, Cuernavaca, Morelos,    M&eacute;xico.      <P><a href="#top1">*</a> Casta&ntilde;eda T. Health sector reforms in Chile: Deconcentration    of hospitals services and decentralization of primary health care. 1997. Unpublished.      <P>     <P><a href="#top2">**</a> Casta&ntilde;eda T. Health sector reforms in Chile:    Deconcentration of hospitals services and decentralization of primary health    care. 1997. Unpublished.      <P>     <P><a href="#top3">***</a> Casta&ntilde;eda T. Health sector reforms in Chile:    Deconcentration of hospitals services and decentralization of primary health    care. 1997. Unpublished.      <P><a href="#top4">****</a> Casta&ntilde;eda T. Health sector reforms in Chile:    Deconcentration of hospitals services and decentralization of primary health    care. 1997. Unpublished.      <P>     <P>     <P>&nbsp;     ]]></body>
<body><![CDATA[<P align="center"><B>Received on</B>: January 8, 2001 &#149; <B>Accepted on</B>:    August 15, 2001    <br>   Address reprint requests to: Annick Manuel. Fundaci&oacute;n Mexicana para la    Salud. Perif&eacute;rico Sur 4809, colonia El Arenal Tepepan, 14610 M&eacute;xico,    D.F., M&eacute;xico.    <br>   E-mail: <a href="mailto:amanuel@post.harvard.edu">amanuel@post.harvard.edu</a>       ]]></body><back>
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