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The Political Economy of Health Reforms in Chile: A Case Study of the Privatization Process

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Abstract

Health issues are contradictory. Although they are intertwined economically and politically, they relate to intangible, elusive and sometimes ethereal concepts. They can simultaneously be the object and the result of change, and the instrument of status-quo. Health reforms need to be explained with reference to the economic conditions and the various interests they sustain, where people are seen not as autonomous individuals but as actors within specific social locations and relationships. The context of health reforms in Latin America and in Chile was more the articulation of conflicting interests in the political arena, mediated by the political strength and mobilization capacity of the political actors and the organized civil society, as well as the armed forces. This chapter discusses the evolution of the Chilean health care system along with the result of negotiations that transpired between a web of economic, political and cultural forces during the following time periods where crucial health reforms were implemented.

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Notes

  1. 1.

    The crisis in Chile that began in 1981 and lasted until 1986 saw inflation rise to almost 30% and caused a currency devaluation of 40%, which created a serious debt problem, exacerbated by a significant drop in the price of copper, the principal source of foreign exchange.

  2. 2.

    Institutos de Salud Previsional, ISAPRES, created by Law 18,933 (1990) which also derogated DFL no 3 (1981).

  3. 3.

    Decree Law 2763 (1979). Regulations for the Ministry of Health, National Health Service System, National Health Fund, Public Health Institute of Chile and Central Supply Centre of the National Health Service. In addition, it established the foundations for a de-regionalized National Health Care System. It established a Ministerial Health Secretariat for each of the country’s regions and created Health Services authorized to delegate tasks to the universities, unions, employers’ associations and other bodies with technical capacities for the activities assigned to the Health Services. The funding would come from the National Health Fund, which was the legal successor to SERMENA and the SNS.

  4. 4.

    Each Service was under the charge of a director, responsible for the supervision, coordination, and control of the facilities and services of the system.

  5. 5.

    The National Health Fund was a functionally de-centralized public service, with a legal capacity and financial resources of its own. Legally, it was a continuation of the National Health Service for Employees and the National Health Service, for the purpose of carrying out administrative and financial actions.

  6. 6.

    The Public Health Institute of Chile was created as a functionally de-centralized public service, also with a legal capacity and financial resources of its own. It contributed to the national laboratory, and was a referential source for s the fields of Microbiology, Immunology, Pharmacology, Clinical Laboratory, Environmental Pollution and Occupational Health. It was the legal continuation of the National Health Service with respect to its relation with the Bacteriological Institute of Chile and the National Institute of Occupational Health.

  7. 7.

    The Supply Center of the National Health Service came into being as a functionally de-centralized public service, again, with a legal capacity and financial resources of its own. It provided the medicines, instruments and other supplies that may be required by the agencies, organizations, institutions and persons affiliated to the Health System, for the implementation of incentive measures, protection or restoration of health, and the rehabilitation of sick people. The Supply Central was the legal successor of the National Health Service.

  8. 8.

    The Ministry of Health was responsible for formulating and implementing the health policies. It had to perform the following functions: direct and guide all government activities relating to the health system; lay out the internal technical, administrative and financial regulations to be followed by the agencies, and institutions of the health system; and supervise, monitor and evaluate the implementation of policies and health plans.

  9. 9.

    Decree-Law 2575 extended the medical and dental benefits of Law 16,781 (1968) to the beneficiaries of the National Health Service. The legal beneficiaries of the National Health Service were eligible for the health care system under Law 16,781, without prejudice to the care that they were entitled to of that service in accordance with Law 10,383 and its amendments. The National Health Service had to pay the amount equal to the percentage paid by the Medical Assistance Fund, as established by Law 16,781. Any difference between the amount funded by the National Health Service and the total value of the benefit was charged to the beneficiary.

  10. 10.

    In developed countries, drug expenses represented between 9% and 10% of the budget destined for health services. These figures more than doubled in underdeveloped countries. These numbers were even more eloquent in Chile, as it was reported that pharmaceutical expenses comprised of almost a third of all expenses recorded in the health sector. Ernesto Medina & Ana María, Kaempfer, “Análisis crítico de la metodología de planificación de salud”, (1968) Revista Médica de Chile 455. The concentration of the pharmaceutical industry in Chile demonstrated that in 1977, out of 57 active companies, 24 were foreign and the 5 largest of these already controlled 32% of the market. The leading 25 companies controlled 80.5% of the total market and 18 were foreign multinationals. Also, since foreign pharmaceutical companies hold patents rights the possibility of transfer of technologies was very limited. At the same time, this allowed artificially high pricing, sales linked to the purchase of other products and finally restrictions in domestic exportation. See Constantine Vaitsos in Meredeth Turshen, “An analysis of the medical supply industries”, (1976) 6 International Journal of Health Services at 275.

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Authors and Affiliations

  1. York University, Toronto, ON, Canada

    Jaime Llambías-Wolff

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  1. Jaime Llambías-Wolff
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Correspondence to Jaime Llambías-Wolff .

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  1. Sheffield Children’s NHS Foundation Trust, Department of Emergency Medicine, Sheffield, UK

    Derek Burke

  2. Sheffield Children’s NHS Foundation Trust, Department of Paediatric Surgery, Sheffield, UK

    Prasad Godbole

  3. Sheffield Teaching Hospitals NHS Foundation Trust, Sheffield, UK

    Andrew Cash

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Llambías-Wolff, J. (2019). The Political Economy of Health Reforms in Chile: A Case Study of the Privatization Process. In: Burke, D., Godbole, P., Cash, A. (eds) Hospital Transformation. Springer, Cham. https://doi.org/10.1007/978-3-030-15448-6_8

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  • DOI: https://doi.org/10.1007/978-3-030-15448-6_8

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