UNIVERZALIZATION OF SOCIAL PROTECTION IN HEALTH

COVERAGE

Daniel Titelman Chief, Development Studies Unit

The Welfare State based on a “working society” has been an unmet promise.

Low coverage, which impacts social exclusion Inequality in income distribution, which transfers

over to social protection. The reforms during the 1990s sought to

improve financing and access through: A stronger relationship between employment and

protection, through the formalization of the labor market

Emphasis on incentive and efficiency mechanisms, more than on solidarity mechanisms

HISTORICAL BACKGROUND AND REFORMS IN THE 1990s

The design of the reforms was not the most appropriate for the problems in the region.

Growth, which was low and volatile, was not favorable.

The dynamic of the labor market was not as expected: High unemployment Informality and precarization of work

Fiscal restrictions implied low, non-contributory coverage.

CONTEXT OF THE REFORMS OF THE 1990s

IN SPITE OF THE REFORM, CONTRIBUTORY COVERAGE HAS NOT INCREASED SINCE 1990

ChiMex C.Rica

Arg*

BraAverage

Ecu*

El Sal

Bol*

Nic

0

10

20

30

40

50

60

70

80

0 10 20 30 40 50 60 70 80

Coverage circa 1990

Co

vera

ge c

irca 2

002

COUNTRIES IN WHICH

COVERAGE IMPROVED

COUNTRIES IN WHICH

COVERAGE WORSENED

LATIN AMERICA: COVERAGE IN 1990 AND 2002

(% of employed that contribute)

45.4%

21.9%

68.2%

21.7%

54.9%

20.4% 18.9%

32.3%

1 2 3 4 5 6 7 8

Average coverage: 38.7%

LATIN AMERICA AND THE CARIBBEAN:EMPLOYED PEOPLE THAT CONTRIBUTE (c. 2002)

Urban RuralFormal Urban

Infor- mal

Urban

Men Women (% of working age)

Q5 Q1 (rich) (poor)

INEQUITY IN THE CONTRIBUTION STRUCTURE

SECTORAL DISTRIBUTION AND COMPOSITION OF SOCIAL SPENDING, BY

INCOME STRATUM

7.9 7.8 8 8

5 5.1 5.2 4.3

2.5 3.4 57.5

16.8

8.2

5.2

0

5

10

15

20

25

30

35

Poorestquintile

Quintile II Quintile III Quintile IV Richestquintile

tota

l sp

en

din

g =

10

0

Social security spendingHealth spendingEducation spending

16% 16.3%17.9%

29.1%

20.7%

IN SUMMARY

On average, 4 out of 10 workers4 out of 10 workers that are employed

contribute to social security. 4 out of 10 people over age 704 out of 10 people over age 70 receive

retirement or pension income. 4 out of 10 people4 out of 10 people live in poverty conditions.

There is great heterogeneity among the countries in the region.

SOCIAL PROTECTION: A CHANGE IN FOCUS

Work is not perceived as the exclusive mechanism for accessing social protection in the short and intermediate term.

Requires a better balance between incentives and solidarity.

New pressures due to demographic and epidemiological changes and changes in the family structure.

A new social consensus is required in order to universalize social protection

Explicit, guaranteed and compulsory

Definition of financing levels and sources (solidarity mechanisms)

Development of social institutionality

CONTENT OF A NEW SOCIAL PACT

Three dimensions of rights: ethical procedural contents

ECONOMIC AND SOCIAL RIGHTS IN PUBLIC POLICIES

Advancing toward the construction of a true social citizenship

SOURCES OF FINANCING

The challenges of social protection require: Increased non-contributory financing:

increased collections and reallocation of spending

Increased contributory financing A solidarity component without

contributory financing.

PUBLIC SPENDING: GREAT DIVERSITY OF SITUATIONS

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%Ar

gent

ina

c/

Boliv

ia c

/

Bras

il c/

Chi

le c

/

Col

ombi

a

Cos

ta R

ica

c/

Ecua

dor

El S

alva

dor

Gua

tem

ala

Hai

tí

Hon

dura

s

Méx

ico

Nic

arag

ua

Pana

má

Para

guay

Perú

R.D

omin

ican

a

Uru

guay

c/

Vene

zuel

a

Ingresos tributarios a/ Contribuciones seguridad social

Otros ingresos b/ Ingresos de capitalAL: Total (20,8%)Promedio OCDE (36,3%)

AL: Ing. Trib.+Seg. Soc. Tributary income a/

Other income b/ Capital income

Contributions to soc. sec. LA: Trib. Inc. + Soc. Sec. LA: Total (20.8%) OECD Average (36.3%)

Dom

. Rep

.

CHALLENGES TO SOCIAL PROTECTION IN HEALTH

Strong inequity in access to health services in the region

INEQUITY: OUT-OF-POCKET SPENDING ON HEALTH

OECD

VENURY

TTO

SURVCT

LCA KNA

PER

PRY

PAN

NIC

MEXJAM HND

HTI

GUY

GTM

GRDSLV

ECUDOM

DMA

CUBCRI

COL

CHL

BRABOL

BLZ

BRB ARG

ATG

0

1

2

3

4

5

6

7

8

0 10 20 30 40 50 60Out-of-pocket spending on health as percentage of total health expenditures (%)

Pu

bli

c sp

end

ing

on

hea

lth

as

%

of

GD

P

LAC

CHALLENGES TO SOCIAL PROTECTION IN HEALTH

Strong inequity in access to health services in the region

Demographic, epidemiological and technological transition

INCIDENCE OF DISEASESDALYs per 1,000 inhabitants

29 29 27 39 26

112108

115 120 103108

98

45 35 39

101

12

8

0

50

100

150

200

250

300

Group I (transmissible)Group II (non-transmissible)Group III (accidents, violence)

Latin America & Caribbean

High income

Middle income

Low income

Latin America &

Carib.OECD, high

income

Globalaverage

CHALLENGES TO SOCIAL PROTECTION IN HEALTH

Strong inequity in access to health services in the region

Demographic, epidemiological and technological transition

Problems in the articulation of financing and service provision among sub-systems

Advancing toward universalization

SEGMENTATION OF HEALTH SECTOR

Current Trends Objective

Functions

Sectors

Functions

Sectors

Insured Uninsured Insured Uninsured

Poor Middle

and high class

Poor

Middle and high class

Regulation Financing Service Provision

Regulation Financing Service Provision

Social

Security

Public Sector

Private Sector

Social

Security

Public Sector

Private Sector

Source: Londoño and Frenk.

DUALITY OF FINANCING SOURCES IMPOSES CHALLENGES ON SOCIAL PROTECTION IN

HEALTH SYSTEMS

Overcome traditional segmentation between contributory social security and the non-contributory public system: Gains in macro-efficiency due to better

utilization of the available capacity. Greater and better management of social

risks. Reduces incentives for “cream skimming.” Strengthens solidarity mechanisms.

HEALTH: INTEGRATION OF THE PUBLIC AND SOCIAL SECURITY SUB-SYSTEMS

Universal Insurance by combining contributory

and non-contributory sources.

Define benefits with universal coverage and

guaranteed fulfillment (of health needs). Rationalization of the use of the existing capacity. Quality of the services is a fundamental incentive. Purchasing and payment mechanisms. Strengthen Primary Care.

IN SUMMARY

Universalizing and improving social protection is an unfinished task

Employment is not enough for universalizing coverage

Solidarity mechanisms should play a fundamental role, combined with improvements in the incentive systems

Reforms should integrate contributory and non-contributory schemes.

Reforms in the context of a social consensus where rights are the normative horizon and economic restrictions are

limitations to confront

UNIVERZALIZATION OF SOCIAL PROTECTION IN HEALTH

COVERAGE

Daniel Titelman Chief, Development Studies Unit