Document(s) 7 de 14

Introduction

This chapter will describe the social and historical factors that shaped the process of health care system reform in Brazil. It will also examine the social and economic context within which the reform took place; the principles on which the reform was based; the extent to which it was completed; and an evaluation of the present situation.

The ongoing process of health care reform in Brazil has at least two general aspects. First, the last two decades have seen profound changes in the country, as much in economic terms — the result of world-wide structural transformations — as in socio-political and cultural terms — the result of the consolidation of democracy. The health care sector has been influenced by all these changes, mainly because social policies in the country have historically been greatly affected by variations in politics and economics. Another general aspect of health care reform in Brazil is the ambitiousness of the reform proposals themselves, which aimed to modify a huge and complex system that had taken decades to build, and was consolidated during the most recent authoritarian period.

During the authoritarian regime that began in the 1960s, the political system and the production system were modified simultaneously, leading to a period of accelerated economic growth stimulated by external and internal borrowing on the part of the state. A highly specialized bureaucracy played a major role in this process both economically and politically, expanding its institutional apparatus, including that of the health sector. Strong centralization, particularly at the federal level, was combined with policies designed to strengthen the private sector and aimed at increasing economic growth. A remarkable broadening of health care services took place during this period.

The economic model adopted in the country from the 1950s on had initially been very dynamic, especially in the industrial sector, and indicated a strong capacity for growth. However, this vigour began to wane as early as the end of the 1960s, generating an economic crisis in the 1970s with a huge social impact, along with the progressive deterioration of the authoritarian political regime.

The economic and political steps taken to rectify the financial crisis affected the public sector most of all. The state absorbed the negative impacts of the external debt, while public finances took on the role of adjustment variable. One of the means of adjustment was to privatize state institutions (Dain 1986), allowing the private sector to maintain much of its profits despite the losing momentum of the internal economy.

This set of factors, on one hand, compromised the state’s financial capacity, and, on the other hand, helped discredit the military regime, which had difficulty maintaining power. This prompted a long and complex transition to democracy that lasted through the 1980s and assumed a particular shape, known as "agreed democratic transition" (O’Donnel 1987), because it was conducted largely by the authoritarian government itself. While pressure from civil society, revitalization of organized social groups and increasing public dissatisfaction played a decisive role in accelerating the process, most of the rules were set by the military government. This resulted in a high degree of institutional continuity and allowed the same groups to remain in power.

It is in this context that proposals for a public, universal, and democratic health care system emerged. Social movements and civil society organizations rallied around these proposals, and some of them were adopted by the health bureaucracy.

Reform proposals increased, with a view to profoundly changing the health care system, while the conservative elite was still in power. This elite for a time had no alternative to dictatorship and so adopted not only democratization, but also the rescue of the so-called social debt, as its own project. This situation changed after the first elected government following the dictatorship took power. Supported by the conservatives, this new government was clearly identified with liberalism and privatization and opposed increasing investment in social programs. This orientation remained up to the present government, which has sought to incorporate global structural adjustment measures into the Brazilian economy. And yet, it was during the two last governments that reform of the health care system was implemented.

In such a context, the path to health care reform was not smooth, but characterized by many disruptions. Nevertheless, considerable changes have been made in the health care system and social policy in general. For the first time, universal social policies have been adopted. Substantial changes in the institutional structure are evident in financing alternatives, the involvement of various levels of government, the introduction of innovative forms of management, and in social participation. Nevertheless, the system still suffers from low levels of financing and investment; poor quality services; and a limited ability to solve problems. Today, a large segment of the population uses private health care services, which have increased and diversified to the point that their revenue nearly equals expenditure on the public health sector, although they serve only one-quarter of the population.

Even with all these difficulties, it is impossible to explain the constraints on health care reform as solely the consequence of structural adjustment measures, as seems to be the case in various other Latin American countries. In fact, in contrast with most of these countries, the Brazilian government had no concrete proposals to include health care reform in the structural adjustment strategy. The reason that reform did not entirely follow the structural adjustment strategy may be explained in two ways.First, the momentum for reform, although no longer expressed through broad social movements as in the 1980s, has expanded significantly and been expressed principally through government institutions. For this reason, proposals aimed at altering the process underway would have a high political cost.

Second, there are particular characteristics to adjustment strategies in Brazil that are fundamentally different from adjustment strategies in other countries in the region and much more resistant to the orthodox stabilization process. Fiori (1995, p. 157) emphasizes two factors to explain this resistance. First, the existence of an "industrial fabric, an importing dynamism and a commercial diversification unparalleled in the continent," that rejects the Argentine approach of specialization as a way of gaining advantage in the international sphere. Fiori’s other point (1995, p. 158) is that Brazilian industry is not complementary to any particular commercial partner and, therefore, discourages economic restructuring aimed at commercial integration, as in the Mexican case. In other words, it is not the weakness but the dynamism of the economy that prevents it from taking over the adjustment process in a more radical way. Having completed a process of heavy industrialization, the Brazilian economy does not passively accept changes neither in the international scenario nor position itself exclusively through the export sector.

Although the restructured economy has not clearly defined the role of social and health policies, it has at least presented an alternative to the reform process: "non-politics." This means the total absence of a clear strategy for the sector on the part of the government.

The following description of the reform process describes the context and analyzes the limits imposed on the Brazilian health care system.

Background Influences

Until the 1960s, health care services in Brazil were organized according to three subsystems, represented by social security, the Ministry of Health and the voluntary private sector. Social security was consolidated from the 1930s on, when the state began to participate in the financing of public and private companies’ social security benefits, one of which was to provide health care to workers and their dependants. Social security institutions, then called Institutos de Aposentadorias e Pensões (IAPs, retirement and pension institutes), were organized according to professional categories and according to a classic insurance model: in other words, that benefits and assistance depended on the ability of the category of employee in question to contribute. Services could be provided through the private networks, as was the case for the richest institutes, or through contracts with the private sector. Social security became the dominant system for providing health care services in the country. As a consequence, health care followed a stratified model of social rights, expressed in terms of different levels of access by the various IAPs and the exclusion of segments of the population not participating in the formal labour market (Oliveira and Fleury Teixeira 1989).

The Ministry of Health, organized in a parallel structure, was responsible for preventive care. It retained a preventive focus (vaccination campaigns, sanitation, and so forth) until the end of the 1950s, when it was split into multiple services and departments operating in and uncoordinated manner. In terms of medical care, the Ministry was responsible only for the creation and maintenance of chronic care facilities.

The third subsystem, the private sector, was independent of the main subsystems and limited to services provided by autonomous physicians through direct payment.

The Social Security Organization Law, passed in 1960, standardized the benefits provided by the different IAPs. However, they were not yet unified and remained as isolated structures, serving their clients separately. The Law focused more on standardizing medical services, which were handled cautiously in the various decrees governing the operations of the institutes.

From the mid-1960s on, particularly after the start of the authoritarian regime in 1964, Brazil underwent a series of transformations to meet new industrialization and economic development aims. Government management became increasingly interventionist. Social policies, particularly health policies, were used to help legitimize the regime as well as stimulate the private sector.

It was in this context that social policies, particularly in the health sector, were made increasingly universal as the state took on more responsibility for the provision of services (Draibe et al. 1990).

In keeping with this trend, the organization based on the IAPs was unified into a single institution, the Instituto Nacional de Previdência Social (INPS, national institute of social security) under Decree 72 (21 November 1966). Social security coverage was extended, but remained restricted to specific professional categories in the formal market, thus keeping the clientele segmented. Rural workers, people employed in the informal sector, and the self-employed remained excluded.

The changes contributed to the creation of a specific model of health care in the 1970s, with basic characteristics that would become the principal targets of health reform. Among these characteristics were centralization; the dichotomy of institutions within the health care system; the growth in coverage through private provision of health care; incomplete coverage; and regressive financing.

Centralization

The unification of the social security structure consolidated resources and power under the central government, reducing the influence of state and local governments in planning and management.

Dichotomy of institutions within the health care system

The public health sector was structurally divided into two ministries with separate powers, clienteles, and operating methods.

1. The Ministry of Health, established in the 1950s, was responsible for developing and coordinating national health policy; for public health and preventive medicine; for a network of hospitals for treating chronic disease; and for a basic network of health care services for those in the poorest localities.

2. The Ministry of Social Security and Social Assistance, established in the 1970s by Law 6.025/74, was responsible for providing medical care to workers insured by social security.

In the 1970s, the institutional dichotomy was formalized by the creation of the Sistema Nacional de Previdência e Assistência Social (SINPAS, national system of social security and social assistance), within which different institutions were created, each responsible for a specific area of social benefits. Medical care became the responsibility of the Instituto Nacional de Assistência Médica da Previdência Social (INAMPS, national institute of medical care and social security). This new institution was an answer to the progressive growth of health care within social security that necessitated its separation from long-term benefits. Thus, INAMPS achieved significant political and financial power (Oliveira and Fleury Teixeira 1989), while the public health system became even weaker within the health sector as a whole.

Medical services were provided by both the public and the private sector. They were provided by the public sector through hospitals, health centres and primary-care units pertaining to the three levels of government, federal, state, and municipal. Private service providers were classified as follows:

• independent professionals or health services contracted by individuals or companies and financed by the private sector itself; and

• private sector contracts — profit and nonprofit units that provided services to the public sector under contract to the federal government

The relationship between the public and private sectors was restricted almost exclusively to services contracting, based on fee-for-service payment, with no control over the kind of medical care provided. Thus, medical care was characterized by high-cost, specialized, curative, and hospital-based treatment. The absence of policies based on the actual epidemiological profile and health needs of the population meant that services concentrated in the more profitable regions, causing an imbalance in supply.

This distorted health care model expanded through the mobilization of a growing volume of resources within the Ministry of Social Security and Social Assistance. This Ministry had the second largest budget in the country, only surpassed by the federal budget itself. Public health and primary care were not similarly privileged, however, enduring a progressive decline in investment due to reduced financing from the Ministry of Health.

Growth in coverage through private provision of health services

From the 1970s on, social security coverage was extended to workers who previously had none, but benefits continued to be linked to contributions. In addition, emergency care was expanded to cover the whole population, independent of an individual’s affiliation with social security. This provoked an unprecedented increase in the demand for services.

The Instituto Nacional de Assistência Médica da Previdência Social (INAMPS, national institute of medical care and social security), contracted more and more often with third parties to care for the increasing clientele. This gave the private sector a progressively more important role in service provision. As a result, the publicly owned network shrank and deteriorated. By 1976, for example, only 27% of all hospital beds were public, while 73% belonged to the private sector.

This quick and progressive extension of coverage enabled the military government to accomplish its goal of legitimizing the authoritarian regime and, at the same time, stimulate and strengthen the private sector. The latter was accomplished by:

• subsidizing debts to build hospital units with the guarantee of future contracts from INAMPS;

• subsidizing medium and large companies to take responsibility for the health care of their employees; and

• stimulating private hospitals to provide services to social welfare insurers, on a fee-for-service basis. This type of payment, known to stimulate the use of services, also led to widespread fraud due to the total absence of inspection.

Another historical tendency was reinforced when private-sector consolidation took place, not as the result of market economics and competition, but encouraged through subsidies and political guarantees conferred by the state. But although such public-private partnerships were responsible for the commercialization of medical care, we cannot discount their significance in expanding access to services. Therefore, the process was not based exclusively on market logic but also on the growing importance of health in the public agenda (Costa 1996).

Regressive financing

Social security funding was not supported by the fiscal budget, but by compulsory payroll deductions from workers and companies. Thus, the resources in this budget were extremely dependent on cyclical variations in the economy, particularly when recessions affected employees and salary levels.

The progressive extension of coverage carried out during the 1970s was not followed by a change in funding. The resources collected by the Ministry of Social Security and Social Assistance were expected to cover not only retirements and pensions, which resisted cuts because their amounts were predetermined, but also medical care, which did not require a specific budget. Thus, medical-care expenses incurred in hospitals were significantly reduced during recessions, as observed during the 1980s. The model was based on expansion, but the contributions were based on payroll, and tended to decrease.

In summary, a combination of factors culminated in what was called the social security crisis of the1980s. These factors included the proliferation of expensive medical care without a corresponding change in the method of financing; a method of paying the private sector that stimulated an increase in expensive specialized procedures, as well as fraud; difficulty in controlling finances because of the disorganized structure of the system; deterioration in the quality of services; and a national economic crisis allied to a broader crisis of international scope.

The answer to the crisis within the Ministry of Social Security and Social Assistance was simultaneously political and technical. A special council was established, having as one of its targets to propose strategies to deal with the crisis and to develop a framework to reorient health care within social security. The council was composed of government representatives, employers, and employees’ associations. Because of this mixed composition (state and civil society), it constituted an important arena for projects that involved different social actors in the health sector.

The plan consolidated principles and updated proposals already championed by different social actors, either in the bureaucracy or in civil society. The strategies included those developed by technicians in the social security bureaucracy to rationalize expenses, and those proposed by civil society aimed at reorganizing the health care model and democratizing the health care system. The latter were adopted by the former with the support of the health professionals, who were better able to influence the state bureaucracy.

A number of financial and management measures were adopted. Criteria were defined for allowing the private sector to operate in the name of the government. Mechanisms were created to decentralize planning; budgets were integrated between the various levels of government. Social participation was to be encouraged. And, central government resources were to be transferred to the states and municipalities to restore their health units.

One of the core objectives of these strategies was the progressive transfer of health care to the states and, further, to the municipalities. Thus, the federal social security health units, which were previously responsible for providing services, had their duties redefined. They were now responsible for planning and co-financing. Control remained at the federal level, however, because it was the main payer.

The transfer of resources to the states and municipalities were based on the accomplishment of certain goals. But this did not stimulate independence at the state and municipal levels, however, because the transfers were not based on health needs but rather on services provided. Thus, the principles governing the private sector were extended to the public sector.

One of initiatives in the area of service provision and organization was to reactivate the Instituto Nacional de Assistência Médica da Previdência Social (INAMPS, national institute of medical care and social security)’s own hospitals. In addition, various attempts were made to make services more efficient by applying updated principles for structuring health care, such as integrating preventive and curative care, as well as different levels of care, within the existing capacity of the various regions.

These principles had already been applied in some experimental projects developed in the 1970s by various technical groups critical of the existing health care model. Based on proposals such as that for community medicine, these projects featured a reversal of the trend toward specialized curative health care and extended the decentralization of primary care delivery. This kind of project had not been successful, due to opposition from the INAMPS bureaucracy and the private sector, who had no interest in reversing the hospital-centred model.

Although these proposals were not entirely implemented, new primary health care units were installed. Their inclusion in the reorientation of the health care system strengthened various actors within the government bureaucracy, who would be important in the reform process.

The set of measures adopted during the 1980s reflected different projectsinvolved in health system reorganization. These projects sometimes complemented and sometimes contradicted each other, depending on the positions of the actors involved. Thus, although the main purpose of reorganization was to control expenses, the measures were accompanied by a strong democratizing component. In part, this was because of political action by the people who would shape the social movement that was fundamental to the reform process, known as theHealthMovement. Composed of intellectuals, health professionals, and left-wing militants from the opposition parties, the Health Movement identified democratization as central to the creation of an effective health care system and, in turn, attributed all the problems related to the health care services to the authoritarian regime.

With the decline of the authoritarian regime, democracy was reborn as the ideal for restructuring Brazilian society. A series of social demands had accumulated during the authoritarian period, among them demands for health care. The crisis in the health care system resulted in increased criticism of the model in force and renewed the proposal of alternatives.

The Health Movement strategically associated the demand for health care services with the demand for a democratic regime. The main principles of the Health Movement were that health is a right of all citizens, to be provided by the state through a universal health system based on integrity and equity in health care (Barros 1996). The effectiveness of the Movement required the construction of a political strategy that encouraged civil-society organizations to demand the universal right to health as an obligation of the state. The Health Movement also called for reform of the state bureaucracy and institutions.

It was thus on the issue of health system reorientation that the strategy of the Health Movement coincided with the rationalizing proposals of the social security bureaucracy, making health institutions the focus of health care reform.

The proposed reform was based on the following principles:

• restructuring financing mechanisms to broaden the support base beyond the payroll;

• reversing the process of privatization and establishing ways for the public sector to control the private sector;

• giving greater decision-making and financing autonomy to the states and municipalities; and

• introducing the participation of social organizations in formulating and implementing health policies.

The Reform Process

The 1980s was a period of intense discussion concerning health demands and health care policies. The policies adopted during those years to overcome the crisis in social security, as well as the broad social and political demand for sanitary reform (health reform), can be understood as part of the process of health care reform. However, it was only in 1986 at the 8th Conferência Nacional de Saúde (CNS, national health conference) — one of a series of official forums regularly called by the Ministry of Health to determine policy guidelines — that the reform became a policy in the strictest sense of the word.

The 8th CNS brought together not only broad sectors of civil society and representatives of the most important institutions in the sector, but also professional groups and political parties. The conference differed from previous ones in its participatory nature. It became a milestone in the reform process because its most important principles were enshrined in a national document. Its proposals would later be brought by the Health Movement to the Constituent National Assembly during the elaboration of the Constitution adopted in 1988.

The final report from the 8th CNS defines health from a comprehensive perspective encompassing many aspects, such as quality of life, leisure, sanitation, transport, work, etc., meaning that the changes to the health system should go beyond the limits of an administrative reform. The report concluded that health care should be administered by a single body, the Ministry of Health. Thus, it would no longer remain under the authorityof the Ministry of Social Security and Social Assistance, which would become responsible for long-term benefits only.

An important step in the reform process was the creation of the Sistema Unificado e Descentralizado de Saúde (SUDS, unified and decentralized health system). As set out in 1987 by the Instituto Nacional de Assistência Médica da Previdência Social (INAMPS, national institute of medical care and social security), the aim of the unified decentralized health system was to carry out the transfer of health units and human resources from the Federal Government to the state governments according to a set of conditions. The Federal Government also delegated the appropriate responsibility and sufficient means to the states and municipalities to ease the transition to their new role in health services provision.

The reform of the health system was legally defined in the 1988 Constitution. It was called the "Citizens’ Constitution" because it introduced significant improvements in terms of social rights. It defined health as an obligation of the state and imposed radical changes on the health sector, formalizing the main aspects outlined in the 8th CNS. The guiding principles of the health care reform were as follows.

• Health as a right of citizenship. All Brazilian citizens acquired the right to health care provided by the state, thereby characterizing health as an activity of public relevance.

• Equal access. All citizens should have equal access to health services, with no discrimination of any kind.

• Health as a component of social welfare. The health sector had to be integrated with the social welfare system, defined as an "an integrated set of actions provided by the state and society aimed at fulfilling rights related to health, social assistance and welfare" (Federal Constitution 1988, article 194). The connection of this statement with the financing plan led to the creation of a single integrated budget — the Social Welfare Budget — which gave each sector autonomy of management and resources, and guaranteed 30% of the budget for health on a temporary basis until rules and regulations had been set. These resources came from various sources: tax collection; social contributions, mainly by companies, to finance social activities; and contributions from employees and employers based on a percentage of the payroll.

• A single administration for the public system. One principle of health care reform concerned the creation of a single system to aggregate all health services provided by federal, state, and municipal public institutions through direct and indirect administration, as well as foundations supported by public authority. The private sector was also allowed to become part of the system under contract; however, the public authorities retained the power to rule, control, and inspect the services provided. The Ministry of Health was responsible for monitoring and directing all activities related to health, including medical care, which was no longer under the control of social security.

• Integrated and hierarchical health care. The unified system had to be organized to provide integrated care by giving priority to preventive procedures without jeopardizing care at other levels. Therefore, promotional, preventive, and curative activities had to be based on the epidemiological profile of the population. Provision of services had to be arranged with respect to the health care hierarchy and had to provide people with universal access to all levels of care. The hierarchy had to operate on referral and counter-referral mechanisms, from the least-complex level of care to the most, ensuring continuity of care through the primary caregiver.

• Social control and social participation. The system had to be governed according to democratic criteria, and the participation of civil society in its decisions was of paramount importance. For this reason, it was proposed to create health councils at the federal, state, and municipal levels, to increase democratic participation in developing and implementing health policies. The health councils were to comprise representatives of the three constituencies involved: users, professionals, and managers. Health conferences, to be held at the national, state, and municipal levels on a regular basis, were also intended to stimulate and guarantee social participation. Various collegial institutions were to take over functions previously the exclusive domain of executive power, such as determining resource allocation, inspection, and regulation (Fleury 1994a).

• Decentralization and regionalism. Decentralization was a fundamental factor in health system reform because it led to a redistribution of the responsibilities between levels of government. Provision of health services had to become the responsibility of municipal governments, aided financially by the federal government and the states. However, all services had to operate within a unified system, because it could not be expected that all levels of services could be provided at the municipal level (Santos 1997). The need for a hierarchical and regional system led to the creation of management forums at the various government levels, and to the strengthening of the role of municipal managers, who became relevant actors in the new system.

The introduction of these principles was preceded by extensive political debate. Even before the constitutional process, the National Congress was already considered an important centre for public debate and for developing alternative health policies, mainly through the deputies’ Chamber of Health Commission. The period of debate that led to the development of the new Constitution was described as an exceptional opportunity for various actors toexercise political pressure by lobbying for the inclusion of their proposals.

The 8th CNS had already highlighted the different and sometimes contradictory concepts of reform held by the main actors involved in the process of reforming the health sector. The absence of important representatives from the private sector was a clear demonstration of their opposition to the resolutions of the Conference. At that time, the Health Movement still supported the thesis that all health services should be provided by the state, but found strong resistance from the medical association and even from the proponents of health system reorganization. Following the conference, these actors became more prominent in the political arena, especially in National Congress. Positions in the dispute ranged from the most private to the most public orientation.

In general, three major groups of actors could be identified:

1. unions, professional associations, federal councils, and organizations linked to the HealthMovement, which supported the reform project as defined at the 8th CNS, that is, a public and democratic system;

2. private sector associations that had as a common objective resistance to any government control, but were distinct in terms of the interests of their particular subsystem. The contracted private sector wanted to continue providing services financed by the state, but with no technical and administrative interference, and also wished to increase its share of public income. In contrast, the voluntary private insurance sector, already significant at that time, wanted total independence from the state; and

3. representatives of the health and social security bureaucracies who wanted to keep control of medical care (Neto 1997).

The principles defined in the Constitution — the guidelines for the new health care system — acknowledge that various actors and interests are involved and are expressly vague on non-consensual issues, leaving them to be defined later by specific regulation.

The Reform Implementation

The legal components of the Brazilian health care reform guarantees the state’sright to regulate, inspect, and control the health system. The legal framework ruling the Sistema Único de Saúde (SUS, unified health system) is composed of the Health Organization Law (Laws 8.080/90 and 8.142/90), the federal Constitution, the state constitutions (1989), and the municipal organization laws (1990). Operational strategies for the system are outlined in the Normas Operacional Básicas (NOBs, basic operational norms) published by the Ministry of Health in 1991, 1992, 1993, and 1996.

The Health Organization Law (Laws 8.080/90 and 8.142/90) governs such items as: conditions for health promotion, protection, and cure; powers and resources of each level of government; and basic mechanisms for managing the system, including community participation through health councils and conferences. The two laws are complementary, as the second law (8.142/90) was passed after the first was vetoed by then-president, Fernando Collor.

Since the Organization Law went into effect, the administration of the SUS has reflected all the conflicts of interest and perpetuated all the ambiguities within the system. One of these concerns the difficulty of defining the roles and responsibilities of the federal, state, and municipal governments with respect to the SUS. The Organization Law 8.142/1990 governs the transfer of resources from the federal government, but remains silent on the responsibilities related to the different agencies and levels of government, leading to duplication of some activities and gaps in others.

The most important issue, however, is that the sphere of action of the SUS legislation is almost entirely restricted to the public sector. Although the government has the right to inspect and monitor both public and private sectors, neither the 1988 Constitution nor the Health Organization Law include any provision for private sector regulation.

The years since the formal reform legislation was passed have, therefore, been marked by conflicts over certain points, with the result that implementation of the system has been slow and uneven across the country.

Municipalities differ significantly in their ability to handle health services and in their relations with other levels of government. This has led to the development of various processes for transferring health services to municipalities across the country. The dynamics of transfer are also influenced by broader political and social differences, such as conflicts between public and private interests.

It is, therefore, possible to identify three broad politico-governmental periods since the beginning of the implementation of the reform settlement:

1. 1990-92, in the context of the first government elected after the military dictatorship and immediately after legal recognition of SUS in the Constitution;

2. 1993-95, when government restructuring caused by presidential impeachment took place; and

3. 1995 on, following the election of the present president.

As already explained, the initial stage was developed during the first elected government after the military dictatorship. The new government adopted an economic policy based on structural adjustment, reduced state intervention, and enforced privatization. While the sanitary reform clearly advocated government control, the government in power favoured a liberal-privatizing approach. In the health sector, as in the field of social policy as a whole, resources were immediately reduced.

Reduced financing further weakened the network of hospitals. To make ends meet, the average fee for service was reduced. The private sector was the major health service provider, with most of its financing coming from SUS contracts. Erosion of profits led many private companies to terminate contracts for high-cost procedures. Only those companies that had not been able to modernize their operations remained linked to the public sector, significantly affecting the quality of services. Other companies preferred to keep their contracts but not fulfill them, in an informal breach of contract(Mendes 1993).

Such an unfavourable political environment adversely affected the constitutional principles governing the Health Organization Law. As a result, various articles concerning financing, decentralization, and community participation were vetoed. The automatic transfer of federal resources to municipalities was vetoed as well. This helped slow down the decentralization process.

At this stage, the Instituto Nacional de Assistência Médica da Previdência Social (INAMPS, national institute of medical care and social security) remained responsible for medical care. The technical bureaucracy saw decentralization as a weakening of its political and financial power. Control over financing medical services had for many years guided important political relationships in the authoritarian regime. INAMPS maintained offices in all the states, through which demands were negotiated. Representatives frequently acted as key persons in the local political arena. INAMPS was thus an important mechanism in looking after central government interests in the states and municipalities. The contracted private sector also preferred that INAMPS be maintained because of its political proximity to the bureaucracy. However, sole command was a key point in the creation of SUS, which meant that the health system was heading for a power struggle. It was only in 1993, after presidential impeachment, that INAMPS was abolished and the strategies outlined in the reform began gradually to be implemented.

The Normas Operacional Básicas (NOBs, basic operational norms) provided the Ministry of Health with a gradual, flexible process for allowing states and municipalities to join SUS according to the management provisions most convenient for them.

The powers of the different levels of government were defined as follows:

• The federal government was responsible for developing national policies; controlling national regulation through SUS; providing technical and financial assistance to states and municipalities; and regulating public-private relations and private sector activity.

• The states controlled the regional network and hierarchy within the state, as well as supervised and provided technical and financial support to municipalities.

• The municipalities were responsible for providing health services and health planning.

To manage the system, bipartisan and a tripartisan management commissions were created. The first were composed of state and municipal representatives, and the second of federal, state, and municipal representatives. As negotiating forums, they had the power to follow up on the decentralization process and to assess municipal conditions in order to fit each into the most appropriate level of management autonomy.

The 1993 NOB classified the degree to which a municipality had assumed responsibility for health service provision (including contracting with and supervision of the private sector) as incipient, partial, and semi-complete. At the maximum level of autonomy (semi-complete), the municipality no longer received resources from the federal government that were linked to providing services, but did receive a lump sum, based on historical expenses, to support health care (Barros 1996).

In addition to the management commissions, the Federal National Health Council and state and municipal health councils act as central forums in the process of health policy development at the various levels of government. The councils are legal entities comprising representatives of government and SUS users, as well as representatives of various civil society associations. They operate differently in the various municipalities and states, and join the inter-managing commissions to a greater or lesser degree, depending on the political relationships they establish with state and municipal governments. In other words, although they have the legal responsibility for heading the system in the name of the executive power, their effectiveness varies from state to state and municipality to municipality in accordance with the political relationships between the councils and the executive power.

At present, the Federal National Health Council is the most active council and assumes an important role in analyzing and discussing projects presented by the federal executive power. Its actions have been marked by strong technical support and an excessive preoccupation with regulation. However, there is tension between the Council and the executive power caused by the presence of diverse actors. Although all measures are supposed to be presented to Council, the executive power does not always respect this law — whether it does or not depends on the interests involved.

In addition to these institutions, the roles of the Conselho Nacional de Secretários Estaduais de Saúde (CONASS, national council of the state health secretariats) and the Conselho Nacional de Secretários Municipais de Saúde (CONASEMS, national council of municipal health secretariats) have been strengthened. These councils are civil entities with public status that participate in both the Federal National Health Council and the inter-management commissions.

The involvement of all these institutions in planning and managing the system has been recognized as an important instrument of democratization and one of the sanitary reform’s most radical changes (Castro 1992).

Although the problem of financial restrictions remained from 1993 to 1995, it was the 1993 NOB that gave the reform its most important stimulus. Many municipalities achieved semi-complete status, thus increasing their degree of municipal autonomy within the health system. Under the decentralized system of operation, many municipalities started to administer services according to the needs of their populations. Many innovative arrangements were introduced, such as family doctors and health agents. Some municipalities invested in primary care and health centres, trying to reduce the use of hospitals for primary care. On the other hand, better control of services provided by the private sector were developed. Other management measures were applied to improve the delivery of health care, such ascontracting out ancillary services such as cleaning, nutrition, etc., encouraging independently managed hospitals, and contracting with medical cooperatives for care.

From 1995 on, the health system suffered deeply from the withdrawal of financial resources. Because of this, one of the main activities of the Ministry of Health centred on negotiating a fixed amount of resources for the health system, because since 1993 the INPS had suspended the transfer of resources determined by the Constitution. A special tax onbanking transactions was finally approved in 1996. This amount was to supplement the health budget by about 4 billion Brazilian reals (in 1997, R$ 1.00 (Brazilian real) = US$ 1.15). However, in 1997, the first year of the new contribution, the Ministry of the Treasury held back about R$ 1.7 billion instead of transferring it to the Ministry of Health.

On the side of the federal government, the only important measure adopted since then has been the new operational standard by the Ministry of Health, which was published in 1996 but only came into effect in December 1997. This NOB made progress in terms of regulating management at the municipal level. The municipalities are now able to apply for one of only two levels of management autonomy, the one taking responsibility for all primary care and the other for the whole municipal health services system. Municipalities not able to do one or the other of these two possibilities will remain SUS service providers under the control of the state.

This NOB reinforces the function of the inter-management commission as a key instrument of integrating and harmonizing the roles performed by municipal, state, and federal subsystems. It also governs the shared provision of services, by means of inter-municipal consortiums, which draw up planning and budgeting agreements.

An underlying issue concerns the definition of a health care model based on family health and aimed at strengthening basic care, as well as the relationship between the health team and the community. In this sense, the model reinforces the integration between individual medical care and the epidemiological approach. As part of the strategy for reorganizing the health care model, a regular and automatic transfer of resources from the National Health Fund to state and municipal funds was introduced through NOB in 1996 to fund primary care. The amount can be increased if the municipality develops community-based programs for family health or community health agents.

A consensus on the general principles of sanitary reform is growing in all the decision-making institutions created since the Constitution. However, improvement in health management has not overcome the lack of investment nor the lack of a clear policy in the system. There are still intense conflicts concerning the allocation of financial resources between the various levels of government. The disagreement between different interest groups remains within the health sector, mainly between defenders of a tendency toward privatization and those who advocate government control.

The role of the private sector under SUS had been a major source of conflict during the drafting of theConstitution and still flourishes. Prepaid and private health insurance plans have been stimulated first by the reduction in public services and then by public subsidies in the form of income tax deductions on the part of companies and consumers. However, high prices caused increasing complaints against the services provided under these plans, compelling Congress to reopen the debate. After months of discussion and negotiation, a proposal to regulate the sector was approved. It is far from what the critics of private services wanted; however, there seems to be a consensus within the health sector that considerable improvements were made and that this law is better than nothing.

From now on, companies are obliged to offer at least three basic plans. The most complete (and most expensive) covers all the diseases registered by the World Heath Organization (WHO), and includes hospital stays and office visits. However, it does not cover many complex procedures, such as transplants, and does not include drugs. A patient with AIDS (acquired immune deficiency syndrome), for example, will now be covered by these plans, but the drugs will still be the responsibility of the public system. Two very important aspects of the new legislation are the end of the limit on hospital stays and the prohibition against raising prices for beneficiaries over 60 years of age, as long as they have been with the plan more than 10 years.

Many complaints had resulted from companies refusing to cover patients with "pre-existing" conditions. Now, companies are at least obliged to treat the patient, and the onus is on them (and not the patient) to prove the pre-existence of the disease. On the other hand, if the company can prove that the patient already had the disease and knew it when the contract was signed, the patient could be obliged to refund the company. Workers entitled to health care through their employers have the right to maintain the insurance for a period in case of unemployment or retirement, as long as they pay the employer’s portion.

Two aspects of this regulation are especially important for a better functioning of the health system as a whole. First, SUS is allowed to charge private companies for services rendered to their beneficiaries in a public health unit. Second, the Ministry of Health has created a subordinate council to monitor the activities of the voluntary private sector. The creation of an organization independent of SUS may be understood as the definitive separation of the public and private sectors. Moreover, besides the immediate improvement in the quality of services available to the population, it leads to the possibility of developing mechanisms of negotiation and commitment to long-term policies.

Evaluation

One of the basic tenets of health care reform was the definition of a client profile based on citizenship, as set out in the Constitution, which not only emphasized universal access to health care but also strengthened the public nature of health care, i.e., that it is a responsibility of the state(Costa 1996).

In addition, decentralizing and strengthening municipal governments brought significant benefits to the system. One cannot say that the decentralization process in itself guaranteed better health care. This was, among other reasons, because sometimes local governments passed on even more intensively the distortions that had occurred at the federal level, such as patronage. However, the increasing participation of municipalities in the provision of health services — which meant, in some cases, investing in localities that were not previously priorities — reduced regional inequalities in terms of beds and medical consultations. As well, the number of outpatient institutions is expected to have significantly increased with the improvement in the network of municipal services (Barros 1996).

The inter-municipal consortiums — local government partnerships for providing health services — are making it possible reopen institutions that had been closed and hire specialized professionals, giving particular localities access to new kinds of care (Barros 1996).

Decentralization has not only generated the transfer of resources, but also of managerial skills. In the longer term, this stronger technical ability will translate into better quality service (Fleury 1994a).

However, critical points remain concerning the relationship and powers between the different levels of government. To a large extent, this is because there are no automatic financial transfers to states and municipalities. The use of federal resources by states and municipalities is subject to technical assessment by the federal government, which decides the amount to be transferred, while maintaining control of the process. This means that the transfer of power may sometimes not be proportional to the resources.

Because they are incorporated under a single legal structure, SUS has considerable problems coordinating services linked to institutions at different hierarchical levels, which traditionally were very different in terms of the salaries and services that they provided. There are contradictions between the traditional administrative, financial, and organizational structures and the principles of decentralization, integrity, and social participation.

Municipalities need the necessary structure to develop their new role as health system managers. As well, planning activities, which involve developing actions, scheduling, following up, monitoring, and assessing, have not been effectively developed by the various levels of government. Added to this, low salaries and poor working conditions have reduced the number and quality of staff, which threatens the smooth operation of these institutions (Barros 1996).

Another negative aspect of centralization has been perpetuated. As long as the federal government transfers resources to states and municipalities through agreements that are based on production levels of physicians and hospitals, provision of services will be used to maximize resources. The few financial incentives provided for preventive programs by the national government have done little to contest this logic.

Financing is another issue with enormous impact on health reform implementation. The establishment of SUS occurred in the context of a deteriorating fiscal and regulatory situation in the country. Collecting financial resources for health care became a key question in operating the system, considering that the Orçamento da Seguridade (OSS, social welfare budget) was not complete and financial resources were diminishing.

The guidelines governing the social welfare budget have been changed since the Constitution, not only in terms of funding, but also in terms of the participation of the different social areas in the resources. The health sector, which should be assigned 30% of the total amount of resources, has not received any transfer since 1993. Since then, resources from the Ministry of Health have been subject to instability and irregularities in the monthly cash flow. The separation of health sector and social security financing buried the hopes of health reformers that had been renewed by democratization, of linking the two social areas under the same institutional jurisdiction. At present, social security and health are completely separated from one another.

Another challenge still on the agenda is the change in the health care model. Although the sanitary reform was prompted by major criticisms of the individual, curative model of medical practice, this element no long guides the prevailing proposals in the reform process. In fact, the legal and institutional changes currently proposed focus on the organizational aspects of the system, which do not guarantee the reorientation of medical care.

The priority given to the legal and institutional structure is largely due to the narrow context in which the reform process developed, mainly, the struggle against authoritarian government and for the democratization of society. The segmentation of society in terms of social rights was perpetuated by the authoritarian structure of the Brazilian State. Therefore, the principal focus of attention for the reform proposals was the association between the right to health and the restoration of democracy. In this sense, alteration of the state’s legal and institutional structure was of fundamental importance, and would finally prevail over the reorientation of the health care model.

We must also consider that the interests of different health professionals’ (physicians, nurses, nutritionists, etc.) in reforming the system are not homogeneous. There is no consensus, within SUS, on the benefits that the various categories of professional should receive, even though, it is obvious that new health care system depends on them. On the other hand, there is still great opposition from the private sector, which adheres to the model of individual, curative care.

In any case, the initiatives outlined in the NOB of 1996, which includes financial incentives for preventive and primary care, may be an important instrument for bringing about changes in the medium term.

Another problematic aspect of the organization-focused reform process concerns the Ministry of Health’s doubtful regulation and inspection of health care inputs, particularly drugs and equipment. Initiatives by the public sector to produce low-cost drugs have never supplied a substantial portion of the demand. The political pressures exerted upon the public sector to avoid appropriate regulation, particularly with regard to pharmaceuticals, is well known.

About 2 000 drugs are presently authorized and sold in Brazil, even though most of them are banned in the countries that produced them. Inspection is minimal, resulting in frequent cases of fraud. The country is, for instance, one of the world’s largest consumers of amphetamines, which can easily be acquired without a prescription.

Regulation is made all the more difficult by the number and diversity of services provided directly — mainly through private providers, clinics and hospitals, as well as over-the-counter sales of drugs — and the domination of the sector by foreign companies. However, the reform has not yet tackled either the drug issue or the private sector in general. This may be explained by the ideological conditions that prevailed when the reform originated, which precluded any possibility of involving the private sector. More recently, a special national government agency responsible for regulating and controlling drugs and sanitation has been created. Experts doubt that the problems in these two areas can be solved solely by the creation of another agency. Obviously the problem is much more political than administrative. But, as the present health minister has paid special attention to the regulation of the private sector, the agency has already taken important measures, especially concerning drugs.

In short, the principal weaknesses in the sanitary reform process pertain to:

• financing, which includes not only the insufficiency of resources, but also the mechanisms to control expenses and fraud, and the transfer of federal government resources to the states and municipalities;

• conflict of interest between the public and private sectors, and bureaucratic disagreements between the three levels of government (Castro 1992);

• organizational and managerial problems related to adjusting institutions and actors to their new roles; and

• the prevailing curative, individual, hospital-centred model of health care.

Conclusion

In spite of these major limitations, there is no doubt that sanitary reform has had an impact on the democratization of the health sector and on the country as a whole. Never before in Brazilian society has the notion of citizenship included social rights as a basic tenet. Naturally, it is too much to expect that these rights will be fulfilled within a few years, in a country with a long history of denying them. Nor can the historical dependence of social policies upon the variations in politics and the economy be eliminated overnight. In fact, the current juncture has not been favourable to its effectiveness because Brazil has followed the world-wide trend toward separating economic policies from social policies, with clear losses for both.

The democratization of health has also altered the pattern of political interference in Brazil, where the authoritarian profile of the country always prevailed. The fact that the principal periods of economic and social expansion took place under authoritarian regimes meant that represented interests were always limited to a few groups, allowing obscure relationships between the public and the private sectors.

The effect on social policies was a segmented pattern of rights, or rather privileges, granted to specific groups. Negotiating to change these privileges into guaranteed rights had always been the predominant modus operandi of Brazilian society and moulded the notions of citizenship and social rights. The sanitary reform process diverged from this pattern by introducing mechanisms of democracy that were responsible for altering the traditional forms of political negotiation in the social sector.

Establishing civil society and social participation by means of various decentralized institutions, has actually resulted in the creation of a number of innovative forms of health system management. Although its effect is less apparent in health outcomes, it has already changed the culture in terms of the role of the state and civil society in governance.

Thus the effect of Brazilian health care reform is undoubtedly much more evident in the political than in the health sphere. It has been more effective in democratizing the health sector than in changing the epidemiological profile or improving health indicators, leading to the conclusion that democratization was actually its main goal.

The process is not finished yet. Nevertheless, it seems to have increased the distance between democratization and health, which was so clearly related when the process began. In other words, there is no guarantee that democratization will guarantee better health.

 

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