Document(s) 11 de 14

Major Economic and Social Tendencies

The social policies that have developed in most Latin American countries are rooted in a similar development model. They are responsible for some of the most significant features of the relationship between state and society, as well as for incorporating a particular power structure into an institutionalized system. This pattern of structured social interactions is manifested in the following characteristics of the health sector:

• stratification and/or exclusion of certain population groups;

• fragmentation of institutions;

• a narrow and fragile financial basis, relying mainly on contributions from salaries; and

• strong actors with vested interests represented in the political arena.

The demand for health care reform arose when it became apparent that this pattern was incompatible with expanding the coverage, increasing the efficiency, and improving the quality of health care services in a context of financial shortage. Moreover, the recent movement of Latin American societies toward more democratic and pluralistic political regimes strengthened the demand for reforming the state and its traditional links with different groups in society.

Nevertheless, the possibility of designing and implementing a reform proposal will depend on the previously existing characteristics of the social protection system - including the health care system and social security - in each country.

Within the common pattern of social protection one can find huge differences between the countries in the region. While some countries spend almost 18% of their gross national product (GNP) on social policies, others spend no more than 8%. Social security coverage also varies, ranging from 20% to 90% of the population, according to Mesa-Lago (1991).

When one considers who is included in the social protection system and how resources are allocated among different groups, the characteristics of stratification and exclusion immediately come to mind as the variables best able to explain different arrangements of social protection in Latin American countries. The original studies of Mesa-Lago identified stratification as the salient feature of social security in the region. While Mesa-Lago’s typology was based on the original timing of the emergence of public policy in this field and its subsequent trajectory, Filgueira (1998) built another typology, based on the combination of stratification and exclusion.

In Filgueira’s typology (Filgueira 1998), the Argentine social protection system in the 1970s was qualified as a sort of "stratified universalism" because although it covered almost everyone, it was highly stratified with regard to the conditions of access to and benefits derived from the health system. As in Chile and Uruguay at the time, Argentina presented a situation in which the demands of a very organized and homogeneous working class were progressively incorporated into social policy (Fleury 1997). The resulting system was highly stratified, deeply fragmented, and under the control of the unions. Nevertheless, it constituted an important mechanism for redistribution.

Filgueira (1998) qualifies the Brazilian and Mexican health systems as "dual regimen" because, in the 1970s, the social security and the health system covered a small portion of the working class, while maintaining the same characteristic of stratification among those included in the social protection system. Due to enormous heterogeneity in terms of economic and socio-political development in the two countries, social policies served to act as a redistributive mechanism for those covered by the social security, while excluding the majority of the population (Filgueira 1998).

Almost all the other countries of the region except Costa Rica fall into the third type, a sort of "exclusive regimen," because social policies are part of a highly elitist system.

Thus, the three countries in our comparative analysis - Argentina, Brazil and Mexico - fall into two different categories according to the patterns adopted to institutionalize social protection prior to the reforms of the last two decades. This difference in institutional starting point will affect the course of the reform.

In recent decades, the deep economic crisis and the structural adjustment measures introduced by Latin American governments have resulted in a common scenario in countries where reform agendas are being carried out. In spite of these similarities, one must emphasize the fact that the three countries in question — Argentina, Brazil and Mexico — varied in the way that they faced this critical period, as well as in the effects of adjustment policies on their economic recovery. This gives us a picture of the overall setting in which health system reforms are being carried out. We should also add data concerning the resources for health systems, to have a better idea of the possibility of and constraints to implementing health system reform.

One of the most important features of the recent economic crisis was inflation. An acute form of hyperinflation occurred in Argentina during 1989-90 and is now controlled due to the economic policies adopted in that country. Brazil also had high inflation that lasted more than 5 years and seems to have only come under control during the last 2 years. Mexican inflation never reached the same level as in the former two countries, but it is still increasing (Table 1). 

Table 1. Average annual growth of consumer prices (%).
	Argentina	Brazil	Mexico
1986	85.7	125.0	86.2
1987	123.1	233.3	131.8
1988	348.3	690.0	114.2
1989	3 086.9	1 289.0	20.0
1990	2 313.7	2 923.7	26.6
1991	171.7	440.9	22.7
1992	24.9	1 008.7	15.5
1993	10.6	2 148.5	9.7
1994	4.2	2 668.6	6.9
1995	3.4	84.4	35.0
1996 a	0.2	15.0	34.4
Source: IDB (1997). a Approximate.

The lesson learned in recent years in Latin America is that inflation control provides a government with very considerable political capital, as it justifies economic adjustment policies in spite of their painful effect on salaries and unemployment. Success in defeating inflation, especially in countries where it has reached very high levels, allows governments to carry out social reforms with more freedom. Even so, however, they have to face stakeholders and deal with strong lobbies that have veto power in the social decision-making process.

The economic situation in Argentina may be characterized as stable and moving toward recovery. Although the economic reforms have accelerated economic growth, they have slowed the pace of job creation such that 17% of the labour force were unemployed in 1996 (IDB 1997). This situation is threatening the government’s credibility and compromising conditions that were initially favourable to health reform.

Brazil is in a different position. Inflation has only recently been brought under control and recovery is still slight. The lower level of unemployment gives some credibility to the reform process, although increased unemployment is expected as a consequence of the economic measures adopted to combat inflation. Persistent poverty has brought instability to the social and political scene. More than 40% of the population lives in a situation of moderate poverty - 46.3% in 1990 and 43.5% in 1995 - and more than 20% in a situation of extreme poverty - 24.5% in 1990 and 22.9% in 1995 (IDB 1997).

Between 1990 and 1995, Mexico saw an increase in the percentages of both moderate poverty and extreme poverty. Moderate poverty was 19.9% in 1990 and 22.3% in 1995, while extreme poverty was 11.3% in 1990 and 11.8% in 1995. The country’s present economic situation does not favour a launch of social reforms that could negatively affect the interests of important groups in the political arena. On the contrary, social reforms would be driven by the need to rebuild a coalition supportive of the government.

The demographic and social data show other dissimilarities between the three countries. One important trend in the social field is population growth. The population growth rate is steadily declining in Argentina, recently underwent a sharp reduction in Brazil, and is slowing down smoothly in Mexico. Between 1970-80 and 1990-96, average annual growth rates fell from 1.7% to 1.2% in Argentina, from 2.4% to 1.6% in Brazil, and from 2.9% to 2.1% in Mexico (IDB 1997).

Of the three countries, Argentina is in the most favourable situation for tackling social problems, not only in terms of its population growth rate but also with respect to its lower reducible gap in mortality (Table 2). 

Table 2. Reducible gaps in mortality.
Country	Total reduction (%)a
Argentina	18.1
Brazil	57.1
Mexico	40.2
Source: PAHO (1994). a Total percentage of reducible death for the population under 65, 1985-89.

From a historical perspective, Argentina’s favourable situation has nonetheless vanished, because in this country the reducible gap in mortality narrowed up until 1975-79 and then started to widen, ultimately reaching and even exceeding the levels that prevailed in the 1960-65 (PAHO 1994).

Although Brazil is in a difficult position because of enduring inequities, the Mexican situation is the most unsatisfactory in terms of availability of resources for the health system (Table 3). 

Table 3. Resources in the health care system, about 1991.
Country	Population per doctor	Population per nurse	Hospital beds per 1 000 population
Argentina	330	1 650	4.4
Brazil	670	6 700	3.5
Mexico	1 850	2 310	0.8
Source: UNDP (1994) and PAHO (1994).

The serious lack of nurses in Brazil could be explained by the predominance of hospital care over outpatient care in this model. An example of inequitable access to highly specialized services and hospital units in Brazil can be seen with respect to professional care during delivery, which compares unfavourably with the situation in the other two countries. In 1991, 95.4% of deliveries in Argentina and Mexico took place under professional care, while in Brazil only 70% did (PAHO 1994).

Even with fewer resources, Mexico achieved a better level of professional care during delivery than did Brazil, in fact, the same level as Argentina. The variation here could indicate the extent to which the prevalent health care model in each country gives more or less priority to prevention at the first level of the health care system.

Regarding social security coverage, important differences can be observed between the three countries. Although social security expenditure on health in Argentina rose during the period 1980-90, from 2.8% to 3.3% of gross domestic product (GDP), it declined in Brazil from 1.5% to 1.2% and in Mexico from 1.3% to 1.0% during the same period (PAHO 1994). These data, however, do not indicate actual access to health care services. Considering the deep economic recession in Argentina during this period, political pressure may provide a possible explanation for this increase.

Social security expenditure per capita on health in these countries varies greatly. In 1990, the health expenditure per capita on social security was US $167.8 in Argentina, US $26.4% in Brazil, and US $38.8 in Mexico. Health expenditure in Argentina is more than six times that in Brazil, suggesting that universal coverage in the latter may have been achieved at the expense of quality of service.

Other measures of health care use also differ in the three countries being compared. For example, around 1991, the number of consultations per person was 1.6 for Argentina, 3.0 for Brazil and 1.7 for Mexico, while the bed turnover was 22.7, 34.7, and 51.7, respectively. Dissimilarities in the use of health care services in the three countries are probably be better explained by the configuration of the health system than by the epidemiological profile.

In Mexico, the public sector and social security (including the military services) are responsible for more than 85% of the hospital beds, whereas in Argentina they account for about 57%. In Brazil, the public sector (including social security) owns fewer than 30% of the available hospital beds, most of them in units with few beds.

The three countries also have different epidemiological profiles, either in terms of the health condition of the population or its situation vis-à-vis the health care system. In 1994, the major causes of death in Argentina were cardiovascular diseases and malignant tumours - a typical profile for an aged population.

In 1995, the major causes of death in Brazil were cardiovascular diseases, symptoms and diseases of uncertain definition, and external causes. In this case, the epidemiological profile shows a country with some characteristics of a developed society, along with others indicative of poor health care coverage and the existence of violence in large cities.

In 1990, the major causes of death in Mexico were accidents, cardiovascular diseases, and respiratory diseases - a mixed profile, featuring the effects of violence, an ageing population, and poor child nutrition.

Comparing these countries’ health expenditures and health outcomes shows a positive correlation between public expenditure and positive health indicators (Table 4). Not surprisingly, Argentina has the best outcomes, both in terms of access to health services and quality of life.
 

Table 4. Health expenditures and outcomes by country.
	Argentina	Brazil	Mexico
Total health expenditure, 1990
Public as % of GDP	5.85	2.76	3.1
Private as % of GDP	3.7	3.64	2.36
Aid flow as % of GDP	0.01	0.02	0.03
Total as % of GDP	9.56	6.41	5.49
Publica plus aid as % of total	61.28	43.2	56.88
Private as % of total	38.72	56.8	43.12
Health outcomes, 1991-92
Per-capita (international $)	418	296	335
1-year (immunization)	87	18	92
Infant mortality rate, 1992	24	58	36
Life expectancy, 1992	72.1	66.3	70.8
Access to health care (%)	92	72	77
Source: Various; IDB (1996). aIncludes social security systems.

Brazil is the only one of the three countries in which private expenditure exceeds public expenditure on health. However, even though Brazil expends more resources on health than Mexico does, the outcome of the Brazilian system is worse than that of the Mexican system. In addition to the difference in the weight of the public sector in the two health care systems, there are certainly other variables affecting these results, such as economic performance and inequitable distribution of the benefits from economic growth.

The Health Reform Process

The political arena, proposals, and strategies

Argentina

In Argentina, the health care system has historically been divided into three relatively independent sectors: public, private, and social security. The decline in the public sector from the 1960s to the 1990s has been compensated for by growth in the social security sector and by the expansion of private services.

The social security health care system that was institutionalized in 1970 comprised, until recently, a considerable number of institutions. The obras sociales, acting as health insurance funds, grew under the control of the trade unions. These institutions supplied health care to their beneficiaries primarily by contracting services from the private sector, but also through their own health facilities. This organizational model generated a high degree of fragmentation and diversity within the health care system.

The inability of the state to regulate or coordinate the system gave rise to a situation where control was held by two groups of corporate organizations. The first group was composed of financing entities (obras sociales) and politically represented by the Confederación General del Trabajo (CGT, general labour confederation). The other group was composed of medical associations and organizations of private hospital owners. The first group controlled the demand for medical services while the second controlled the supply.

This background to the Argentine social security health care system accurately describes the political arena in which reform took place. On one side were the powerful corporate organizations, those representing the interests of the trade unions and their capacity to finance health care and those representing the entrepreneurs who provide health care. On the other side was a weak bureaucracy, unable to put into effect many of the legal instruments passed by the government and thereby reduce the trade unions’ control over the system.

Some concurrent economic factors have altered the power structure in the health field, as profound changes in the labour market have eroded the trade unions’ prominent position on the political scene. Moreover, additional actors have entered the political arena during the reform process, especially with the increasing importance of private health insurance companies.

With the breakdown of the corporate pact between the trade unions, the professional corporations, and the political parties that had ruled Argentine society for half a century, the government adopted the reform agenda proposed by international agencies, bringing to the health arena the important participation of international policymakers.

To summarize, the health care system in Argentina was highly fragmented -- between the obras sociales and the Ministerio de Salud y Acción Social de la Nación (MSAS, ministry of health and social action) and between individual obras sociales - producing unequal conditions of access to and use of health care services. The decision-making process was concentrated in the hands of the corporate organizations, both on the supply and the demand sides. The deterioration of the public health services from the MSAS, along with the increasing perception on the part of users and professionals that the obras sociales were being mismanaged, created the preconditions for the reform process.

The health reform process in Argentina is, therefore, partly due to the loss of credibility by the political actors who controlled the sector for many decades - the trade unions, the professional corporations, and the political parties - and the introduction of new actors, such as the international bureaucracy and private health insurance companies.

Nevertheless, health reform cannot be understood in isolation from the entire market-oriented economic reform launched by the government during the last decade. In Argentina, health reform was inspired by the principles of efficiency and quality, to be achieved through competition in a market regulated by the government. The reform project was designed to create the necessary regulatory capacity in government agencies; to eliminate monopoly and oligopoly on both the demand side and the supply side; to encourage competition by providing services through both public and private organizations; and to reduce the role of the national government in subsidizing or providing services to those unable to acquire insurance.

The legal instruments that were issued to provide a judicial framework and political guidelines for the reform attempted to reduce the power of the main corporate organizations in the health sector, thereby destroying their monopoly or oligopoly by encouraging competition. The obras sociales had to compete for affiliations, as well as for contracts with private providers. The banning of collective agreements between obras sociales and providers’ associations, and the deregulation that gave workers the right to chose their own obra social, as opposed to being part of a captive clientele, were the main instruments of the new policy.

Other important measures were taken to transfer public hospitals to provincial jurisdictions through administrative decentralization, and to encourage public hospitals to become self-managing. Self-management allows a hospital to participate in the competitive market, either by being funded on the basis of production, efficiency, and type of population served, or by charging those able to pay for services received.

These reform measures had to face powerful opposition from the CGT, who felt that allowing competition between individual obras sociales would open the door to competition between the obras sociales and the international health insurance institutions.

The other pillar of reform, liberalization of contracts, produced considerable impact, affecting both the supply and the demand for services. The corporations that had traditionally predominated in this sector quickly lost the supply oligopoly, and new competitive forms of contracting emerged. The course of reform generated a paradoxical situation, in which a deregulated supply system found its competitiveness favoured as a result of the fragmentation of the demand, each fragment controlling a different level of resources.

Brazil

In Brazil, the reform process was based on two different - and in some instances contradictory --pillars. These were the transition to democracy, which was accompanied by the obligation to incorporate the excluded population into the political and social system, and the necessity of making a financially and organizationally frail health system more efficient and effective.

In this context, the proposal for a public, universal, and democratic health care system emerged. This proposal strengthened the social movement and civil society organizations and has been partly adopted by the government health bureaucracy.

The transition to democracy in Brazil has been characterized as an agreement between the traditional elite and the emergent political forces, under pressure from revitalized social organizations and increasing general dissatisfaction. However, the traditional economic and political elite was able to control the process of incorporating the emerging forces politically and socially, without having to substantially change the power structure.

Over more than two decades after the dictatorship regime excluded workers from the management of the social security institutions and proceeded to unify and centralize them in the hands of a powerful bureaucracy, the inept rule of the military and civil bureaucracy was revealed in critical and recurrent crises in the health care and social security systems.

During the 1970s, the dichotomy in the health sector was institutionalized when an increasingly decadent Ministério da Saúde (MS, ministry of health) was given responsibility for the health care of the whole population, while the strong social security apparatus was legally responsible only for providing its own beneficiaries with health care.

The expansion of health care by the social security system during this period was accomplished by contracting out to private providers on a fee-for-service basis. This strategy generated an intricate network of relationships between the social security bureaucracy and private providers, with dishonest activities on both sides.

However, the increasing demand for equal access to health services, combined with the inability to control health care costs, was strong enough to necessitate administrative reform of the social security health care system, integrating it into the MS network.

A combination of factors culminated in the social security crisis of the 1980s. These included the regressive and fragile financial basis of the system; the proliferation of expensive medical treatment without a corresponding change in financing; a method of paying for private services that stimulated the demand for high-cost specialized procedures and fraudulent operations; the difficulty of maintaining financial control because of the disorganized structure of the system itself; the deterioration of service quality; and the economic crisis in the country.

The health movement that had appeared as part of the revitalization of civil society was able to gather many forces opposed to the regime and formulate a coherent proposal for health system reform before any other political actor. The health movement’s strategy was to take the reform into the legislative and institutional spheres as part of the process of rebuilding a democratic apparatus for the health sector. As usual in Brazilian history, the principal political arena came to be the state bureaucracy. There, many different actors played a game of confrontation and coalition, trying to get hold of the decision-making process, as well as the financial, technical, and political resources.

The main actors in this process were clustered around the social security institutions, not only the opponents of reform - represented by the traditional corrupt bureaucracy, populist politicians, and private providers under contract to the social security health care system - but also those leading the reform process. The latter was a broad coalition that was conducted by health intellectuals and technicians, and included some political leaders, legislative representatives, professional organizations, and popular movements.

The successful unification of the public services that brought social security health care under the direction of the MS, was preceded by a piecemeal strategy of decentralization, recovery of the public service network, and the spread of instruments for planning and budgeting, that invigorated the pro-reform movement.

The health reform was based on the principle of universality, as health was considered an activity of public relevance and a right of the citizen. The state had to assure equal access to health services by all citizens, giving a single direction to the public system. The public health system - Sistema Unico de Saúde (SUS, unified health system) - was structured according to a hierarchical and decentralized institutional arrangement, with each level controlled by a council with equal participation from government and civil society organizations.

The instruments to implement the health reform were both legal and administrative. At the same time, there was a great concern about the constant effort necessary to rebuild the reform coalition alongside the process of health reform, and to consolidate achievements in the process of empowering citizens and local-level public managers.

The main obstacle to implementing the reform guidelines was the government authorities themselves. Closely linked to private providers or influenced by international agencies, they made deep cuts in health expenditure in the initial years of the construction of the SUS, and tried to introduce new strategies aimed at improving efficiency through increased competition, thereby favouring the private network. These obstacles were responsible for the deterioration of the public services, which put the success of the reform in jeopardy.

The impossibility of shifting away from the curative and highly specialized health care model led to the paradoxical situation in which the reformers were caught. The SUS became the natural path for expanding the curative model in a way that completely favoured its former opposition, the private hospital owners. They kept their power to negotiate fees and prices and, rather than being threatened by the new system, ended up being one of its principal beneficiaries.

Recently, some incentives to develop preventive care have been issued by the MS, involving a subsidy and per-capita payment to the municipalities. These measures has been perceived as a way of increasing decentralization because they give local authorities greater autonomy in managing finances. Moreover, they are supposed to break the perverse chain of payments for hospital care, which sustains the curative model and perpetuates the unequal distribution of sparse financial resources.

The reformers’ concern with the public sector meant that they avoided dealing with the increasing presence of health insurance companies in the health care system. This strategic mistake was responsible for the present situation, in which health insurance companies increasingly participate in health care provision with no control by the health authorities. The government has only now passed legislation to regulate the health insurance sector.

Mexico

The health system in Mexico is highly segmented with different institutions covering each group of the population. Each institution has its own network, without effective mechanisms of coordination either on the demand or the supply side.

The population covered by social security was grouped into three different types of institutions. The uninsured population received health care in multiple institutions designed for the population in general, such as those pertaining to the Secretaría de Salubridad y Asistencia (SSA, department of health), the Sistema Nacional para el Desarrollo Integral de la Familia (DIF, national system for the integrated development of the family) and the Instituto Mexicano del Seguro Social - Solidaridad (IMSS - Solidaridad, Mexican institute for social security - solidarity). A tiny segment of the population used prepaid services obtained directly from private suppliers.

Many problems arose from this structure, among which were duplication and waste of resources, and the creation of monopolies for different segments of the population. Probably the most serious problem was the overlap in demand: a high proportion of those covered by the social security system used private sector services or those of the SSA. In addition, despite repeated efforts to encourage decentralization, the system still suffered from the inertia generated by many years of centralization. To summarize, the health care system presented problems of coverage, stratification by population group, and centralization, as well as serious problems of duplication of services, poor quality, and inefficiency.

The players in the political arena were the public sector and social security bureaucracies; the traditional politicians and government authorities; and the insured workers, who mobilized after perceiving any plan of reform as a threat to their acquired rights.

An attempt to integrate the system into a single, national health care system was formulated in the 1980s, when it became imperative for the government to rationalize the functioning of public institutions as a means of reducing public expenditure in a context of economic crisis.

The creation of the Sistema Nacional de Salud (SNS, national health system) in 1983 had as its objective to launch administrative and organizational reform by creating different institutional and functional sectors, decentralizing, modernizing, and coordinating, as well as opening the possibility for community participation. This change also gave the SSA, a public agency, the power to plan and even budget for all institutions, including the Instituto Mexicano del Seguro Social (IMSS, Mexican institute for social security).

The proposed reform was fundamentally a state project, based on the results of weak negotiation between government representatives, employers, and labour organizations. Both the development and the implementation of the reform proposals were carried out by the government, mainly, the SSA. However, the success of the proposals depended on the support of all institutions, but especially that of the most powerful institution in the sector, the IMSS. The IMSS resisted submitting to control by a weaker institution and tried to prevent the balance of power from going in favour of the SSA. The proposed coordination of the health system by the SSA was unsuccessful, as the reform terms apparently undermined the basis of the corporate pact. A coalition was formed under the leadership of the IMSS, supported by the organized labour movement, which vetoed the reform.

Reduced public spending due to the economic crisis, combined with a growing policy of extending health care coverage. resulted in a gradual deterioration in the public services. This, added to the existing high levels of centralization and fragmentation, reduced the effectiveness and efficiency of the public health care services.

However, the government adopted an innovative approach in the form of a focused strategy to provide target groups, mainly those without access to any health care, with public health care services. Interestingly, through this program the traditional division between the social security and the public services became blurred, since public assistance was provided by social security through IMSS-Solidaridad (IMSS-solidarity). But, it also represented an irrational overlap of function between the two main institutions, while the discretionary use of the resources resulted in their being applied for political ends.

To summarize, the first attempt to reform the health sector aimed to create an integrated and coordinated health care system as part of the government’s project to rationalize the public service. As an administrative reform, it was developed by an inner circle of public officials and did not achieve the necessary social and political support required for its implementation.

The new wave of reform in Mexico occurred very recently and differed from the proposal developed in the early 1980s. The reform is currently the subject of public debate among different actors with different proposals. The government project attempts to extend coverage through decentralization of public services and provision at the local level of a basic package of health care services through the public network and the targeted social security program. Concerning the social security health services, the project introduced competition between public and private services by allowing users to chose their insurance plans from the market. The mechanism that allows competition between social security and private insurance is a quota reversion system for insured workers who choose private insurance. It enables them to use their contributions to remunerate private health care providers.

One important change in the new reform process concerned the position of the IMSS. Having blocked the first attempt at reform, the IMSS has now formulated its own proposal. This proposal not only addresses the problem of financing and bringing efficiency to its services, but also includes a strategy to incorporate workers from the informal market. The mechanism to expand coverage is a family insurance plan for those able to gather the necessary resources to contribute to a collective health insurance plan.

This last point might not only provide a solution to the financial crisis in the system, but also enhance the credibility of the IMSS, by demonstrating that it is no longer interested only in defending the privileges of the few.

The fact that employers could be mobilized to debate the proposal was evidence of a new context for the Mexican policymaking process. As the reform in Mexico was only recently approved, it is expected that many adjustments will take place, since the political arena is changing fast in this country and the reform process is never straightforward.

Comparative analysis of the health care reforms

There is a twofold movement propelling the reforms in the countries under study: a movement to displace the institutional and political context in the health care sector from the central to the local level, and from the public sphere to the private one. Although this phenomenon represents a common tendency guiding the process of reshaping the health sector, there are many different possible arrangements to be considered as the strategy of the reform.

A comparison between the political context of the reform movement in the three countries reveals that in Argentina, Brazil, and Mexico, reform started as part of a crisis of authority, against a background of profound economic change. An important feature of the reform was the loss of power by some previously dominant actors. The emergence of a new vision to reshape the relationship between the state and different groups of civil society may come either from organized civil society groups, as in Brazil, or from government authorities, as in Argentina and Mexico. The ability to implement that vision, however, depends on the capacity of each side to keep or enlarge its coalition, once many powerful interests start to be affected by the reform measures. Indeed, there is a difference between a reform project that comes from society and has to be incorporated by government through public policy, and a government project that needs to avoid the veto power of important groups in society and the bureaucracy and enlist the support of others.

Some actors have played a pivotal role in the process: the health bureaucracy, the social security institutions, private providers, international agencies, and civil society organizations. Although the relationships between them vary according to each national context, there is a common impetus provided by the macroeconomic scenario, in which the changing role of the nation-state, the liberalization of markets, and the encouragement of competition are the main factors reshaping economic and social institutions.

Besides the economic component, represented by reduced public expenditure, and the political component, represented by actors with the capacity to organize a strategy either to support or oppose the project, there is a further component at the base of the reform process. It is represented by the emergence of a new dynamic in the health care market favouring the more competitive private providers and insurance companies. The weight of the private sector, represented both by its presence as a health provider and its strength in the insurance market, is an important variable that could define the scope of public policy. This is especially so when public policy depends on private provision and/or the private insurance became a strong economic and political actor before the government had time to regulate its activities.

In comparing the three countries, it is obvious that the reform process has not been straightforward in any case, and has gone backward and forward according to the political and economic context. Analysis of the three reform processes reveals similarities and differences regarding some core issues that appear to provide useful guidelines for a comparative study of health reform. These include the timing of the reform, the design of decentralization, and the make-up of the reformed system.

The timing of the reform

In the three countries, health reform took place in a context marked by two main processes: the economic crisis, followed by structural adjustment policies, and the transition to a more democratic regime. Nonetheless, the timing of the health reform with respect to these two processes seems to be a crucial variable in determining the proposal, contents, instruments, and political actors in the health reform.

Although the transition to democracy and economic adjustment are not finished yet, it is possible to consider health care reform in the three countries, in relation to the vertex of these two processes, as follows: 

Timing of the health care reform.
Countries	Transition to democracy	Economic crisis
Argentina	Subsequent	Concurrent
Brazil	Concurrent	Previous
Mexico	Concurrent	Subsequent

In Argentina, health reform was noted for its close links with the market-oriented reform of public administration and the coalition making up the important political force called the Movimiento Justicialista (justice movement). The loss of power of the trade unions in the political arena was reflected in their inability to veto the project to reorganize the obras sociales, orchestrated by the public bureaucracy with the support of the international agencies.

Therefore, the proposed health reform in Argentina was mainly oriented toward improving efficiency and transparency in managing the funds collected by the obras sociales, through the introduction of competitive mechanisms on the demand and supply sides.

In this situation, the success of the reform depends on the ability of the reform coalition to associate health reform as part of the economic and political restructuring, and to prevent the unions from regaining their former political role. Of course, the success of this strategy will depend on the extent to which economic recovery is achieved. On the other hand, it will also depend on the creation of the required administrative and technical capacities in a traditionally fragile state in order to regulate and control the new emergent actors.

The Brazilian case of health reform is unique in Latin America because the reform project was formulated as an answer to the political crisis in the authoritarian regime, and therefore preceded the economic crisis and structural adjustment policies. Due to the fact that the motivation for launching the reform was basically political and ideological, the proposal was formulated in terms of democratic values, such as equality of rights and participation in the policy­making process. Similarly, the composition of the reform coalition was rooted in civil society organizations and, thereafter, in their occupation of strategic positions inside the bureaucracy.

The capacity of the reformers to deal with an adverse economic situation, with the consequent restriction of public financial resources, remains the principal challenge in this case. In order to stay the course they must adapt the strategy and instruments of the reform while resisting any attempts inspired by financial limitations "to reform the reform."

As the government is constrained by the economic crisis, the possibility of preserving the original direction of the reform depends upon the capacity of the leaders to bring together the same political coalition and increase its power as a by-product of the reform. In addition, the success of the reform depends on the development of a recognizably better health care system in a very unfavourable economic situation. In this sense, the reformers must add improving the efficiency and quality of health care services to the political agenda, even if it puts them in a position of permanent conflict with the health professionals.

The first attempt to reform the health system in Mexico was not inspired by a political crisis. Authority at that time resided in a political elite in the single party that had been in power since the Revolution. The absence of a political and ideological crisis gave an administrative emphasis to Mexico’s first reform effort.

The consequences of the adjustment to the economic crisis, the rise of insurgent guerrilla movements, and the emergence of a legal opposition coalition, have reversed the Mexican political situation. In this new setting, another attempt to reform the health sector has emerged, this time more rooted in political and economic interests.

The success of this reform project in Mexico will depend primarily on the government’s ability to enlist the support of the Instituto Mexicano del seguro social (IMSS, Mexican institute for social security), because the feasibility of public policy is still determined more by the weight of institutional power than by organized civil society. Other important actors in this arena are the insured workers, who will fight to retain their differentiated status in terms of benefits. However, as soon as they perceive that the reform is not a threat to their situation, they will support it, making the reform into an instrument to regain the confidence of the middle class and best paid workers by the traditional political party. As society becomes better organized, the role played by the political parties in this arena will also increase, as a veto power, a negotiator, and a designer of alternatives to the governmental reform.

The decentralization design

All three countries have a federal political system overwhelmed by a highly centralized tradition. Both the transition to democracy and the definition of a new role and structure for the state within a new economic context have provided the impetus for decentralization. Nonetheless, the balance between these two movements and the nuances of the relationship between the central and local levels of government will result in different designs of the decentralization process, with respect to their financial, administrative, and political features.

Decentralization varies according to what functions are transferred (financing, regulation, provision, insurance); to which level of government they are transferred (regional, municipal, or both); whether they are transferred from the public administration to another institution, such as an autonomous agency or the private market; and the degree of empowerment that they confer on both local government and local society, in terms of decision-making in the areas of financing, management, and policy.

Considering public health care provision, the design of decentralization might be comprehensive, making all services and resources available at the local level; might be fractional, embracing only a certain kind of institution or level of health care; or restricted, espousing only one or a few programs. An important variable in defining the scope of the process is the role of social security in the health care system, since the structure of the social security sector is notorious for its centralization and ability to resist changes aimed at decentralization.

In the case of Argentina, the core of decentralization was the transfer of responsibility for social policy - public education and health care - to the provincial level, as a way of reducing fiscal pressure on the central government. As far as the reform of the obras sociales is concerned, as hypothesized above, there has been no change in their centralized structure and the reform is moving the social security system even further away from the public health system. Therefore, this situation can be described as a fractional decentralization of health care policy, since the decentralized public sector covers less than half of the population and represents only 21.76 % of health care expenditure (PAHO 1994).

Another important characteristic of the decentralization process in Argentina is the lack of an overall design of the resulting health care system, mainly explained by the fiscal motivation of the reform. The transfer of public health care institutions and financial resources to the provincial level gave the provinces autonomy in managing such resources, but was not followed by any national guidelines on how to reshape the provincial health care system. As the Ministerio de Salud y Acción Social de la Nación (MSAS, ministry of health and social action) relinquished its role as a health care provider, it gave up exercising a steering role with respect to the reorganization of the provincial systems. This resulted in a different process being adopted in each the 23 provinces. A few of them continued decentralization to the municipal level, but most kept the system centralized at the provincial level.

The role of the MSAS is limited to its traditional functions of health promotion, technical assistance, and information. It has assigned the functions of regulating, monitoring, and auditing health care delivery to an agency, the Superintendencia Nacional de Servicios de Salud (national health services authority). This agency has the necessary administrative, economic, and financial autonomy to define quality standards and the basic health care package, as well as monitor cost-recovery in self-managing public hospitals and the process of selecting insurance plans by obras sociales.

The provinces receive general financial resources from the Fiscal Pact [1] and have autonomy to assign them to the public sectors. In 1995, public expenditure on health as a percentage of gross domestic product (GDP) was distributed among the various levels of government as follows: 0.21% at the central level, 1.18% at the regional level, and 0.27% at the local level (Cominetti 1997).

Decentralization to the provincial level can compromise equality between provinces inasmuch as the central government has abandoned its role as equalizer of regional disparities. The fractional character of health care decentralization is evident in the combination of mechanisms used to transfer the provision of health care to the sub-national level, while keeping the insurance policy centralized in social security and delegating regulation to an autonomous agency. At the provincial level can also be found the self-managed hospitals. This complex organization jeopardizes the possibility of coordination and synergetic interaction.

It is essential to establish a coordinating mechanism to negotiate policies and distribution of resources, as well as define criteria for allocating resources in such a way as to avoid the political misuse of health assets. A federal health council is responsible for articulating the efforts of the MSAS and the provinces, for example, in the definition of a program for quality assurance.

Decentralization, combined with a participatory strategy to create a single-command public health system at each level of government, is unquestionably the most impressive feature of health care reform in Brazil. The emphasis in this case was to create the right conditions for the municipalities to take responsibility for the local public health system, including the functions of provision, management of human and financial resources, control of the mechanisms of contracting out, and monitoring the private providers’ network.

The problems associated with decentralization toward municipalities are twofold: insufficient technical capacity at the local level to manage public resources, resulting in its appropriation by the traditional elite, and the difficulty of coordinating a process that involves, in the Brazilian case, more than 5 500 municipalities.

The strategy to decentralize progressively, according to a common framework defined at the central level, established some requirements to be fulfilled by the municipalities in order to achieve a greater degree of autonomy. Those requirements were comprehensive enough to include administrative, financial, technical, and political aspects.

The predominance of political and ideological objectives was responsible for the creation of important mechanisms for sharing decision-making power between local government and civil society. Likewise, important channels of negotiation institutionalized the interactions between the three spheres of government. Moreover, some spontaneous forms of coordinating the demand and supply between neighbouring municipalities sprang up throughout the country.

The empowerment of local managers created a new group of important actors and the participatory mechanisms increased the capacity of local community organization, which affected not only the health sector but also the entire local power structure that had been dominated by the traditional elite.

The composition of the reform coalition has changed as a consequence of the decentralization process. In the beginning, intellectuals and central bureaucrats predominated, while municipal health officials (secretários de saúde) are now in the majority.

The remarkable aspect of decentralization in Brazil was its option to give autonomy to the municipalities, although as part of a unified and comprehensive system. It is organized in a hierarchical chain of municipal, regional, and federal health systems with the same functions and standards, and with institutionalized mechanisms of coordination and participation.

In Brazil, decentralization of the health care system was made possible as a consequence of the general decentralization of financial resources toward the municipalities that was part of the transition to democracy. In addition to empowering the local level, the health reform featured a common design with a progressive and flexible strategy, which explains its success relative to other social sector reforms.

Nevertheless, the comprehensive and unified character of decentralization in the Brazilian case can only be fully understood if one takes into account the merger of the social insurance health care services with the public health care services. As the contribution to the social security system never had a specific percentage designated for health care coverage, it was easier to create a public health care system in the context of the fiscal crisis in social insurance. Another element facilitating this result was the previous integration of the health care network belonging to the social security system.

The central government controls the distribution of financial resources, attributing to local levels different degrees of autonomy to manage them. Thus, there is a permanent tension between the Ministério da Saúde (MS, ministry of health) and the municipalities regarding the power to control resources and the responsibilities of each level. In 1992, the distribution of public health expenditure among the various levels of government as a percentage of gross domestic product (GDP), was as follows: 1.26% at the central level, 0.36% at the regional level, and 0.47% at the local level. Besides the concentration of the resources in the central level, the autonomy of the local level to assign them is limited by existing compromises based on the payment of salaries and providers.

Although differences between local and national managers over the control of financial resources still exist, the conflict has been channelled through the creation of inter-management commissions, which represents a profound change in Brazilian centralized federalism.

The first attempt to decentralize the public health care system in Mexico during the 1980s failed due to its inability to extend the experimental project beyond the initial selected states, i.e. those best equipped in health care capacity. At that time, the government took a gradual and partial strategy, transferring some functions to the states but not the autonomy to manage the budget.

The political situation in Mexico in the 1990s demands a new federative pact, with the distribution of political and administrative power toward the regions and factions. The financial crisis in the social security system and the deterioration of the public health care network gave rise to reforms seeking improvement in efficiency. The necessity of extending health care coverage to those without insurance was at the root of the new proposal to decentralize the health care system to the state level.

In 1998, progress was made when functions and resources of the public health care network were transferred to 14 out of the 31 states.

The Secretaria de Salubridad y Asistencia (SSA, department of health) is responsible for elaborating norms and standards for the public health sector. Coordination between the central level and the states is expected to take place through a national health council. Nevertheless, as the states are free to adopt their own health system. They have only to follow the guidelines concerning the minimum health service package. Thus, it is expected that disparities between states will widen, as is the case in Argentina.

The outstanding characteristic of the Mexican decentralization of the public health system that is taking place in the SSA network is that it is intended to extend coverage to a target population through the delivery of a basic service package via different programs at the provincial level. Besides, a similar program is being carried out by the Instituto Mexicano del Seguro Social - Solidaridad (IMSS-Solidaridad, Mexican institute for social security - solidarity) under the authority of the public health system, although not completely integrated with it.

In this sense, it is the decentralization of a target program rather than the whole health system. In addition to extending coverage, decentralization is motivated by fiscal concerns, since it is expected that the states will be able to contribute new resources to meet the demands on the decentralized health care services.

In conclusion, the process of decentralization in each of the three countries was impelled by different motives - fiscal balance in Argentina, empowerment in Brazil, and target coverage and fiscal balance in Mexico - and took different forms in each. Argentina and Mexico opted for decentralization to the intermediate (provincial or state) level, while Brazil decentralized toward the local level. In the first two countries, decentralization was neither regulated nor controlled by the central level of government, giving rise to different results. Nevertheless, the basic package of health care services remains similar. In the case of Argentina, decentralization acquired a special meaning with the autonomy of public hospitals, making it possible to incorporate market logic into the public services.

As for the scope of decentralization, it involved the whole health care system in Brazil; it was limited to the public services network and excluded the social security network in Argentina and Mexico; and, in Mexico, it focused on a particular program - providing a target population with a basic package of services.

The Make-up of a Reformed Health Care System

With respect to the analytical dimensions of health care organization, financing, provision, and regulation, substantial changes have occurred in the region over the past two decades. These have been responsible for an ongoing movement toward reshaping the health care systems in the three countries under study.

Three models of health care can be identified in all of them: the compulsory insurance model, the public integrated model, and the voluntary insurance model. In the 1970s, the compulsory insurance model and the public integrated model predominated, with the voluntary prepaid insurance model playing a minor role. At that time, they were compartmentalized, with no interaction between them. Over the last 25 years, they underwent various changes.

The public integrated model has undergone changes in the relations of authority and the organization of services through the decentralization process. The trend is in the direction of reserving a steering role for the central level and relinquishing the function of provider to the local levels.

There is also a tendency to guarantee certain target populations a basic health care package. The question is, is the public sector’s responsibility limited to this package and to these target segments of the population, or does it also include those who can afford a supplementary health care plan. Another possibility would be to have a comprehensive and universal health care system.

Another trend is toward the creation of quasi-markets inside the public network, especially in the case of the public self-managed hospitals. This mechanism is already operating in Argentina, but not in the other two countries.

The voluntary insurance model has grown spectacularly over the last few years, simultaneously with the deterioration in the quality of public and social security services. In all three countries, the upsurge of voluntary insurance and its subsequent expansion and integration with other sectors was not regulated by the public health authorities. Recently, some initiatives to regulate the voluntary insurance sector have been launched as demanded by consumers.

The most important changes are undoubtedly occurring in the contracted insurance model. This is the core of the reform process in the period under study. In one country, Brazil, the social security health care network has been incorporated with the public health sector, generating a unified public sector that combines the characteristics of the public integrated model with the modality of contracting public and private providers, typical of the contractual insurance model. In the other two countries, the contracted insurance model has its own peculiarities. Argentina has a typical contracted insurance model, with the trade unions managing the financial resources of a risk pool and contracting health service providers. In Mexico, besides the function of social insurance, the social security system has its own health care services network, and is considered an autonomous part of the public sector.

The tendency to introduce competition in order to increase efficiency in the health sector takes a different form in each situation. In Argentina, there are two levels of competition: one between providers of health care to the insured population and the other between the various obras sociales. In Mexico the competition is between the public sector and the private insurance companies.

The main changes in the relationship between consumers, providers, and payers in each country are described below.

Argentina

The reform process in Argentina has mainly affected the compulsory insurance model, through the adoption of a set of measures designed to introduce competition and stimulate efficient management of resources. These measures have included breaking the oligopoly of the providers and creating a competitive market on the demand side of the health care system. The requirement of providing a basic health care plan, the introduction of freedom-of-choice affiliation, and the compulsory merger of institutions whose resources are insufficient to form an adequate risk pool are expected to change the compulsory insurance sector. Other measures to be introduced include limiting services to a minimum package and the possibility of making a supplementary contribution. This measure would represent the definitive breakdown of the hegemony of obras sociales in the health care system, and could be followed by the introduction of competition between obras sociales and private insurance companies.

So far, the relationship between third-party payers and providers has been the reform’s main focus. The freedom to contract between payers and providers has affected the services system a great deal in terms of money flows, methods of payment, management, organization, and forms of regulation. One of the most important departures from the traditional system has been the transfer of financial risk from the obras sociales to the provider’s network or intermediary organizations.

The transfer of risk to intermediary organizations has led to a new situation, where an interest in controlling demand and costs is part of the rules of the market, and an expected product of better management.

It is likely that the changes mentioned in the contractual relationships between payers and providers of services will have, as a secondary consequence, a further stratification of the beneficiary population.

Because changes in the system were not followed by a redefinition and enlargement of the public regulation function, the emerging market mechanism for regulation was directed toward cost control. But, a public mechanism accountable for policies to reduce inequality and control service quality is still lacking.

In the 1980s, the main regulatory mode was professional self-regulation. With the reform, self-regulation was replaced by management incentives within the intermediary providers’ organizations. Recently, new mechanisms for accrediting and monitoring the education of health professionals and the quality of services are starting to be implemented.

Brazil

In the case of Brazil, the public system resulted from the unification of the public with the social security health care networks, thereby consolidating a new form of a public/private mix. The public sector is responsible for financing, regulating, and organizing the health care system in order to assure universal coverage. The public health care system operates as a third party, contracting for the services of private providers or using the same system of payment to transfer resources to its own services.

The reduction in federal resources during the end of the 1980s up to the middle of the 1990s was somewhat compensated for by the increasing, though still very low, participation of the states and municipalities in financing the health budget. This change has been accompanied by increased differentiation between municipalities in the importance that they assign to the health services, as well as in the quality of health services.

Recently, a national contribution was created to cope with the financial needs of the health sector. Although provisional, it indicates a tendency to look for new mechanisms of financing the health sector. This new contribution is claimed to be a way of coping with the halt of funds from the social security system and the instability of resources from the national budget.

Decentralization did not change the fact that the state remains the main payer for health care provided in private institutions. It did, however, stimulate an increase in local investment in the creation or recovery of the public service network. An effort is being made to control costs and rationalize the use of services.

An important change concerns the mechanism of allocating financial resources to private and public providers. The fee-for-service mechanism used to pay private providers was considered uncontrollable, and has been replaced by a type of diagnostic-related group (DRG) procedure for transferring funds. The transfers to public providers follow the same tendency, in some cases replacing traditional budget mechanisms for DGR, plus some transference on a per-capita basis, in an effort to avoid the tendency toward the proliferation of curative and specialized medical care.

The flow of resources from the national to the state and municipal levels is based on the stage of financial management autonomy attained in each state and municipality, as measured against a standardized scale set by the federal government.

With respect to the relationship between payers and providers, the new inter-management commissions are now responsible for determining the amount of resources that states and municipalities will receive, and for determining their management situations. The decision-making process has become more transparent, and mechanisms for conflict resolution and negotiation have made it more rational, especially through the creation of a health council, where, at each level of government, providers and users are represented in the same proportion as the public authorities.

The introduction of some intermediate management bodies in Brazil, such as the inter-management commissions and health councils, has opened the door to innovative forms of regulation, although they are not yet fully deployed. Undoubtedly, a new form of regulation - neither bureaucratic nor corporate, nor laissez-faire - is emerging that can be used by the government and organized civil society to defend the public interest.

The reform dynamic inside the public sector, however, was not connected with the growing expansion of the voluntary insurance market, thereby, generating a dual system. Since the middle class fled to private insurance, the universal public system has been transformed into a specialized one, covering the poor. There are no cross-subsides between the two systems in order to generate solidarity among different groups of consumers. The public system, however, is fighting to avoid assuming the burden of risk selection practiced by private insurers.

Mexico

The Mexican case has been qualified as a health care system that makes a fundamental distinction between those who are entitled to social security health care and those who are not. Accordingly, it is possible to identify two health services models in Mexico during the 1970s - social security health care services and public services for the population in general. According to the typology used by the Organisation for Economic Co-operation and Development (OECD), which considers the critical feature to be the degree of integration between the functions of financing and provision, these two systems would qualify as integrated public systems. However, the two public systems - the one for those insured by social security and the other for the general population - are not integrated with one another. They serve distinct population groups by means of distinct institutional networks of services. In other words, they are neither integrated in terms of coverage, or in terms of their financing and organizational structure.

Even though split into two parts, the public sector is still the most important health care provider in Mexico, considering the resources involved and the scope of coverage.

The emerging model in Mexico is characterized by the increasing importance of the voluntary contract model and by a proposed public contract model for the social security system. Although it has been a legal prescription for several decades, the public contract model has had a very limited effect and played practically no role in the general orientation of the national health system. Nevertheless, the reforms that were advanced since 1995, both within social security and in the public institutions have made feasible a substantial increase in the use of public contracts to access services.

The recent loss of domination by the Instituto Mexicano del Seguro Social (IMSS, Mexican institute of social security) and its increasing dependence on public funds might facilitate the transformation of the social security system into a public contract model. Under this proposal, financing would come from compulsory contributions to social security, but employers would have the option of allowing contributors to contract directly with private providers of health care. Through the quota-reversion mechanism, the public social security institute is obliged to return the compulsory quota to those who have private health insurance.

The combination of this financial mechanism with competition between public and private providers is aimed at achieving better standards of efficiency. As Mexico is a typical example of a corporate financing system with public provision, competition would present a way to introduce private practice, whether or not it was followed by actual privatization of public health units.

It is also expected that the highest income groups affiliated with the social security systems will probably transfer their funds to the private sector using the quota-reversion mechanism, while the lowest income groups will remain with the public institutions for the general population. This will tend to further stratify access to health care services on the basis of ability to pay. The stratification will thus be as follows: a basic package targeting the poorest groups; another mandatory package to be provided by social security institutions for the contributors; and an ever-growing number of private options for those who can afford to withdraw from the social security system.

Considering the organization of the public health care services, the proposal does not seem likely to transform it into a more rational and efficient system. The social security institutions have not merged into a single institution and continue to be independent from the public health institutions, although both of them are implementing programs targeting the poor. They answer to different authorities. One is decentralized while the other is not, with little integration at the central and local levels. Thus, these programs will probably follow the tradition of overlapping, irrational use of resources, and political bargaining and patronage in the health care delivery.

The reform in Mexico did not create an effective mechanism to cope with the segmentation of the clientele and institutions in either the social security health care network or in the public health care network for the population in general. The main instruments of the reform were financial mechanisms that create competition inside social security, by allowing the option of private health insurance, and the decentralization of the public health care network. The central health authority is supposed to regulate the basic package of services, for the social security and the public decentralized system, as well as the norms and standards of public health.

The reform is intended to limit the public health sector to the functions of regulation and financing, only providing health care to target population groups. Other population groups are supposed to obtain health insurance coverage, either public or private, in accordance with their ability to pay for it.

With the emergence of the public contract model and the encouragement of the voluntary prepaid contract model, options for meeting health needs are becoming more diversified. Nevertheless, a weakened state and the absence of any regulatory body or mechanism are not conducive to a balanced trade-off between the public and private sectors.

Comparing the three countries, it is possible to identify some common tendencies regarding the functions of financing, regulating, insuring, and organizing the health care system. Concerning the source of financing, there is no significant change, since it comes predominantly from general revenues and contributions based on salary. The frequent instability of public health expenditure, particularly fiscal expenditures from general revenues, has not been tackled. In some countries, limiting the public system to the poor and to a minimal package can be justified as a way of targeting needy populations and better applying limited public resources. But it also can be seen as a way of liberating the most stable resources - those from social security - and channelling them into the competitive private market, instead of generating a public pool to compensate for the instability of public revenues.

Instead of changing the conditions of funding the health sector, the reform basically consolidated the specialization of sources. Additionally, there was an attempt to create a new source of public resources in Brazil, while in Argentina it is increasing the amount of out-of-pocket resources as a result of the orientation of cost re-conversion in public services.

However, there has been a much more profound change in the way the resources are allocated. The reform of the payment mechanisms changed from subsidizing the supply of services to a new system whereby the money follows the patient. This system is compatible with the reform’s aim to open the insurance and provision functions to competition. The demand subsidy is supposed to provide the necessary incentive to guarantee both the efficiency and the quality of services. However, in regions were the supply is scarce and there is no competition, this mechanism is worthless.

Even the reform proposal to create a public and universal health care system is facing the problem of allocating resources more efficiently, as a way of controlling costs and providing incentives to improve the quality and efficiency of some programs.

Problems of risk selection, the under-provision of services and under-insurance of certain groups, and revenue skimming are appearing as a consequence of deregulation and competition in the insurance and provision markets.

The public sector is mainly suffering from problems of under-financing, inflexibility (inability to introduce new managerial styles) and the resistance of the professional unions to changes in labour conditions. The inability of reform to improve the quality and efficiency of the public sector, associated with its specialization in the health care for the poorest population groups, might result in an increasing gap between this lagging sector and the more competitive ones.

Different alternatives to cope with this problem have emerged in the region. On the one hand, there is the introduction of autonomy and a quasi-market situation in more complex public services, distancing their operation from the public orientation. On the other hand, there has been an empowerment of local authorities and organized civil society as a way to build up consensus and generate new public standards. So far, this mechanism has only produced improvements in the quality of health care services when combined with significant changes in public administration.

Possible scenarios

As we observed, the main changes in the health care system in the three countries during the last 20 years are occurring as a consequence of the expansion of the voluntary contract model and the changes in the social security contract model. Concerning the public model, there is a common tendency toward decentralization, but it varies greatly according to the role and interactions of the public model vis-à-vis the voluntary contract and the social security models.

The former relative autonomy of the three models, each one with its own funds, authorities, network of services, and clientele, has been replaced by new forms of interchange between them. Although theoretical models of reform postulate a specialization of functions, in the case of a pluralistic system, or a compulsory integration under the public command, in the case of a unified system, the reality is not quite that defined in the countries under study.

On the one hand, the proposed transformation of the health services structure, currently segmented by institution and clientele, into an articulated functional health system, has to overcome opposition from traditional and powerful entrenched interests, especially those associated with the social security system. Also, it has been difficult to create the necessary capability to move the public sector from a providing role to a steering role.

On the other hand, the proposed unified public sector has to cope with its dependency on private health care providers and the growth of a frequently unregulated private insurance market.

Three theoretical scenarios can be drawn as a consequence of the process of reshaping the health care system in the three countries under study: the competitive, the dual, and the specialized.

Under the competitive scenario, market competition becomes the prevalent modality of organizing the health care system, subordinating or even replacing the debilitated public integrated and compulsory models.

The most important feature of the competitive scenario is provision, since beneficiaries can opt for any service they want, while the other functions such as financing and regulation are not significantly affected. Regulation tends to be weak due to the subordination of the public sector to a previously strengthened private market. As the sources of finance - public, corporate, and private - are preserved, but not integrated, consumer choice is basically defined by financing capacity and source.

There is a tendency in this scenario to replace the public provision role with a public insurance role. Due to the limited ability of the public sector to compete in terms of provision, it may specialize in insuring the poor population. The change from the public assistance to the public insurance role is supposed to be preceded by the autonomy of the public hospitals.

Under the competitive scenario, decentralization will not occur in or affect the provider market, but the local health authority could be transformed into a local public insurance.

The dual scenario occurs when both the voluntary and the public system - compulsory and contracted - are strong enough to maintain their own form in parallel. Although in the voluntary model, access to health care depends on the capacity to pay for it, the parallel existence of a vigorous public system guarantees the principle of universal coverage and integrated health care.

The most important feature in this case is the transformation in the organization of the public sector, with the integration and decentralization of the public network. Inability to innovate in terms of financing, management, and regulation may jeopardize the existence of the universal public sector.

The possibility of maintaining this duality - a voluntary and a public model - depends on the ability of the public model to regulate the voluntary model, so that the public system does not have to assume the whole burden of responsibility for high-risk groups. Another condition is related to the possibility of changing the structure of the public supply - decentralizing and expanding it - and improving the quality of the public health care services. Both depend on increasing the financial and managerial capacity within the public sector.

Under this scenario, the decentralization of the public sector is crucial to transforming the structure of the public network, as well as the power structure in the health sector. It is a necessary prerequisite to guaranteeing the strength and democratization of the public sector. Empowering public health authorities and poor citizens to voice their demands and act as public advocates is essential now that the middle class and affluent consumers have left the public system.

The specialized scenario is one in which all providing institutions redefined and ranked according to the package of health care services they offer to each segment of the population. In this way, the voluntary and the public models do not exist in parallel nor in competition, but access and use are highly stratified according to the capacity of each group to pay.

Thus far, the reform processes that have taken place in Argentina and Mexico appear to identify with the competitive scenario, whereas the Brazilian reform is heading toward the dual scenario.

Nevertheless, one should consider these scenarios as general trends, because the reform processes are not straightforward. In this sense, the competitive scenario seems to be a probable path to a segmented scenario, due to the inability of the public sector to provide a competitive insurance for the poor. The most probable result is that public insurance will be so limited that the patient will not be able to afford to be treated in the best public or private health care facilities. Consequently, there will be segmentation of the clientele not only in terms of the source of financing, but also in terms of consumption of services.

The dual scenario is also very unstable because it depends on the two components maintaining the same strength and growth rate. As pointed out above, there are several ideological and political variables influencing the final result of this game. Nonetheless, the economic situation of the country, the fiscal deficit of the state, and the capacity to reform public management, will determine the possibility of keeping this scenario over time.

The important point is that all these scenarios imply the coexistence of different, non-integrated models. Moreover, because the voluntary model is steadily growing under all three scenarios, the user population will probably be re-stratified in terms of social rights and access to social services. In contrast to the traditional model of social protection in Latin America, where benefits depended on the political capacity of each segment of workers to negotiate with the government, the new stratification process will now be based on the purchasing power of each population group. Given the strong positive correlation between level of salary and position in the formal market, it is likely that this stratification will confine the poor to minimal health care consumption, in terms of procedures and quality of services.

Lessons from the experience

An analysis of the reform process in Argentina, Brazil, and Mexico reveals similarities and differences. It also makes it possible to extract some important lessons to orient decision-makers in analogous situations. Such lessons have been grouped in three main sets: the focus of the reform, the managerial issue, and health care utilization.

The focus of the reform

The health reforms under study have focused mainly on the internal relationships between the components of the health care system, such as payers, providers, regulatory agencies, and users. Since the reforms have resulted in few changes in the functions of financing and regulation, the most significant effects were felt in the areas of provision and organization of health care services.

However, a reform process affects three different dimensions of the health care sector and its relationship with the other societal structures. First, the reform changes the relationship between state and society, either by replacing political logic of action with market principles or by creating new forms of social control and participation. The reform also alters the balance of power between the different levels of governmental organization.

In this sense, the reform necessarily implies a problem of governance. Replacing old actors with new ones and stabilizing coalitions to support the changing process means altering the previous equilibrium in terms of political and material powers.

The process of reform was favoured by the appalling public image acquired by the public health care services over the last few decades and by the loss of prestige of the main actors associated with it - the central bureaucracy, the trade unions, and the professionals. It was also seen as a necessary change in the relationship between the state and society. This favourable common starting point is not enough to guarantee the continuity of the process, however, since it starts to change the balance of power between winners and losers.

Unless reformers are able to take into account the governance of the process and reorient their strategies accordingly, the technical aspects of the reform will be compromised, either as a result of inability to implement the changes or to foresee the possible results of the reform in terms of the balance of power.

The second dimension of reform is, of course, institutional. Consideration of the main relationships and functions linking the components of the system is fundamental. A system as complex as the health care system requires a high level of coordination and integration between its multiple actors, structures, and bodies. Coordination may determine the results in terms of efficiency, as well as competitiveness.

Nevertheless, the health care system must be seen in a wider sense, taking into consideration not only the health care services, but also its main inputs. The current processes have paid scant attention to crucial aspects such as human resources, equipment and medicines, and the development of science and technology.

With respect to human resources, there have been some initiatives to control the quality of training, but no consistent policy to enlist their support for the reform proposal. This oversight may be a consequence of the naive assumption that the desired goals are a natural by-product of competition in the health care market. However, international experience has demonstrated that health professionals are the main losers within a market-oriented health system. Consequently, they tend to transfer their stress and dissatisfaction to the professional-patient relationship.

Another product of the change in working conditions under a market-oriented health system is the failure to tighten and consolidate relations between members of the health care team, as a result of the enlarging competition.

The emphasis on using competition to increase efficiency and reduce costs does not take into account that the cost of health care is mainly determined by the inputs consumed. The rise in prices originated principally in the sphere of production, not only in the sphere of provision, of services. Therefore, emphasis on controlling provision of services through competition can only reduce prices to a point and may generate problems of coordination.

The most important dimension to be considered in the health care system is undoubtedly the health care model. This means considering different orientations with respect to the health/illness continuum. These might include favouring a preventive over a curative orientation, promoting patients’ responsibility for their lifestyles, adopting more or less aggressive treatment protocols, etc.

These are not disconnected aspects, but rather part of a totality that can be more or less explicit in the reform proposal. Moreover, in addition to the declared intentions, the way relationships between the parts of the system are organized, especially in terms of the flows of money and patients, can determine the final health care model.

Tragically, a reform oriented either by the principle of efficiency or the principle of equality may introduce a perverted logic of consumption characteristic of the most expensive and inadequate health care model.

The managerial issue

Although there is a strong managerial component in all the present health care reforms under study, it does not represent a homogenous trend.

Differences in the design of the system the in the three countries have already been pointed out. It may be observed that while the public-oriented reform presents a detailed and incremental proposal for rebuilding the whole system, the market-oriented reform lacks a comprehensive proposal for the health care system. In the latter, decentralization may or may not stop at the regional level, since the organization of the system is defined in different ways.

The proposal of a unique national system requires a common design, as well as the development of the managerial instruments to carry out the process, in terms of financing, regulation, and organization. In spite of the existence of a general design and also of an incremental strategy to implement it, the management of the system does not spontaneously generate better conditions for managing the institutions within it. In this sense, it is possible to affirm that a reform of the health care system may improve management at the systemic level, but not necessarily at the institutional level.

The opposite is also true. Improvement in the management conditions of the health care services does not necessarily lead to a better design and/or management of the health care system. In the former case, the problem appears as a well designed system that results in poor performance at the institutional level, threatening the credibility of the reform. In the latter, improved institutional performance is not capable of overcoming problems like overlap of resources or absence of coordination.

Based on this consideration, we would recommend that policymakers consider the twofold management approach, at the level of the system and at the level of the institution. Each level will require different managerial approaches and instruments in terms of benchmarks, controls, measures of performance, evaluation, information systems, resource allocation, etc. Both are essential to the reform process.

Another important aspect to consider in the design and management of the reform is whether or not the material basis necessary to implement the proposal exists. In spite of the fact that it is a basic consideration, it has not often been observed in the countries under study. The reform in Brazil proposed to create a unique, single national health care system even though the majority of the health care services were private. The result was a public/private mix, and great difficulty was experienced in subordinating the private services to a public orientation and regulation.

In the case of the Mexican reform, as well as the Argentine one, the predominance of public services and expenditure did not prevent the proposal from introducing the principle of market competition into the health care sector.

In the same way, the intent to reserve the steering role for the central level had to cope with the state’s weakness or inability to orchestrate a non-unified system and to regulate a flourishing, deregulated market. Failure in the ways justice works and problems in assuring consumers’ rights are part of the new situation.

The proposal to increase coverage has to deal with obstacles imposed by a highly concentrated network of services, in a period when public resources are not even sufficient to maintain the existing network, with few possibilities of increasing investment in order to guarantee broader access to the health care system.

The health care utilization

The utilization of health care services is a complex issue, since it includes several variables, including those classified as predisposing (social and demographic conditions), enabling (economic and political conditions), and need (perceived health conditions). Finally, the issue of utilization implies the possibility of accessing a health care service, sporadically or on regular basis, and the satisfaction of the users with the attention they received.

Comparing the results of the health services utilization survey, one can find interesting, although not conclusive, evidence of the determinants of access and utilization. In all three countries, for different tracer conditions (hypertension, pregnancy, delivery, and diarrhea), we always found some enabling variables that have a direct and significant influence on health services utilization.

Foremost among these were availability of health coverage, existence of a regular source of care, and out-of-pocket money. In any case, differences in the use of the services due to entitlement or to the impossibility to pay some amount for it. clearly indicate the degree of inequality in access to and use of the health care services. The influence of a regular source of care is also indicative of the degree of difficulty in accessing either a private service or the public health care system.

In all these situations, access and utilization of health services were primarily influenced by enabling variables, not by perceived need for care. The predisposing variable education, strongly differentiated according to the income level, also influenced the utilization of services. Similarly, attitudes and beliefs, in close relation with variations in income and education, affected the utilization of services.

Only in cases of chronic disease, such as hypertension, did perceived need have a direct influence on health services utilization. It would seem that patients with chronic conditions, in this case generally elderly people, recognize their symptoms and do not just learn to live with the disease, but also how to deal with the health care system so as to have their needs attended.

Nonetheless, the general tendency is to discriminate between patients according to entitlement and other limits to access and utilization. Although this situation cannot be attributed to the reform process, it is likely that the direction health reforms are taking may aggravate problems of access and utilization in these countries. The emphasis on co-payments, the stratification of beneficiaries by purchasing power, and the impossibility of guaranteeing effective conditions of access and utilization might exacerbate the present situation.

Concerning the utilization of services, health care reforms have to cope with the two main problems in Latin American social structure: exclusion and inequality. In a situation where resources are scarce and highly concentrated, each reform measure must be evaluated according to its effect on exclusion and inequality. Both issues must be considered independently, but simultaneously, since the same measure can affect each of them in opposite ways.

It is, of course, different in the developed countries, where reform proposals were primarily intended to address the increasing costs of health care services and resulted in increasing inequality. Only the United States, like Latin American countries, has also to cope with the problem of exclusion from the health care system.

Since the utilization of health care services is only one piece in a complex system of relationships, the reform process may be considered in terms of its effect on each of the dimensions of the health care system, namely, economic, political, social, organizational, financial, and personal.

So far, the main result of the reforms has been to extend coverage. Nonetheless, it may have different meanings depending on the strategy adopted. For example, the initiatives aimed at increasing coverage through target programs are addressing the problem of exclusion. However, if access is assured only to a limited basic package of services and or to isolated groups of the population, the guarantee of access does not cope with the problem of inequality. On the contrary, this strategy may result in the institutionalization of differentiated use of health care services.

In the same way, “universal” systems that do not eliminate barriers to accessing the system are not capable of tackling the issue of exclusion. In this case, a proposed universal system that cannot guarantee access and quality will probably end up being a poor health care system for the poor. The apparent contradiction between universal and target policies can only be overcome through a combination of selective programs to vulnerable groups able to promote their access to and insertion into a universal system.

It cannot be denied that health care systems are undergoing major changes with regard to their political constituency and organizational and financial modalities, and are heading toward a more pluralistic and competitive configuration. Undoubtedly, one can qualify Latin American health sector reforms as a kind of modernization of the traditional pattern of social protection rooted in populist political relationships. The traditional pattern of social protection, which featured the stratified inclusion of urban workers from the formal market and the exclusion of the poor in the informal market, was expressed in the separation of the main institutions of the sector: the ministry of health and the social security system.

The new design of the health care system is part of a process by which Latin American societies are assuming a new profile, with a more pluralistic and inclusive system of social protection.

Instead of denying membership to some groups, there is a movement to stratify the population according to the purchasing power of each group. The possible outcome will be that each individual will be entitled to rights and services to a greater or lesser degree, according to the population group to which that individual belongs.

While the former stratification was grounded in the collective action of the group, the new stratification will be determined by the individual’s capacity to contribute - directly or through public subsides - to his or her own benefit plan. Unless the government finds a way to have the more affluent population groups subsidize the poorer population groups, the segmentation inherent in the former situation will tend to be reproduced.

Moreover, health policies are contributing to the segmentation of the population by pitting the middle class and the poor against one another, both culturally and politically. This breakdown in solidarity implies discrimination against the poor, as well as the likelihood that public health care services designated for the population without economic resources and a political voice will deteriorate.

So far, no mechanism has been designed to promote solidarity among the various stratums of users, as part of the reform in the three countries. If this situation continues, the reforms will succeed in modernizing the sector at the cost of moving the region even further away from the ideal of fairness.

[1] The Fiscal Pact is the name of the instrument for budgeting in the public administration.

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