Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

The Brazilian Health Reform and the Chalenge of Decentralization by asb28647


									The Brazilian Health Reform and the
   Chalenge of Decentralization
   (The World Bank - February 19, 2004)

             André Medici
                Health Specialist
        Interamerican Development Bank
How works health care before the 1988
Constitution? - 4 schemes

• 1) Social Security: Formal labor market: workers and families (60% of
  the population), financed by payroll taxes;

• 2) Public Sector: informal labor market and indigents (no coverage or
  under coverage) financed by general taxes;

• 3) Private Health Plans: Additional coverage for 10% of the richest
  population (no mandatory, financed by firms or families);

• 4) Out of Pocket Expenditures (complementary for all groups);
Reforming the old health system

• Problems:
   – Segmented coverage: inequalities and lack of coverage for the poorest
     population groups;
   – Poor health outcomes;
   – insufficient financing and unfair distribution of the public funds.
• Political Environment:
   – transition to democracy after 24 years of dictatorship;
   – strong social participation and political will: the goal was to
     implement a system based on the European welfare state.
• Restrictions:
   – economic constraints to increase public health expenditures;
   – unstable macroeconomic context
The 1988 Constitution and the Unified
Health System (Social Security + Public Sector)

• New Universal Rights on Health Care
   – Universal health coverage by the public sector;
   – Integral coverage for all goods and health services (absence of basic
     packages and no risk management);
   – Equal access for all without costs and payments by the users.
• Strategies
   – Financing based on general taxation (social security budget with
     specific sources tied to health);
   – Decentralization of health care to local levels (federal hospitals and
     ambulatory care units were transferred to States and Municipalities);
   – Increasing the public role on investment and public employment.
The 1988 Constitution and the Unified
Health System (Social Security + Public Sector)

• Strategies
   – Centralized management in each level of government (Federal, States,
   – Basic rules defined at national level (lack of administrative flexibility -
     the PAS case in Sao Paulo);
   – Lack of integration with Private Health Plans;
   – Social participation (establishment of health counsels in each
     government level composed by providers;employees and community
   – Strong corporatism of health related personnel.
   – Hospital centered system (low incentives to primary health care).
   – The system was driven by the supply side (no incentives related with
     demand side as capitation).
Restrictions in the early ninities

• Restrictions
   – Strong fiscal imbalances creating financial restrictions to the SUS;
   – High inflation and economic instability
   – Political crises and constant changes of health ministries (average less
     than one year);
   – Low priority of social policy and social changes;
• Consequences
   – Strong corporatism and permanent strikes in health related
   – The population and communities had no confidence in the system;
   – The rise of private health plans as an option for high income
     employees and middle class
The Reforms under the Fernando Henrique
Cardoso Government (main achievements)

• Strengthen of financial sustainability
    – Creation of the CPMF (tax related with financial transactions) to
      increase the economic support for federal expenditure in health;
    – Legislate that 10% of federal tax collection; and 15% of state and
      municipal tax collection have to be applied in health care;
    – Increase the federal sources transferred to states and municipalities;
• Increase the autonomy of States and Municipalities
    – changes on the financial schemes (prospective payment to block
    – decentralization of the audit system;
• Movement toward the primary health care:
    – definition of a primary care basic package of services fully funded
    – financial incentives for family doctors and community health agents;
               Some outcomes
• The SUS lead to better health indicators:
   – Life expectancy increase from 65 to 68 years from 1991
     to 1999;
   – Infant mortality rates have been reduced from 50 to 29
     per thousand among 1991 and 2000;
   – increase of institutional natal care;
   – decrease of malnutrition rates among children under 5;
   – increase immunization among children and pregnant
           Cuadro 1.5 – Brasil: Tasas de Mortalidad Infantil (por 1000 nacidos vivos) - 1997
                        Valores máximos y mínimos de los municipios de cada estado
          Estado            Valores máximos y mínimos de los Municipios de Cada Estado
                                    Máximo (1)             Mínimo (2)                Relación (1)/(2)
 Alagoas                               119.33                  53.83                            2.22
 Paraíba                               108.61                  37.56                            2.89
 Rio Grande do Norte                   106.15                  42.48                            2.50
 Maranhão                              100.73                  35.08                            2.87
 Pernambuco                             98.07                  37.13                            2.64
 Ceará                                  97.00                  46.22                            2.10
 Sergipe                                82.19                  39.39                            2.09
 Bahia                                  79.08                  23.80                            3.32
 Pará                                   77.90                  26.46                            2.94
 Acre                                   71.29                  39.89                            1.79
 Piauí                                  67.52                  30.37                            2.22
 São Paulo                              56.01                  20.02                            2.80
 Amazonas                               54.05                  23.68                            2.28
 Mato Grosso                            52.00                  20.25                            2.57
 Tocantins                              51.30                  24.05                            2.13
 Amapá                                  51.04                  25.25                            2.02
 Roraima                                48.23                  30.13                            1.63
 Santa Catarina                         45.74                  14.32                            3.20
 Minas Gerais                           44.52                  22.58                            1.97
 Paraná                                 44.31                  23.45                            1.89
 Goiás                                  43.33                  23.92                            1.81
 Rondônia                               40.41                  26.08                            1.55
 Mato Grosso do Sul                     39.74                  18.40                            2.16
 Rio de Janeiro                         39.58                  20.11                            1.97
 Espirito Santo                         38.12                  23.13                            1.65
 Rio Grande do Sul                      25.24                  15.11                            1.67
 Brasil                                119.33                  14.32                            8.33
Fuente: E, SIMÕES, C,C,S, 1998
The relationship among health expenditures
and outcomes in LAC countries

• In 1997 Brasil performed the
                                                                     Percapita Health Expenditures and Life
  8st higher health expenditure                                       expected years in good health - LAC
  among 27 LAC countries. (US$                                                  countries - 1997

  428 per capita - 7,6% of GDP).

• Even son, Brazil occupied the

                                    Life expectancy in good health
  22st position regarding average
  life years adjusted by

  discapacity (59,1 life years in                                    60
  good health).                                                      55

• Others federative countries in                                     50

                                                                                                           y = 3 4 .15x 0 . 1 0 6 7
  LAC, like Argentina (3th./5th.)                                    45                                      R 2 = 0 .5551
  and México (9th./7th.)                                             40

  performed better relationship                                           0     200         400        600           800              10 0 0
                                                                              Per cap it a Healt h Exp end it ur e ( U S$)
  among health expenditures and
Health Expenditure Distribution in Brazil

• Brazilian Health Expenditures -
     Health Expenditures Distribution   US$ millons

   Public Secttor                            22,867.4         9%
           Central Government               12,162.5
                                                                         Out of
           States                            4,285.5
        Municipalities                       6,419.4
   Health Maintenance Organizations          14,800.0                    Public
           Familias                          9,594.4   37%        54%
        Emterprises                          5,205.6
   Out of pocket expenditurews               23,466.9
   Internacional Funds                          265.0
   TOTAL                                     61,399.3
Evolution of Health Public
•   In 1980, the public expenditure in
    health was distributed as following:              Brasil - Evolution of Public Health Expenditure
    Federal Government (74%), States                             1980-1996 (US$ mil milions)
    (18%) and Municipalities (8%);
•   In 1996 the public expenditure in
    health changed as following:            25
    Federal Government (53%); States        20
    (19%) and Municipalities (28%);                                                                        federal
•   There is no data for all the 5,6                                                                       state

    thousands of brazilian                  10                                                             municipal
    municipalities, but some evidence                                                                      total
    shows that municipalities is
    increasing their participation in the








    health expenditure in recent years      -5








    given the recent brazilian
    government regulation
Federal Transfers for States and Municipalities

•   Federal transfers to states and
    municipalities represents almost 20% of
    the Pub lic Health Expenditure            50
•   In the early eighties, federal
    government drove sent most of the
    transfers sources to states. In the       30
    ninities, this trend was reverted. Most   20
    of federal sources now are transferred
    to municipalities;                        10
•   In 1999 the transfers to States and        0
    Municipalites represented almost 36%
    of federal expenditures in health
•   In other hand, federal transfers
    represented 11% of state expenditure           Tr ansf er s t o S t at es
    on health and 25% of the health
                                                   Tr ansf er s t o Municipalit ies
    municipal expenditure.
Brazilian Public Health Expenditure
by Sources and Uses
  Uses of Public Expenditure                 Sources of Public Expenditure
  by Level of Government                     by Level of Government

                               F ed er al
 F ed er al                                                    45%
                               St at e
 St at e
                        53%    M unicip al
 M unicip al

Public Health Expenditure and GDP
percapita by State
                                         Per Capita Health Expenditure x GDP per capita
•   This graphic shows the total
    percapita health expenditures by                       1996 (US$)
    states (including federal
•   Health expenditures are in
    someway directly co-related with
    the state percapita GDP
•   Even then, some poor states
    presented higher health percapita
    expenditures than other rich states.
•   In some way, the federal level
    expends too much in some rich
    states, as Federal District and some
    poor states of the North Region.
Does the federal government own
a redistributive role on health expenditure?
                                      Federal Health Expenditure per capita x
• Federal Health Expenditure
                                      GDP per capita in the States: 1996 (US$)
  don’t have a clear redistributive

                                       Federal Health Expenditure
• The graphic shows that there is
  no trend
• It was expected that federal

                                                Per Capita
  health expenditure need to be
  bigger in poorest states then in
  richest states, but it is not
                                                                     10 0 0   3000        50 0 0      70 0 0   9000

                                                                                     GDP Per Capita
Regional Innequalities Regarding Health Expenditures on
States and Municipalities

                                      Regional (State and Municipal) Percapita
• State and Municipal Percapita
                                      Health Expenditure x State Percapita GDP
  Health Expenditure is closer                       1996 (US$)
  correlated with Percapita GDP
  than Federal Health

                                        Regional Percapita Health
                                                                    18 0

  Expenditure                                                       16 0               MT                           DF
                                                                    14 0                                       SP
• Rich States and Municipalities                                                       AP

                                                                    12 0

  trend to present bigger levels of                                 10 0       RO
  percapita health expenditures                                      60
                                                                      10 0 0   3000         50 0 0    70 0 0        9000

                                                                                      GDP percapita
Infant Mortality Rates x Percapita Public Health
Expenditures in Brazilian States

•   There is a inverse correlation between Infant Mortality Rates x Percapita Public Health
    infant mortality rates and percapita              Expenditures - 1996 (US$)
    public health expenditure
•   But the related data is weak to explain a
    strong correlation. Many states expend

                                              Infant Mortality Rates
    more than others to achieve worse
    results in the reduction of infant
•   Infant mortality is closer correlated
    with general life conditions than health
    expenditures.                                  40


                                                                            50         10 0      15 0     200      250

                                                                                 Percapita Public Health Expenditure
Correlation between infant mortality and GDP percapita
in Brazilian States

                                       Infant Mortality Rates x Percapita GDP
• This inverse correlation is                 at state level - 1996 (US$)
  stronger. Infant mortality
  depends more on the state

                                        Infant Mortality Rates
  income level                                                   80
                                                                                              R2 = 0.6175


                                                                  10 0 0   3000       5000        7000   9000

                                                                                  GDP percapita
Correlations among infant mortality rates and quality
of Health Information Systems

                    Correlation between infant mortality              Correlation between death with known
                     rate and known information about                   death causes and Percapita Public
                                 death causes                                   Health Expenditure

                                         R2 = 0.5539                                                               R2 = 0.7205
Infant Mortality Rate

                                                                    Percentage of deaths
                        70                                                                 50

                                                                     with known death

                        40                                                                 30

                        30                                                                 20

                         0                                                                  0
                             20          40            60   80                                  50   10 0   15 0   200     250

                                  Percentage of deaths with known                          Percapita Public Health Expenditure
                                            death cause
Best Practices to Improve Equity, Efficiency
and Sustainability of Public Health Policies

•   Use the epidemiological evidence as the rule to plan public health sector
•   Separate the roles of financing, organization and provision of services;
•   Use supply subsides just in the case when exist restrictions in the supply of
    health facilities and use demand subsides when there is a multiplicity of
    organizers and providers in a regulated competitive environment;
•   Target the public subside for people without means to pay and use fees
    and co-payments to recovery costs and moderate the demand of people
    with sources to pay for health services;
•   Use public subside to finance a package of cost effective services covering
    the epidemiological, demographic and socioeconomic health profile of the
    population without means to pay;
•   Use, complementary, public subside to finance a package of high costs or
    risks that could not be supported by the population or private health
Main achievements of the SUS
• Increase the capability of States and Municipalities to manage health
• Increase the fiscal compromise of States and Municipalities with health
• Use of block grants to transfer sources from central to local
  government levels:
• Compromises with promotion, prevention and primary care and better
  definition regards the use of high complexity and hospitals;
• Better integration among central, regional and local level on the use of
  public health facilities;
• High quality of the health information
• Increase of social participation
Problems that still remain
•   High superposition on tasks performance among government levels;
•   The system is financed by supply side and not by demand side;
•   Federal funds are distributed without considering epidemiological needs and
    financial shortness of states and municipalities.
•   Few flexibility to use public funds to contract private management solutions
    for health care;
•   Lack of coordination between the SUS and the private plans. Users of private
    plans are also users of SUS generating a public subside for private sector and
    rich families;
•   There is no external audit system. The audit is done by the public sector and
    do not manage interest conflicts;
•   There is no opinion polls about consumers satisfaction and few evidence about
    the system performance for the population;
•   The health workers corporatism is over represented in the social participation
The political economy of the SUS

• The SUS need to be understood as a political movement against
  the militar dictatorship. The SUS has roots on the academy, on
  the medical and health professional unions and in the public
• The 1988 Constitution incorporate several of these positions.
  Some of the SUS principles conflicts with the eficiency and
  equity needs of the health system;
• To face these interests, health reforms in Brazil had been slowly
• The main problem is to revert municipalization in
  regionalization, with a mayor role of the states
Some solutions to improve the SUS
in a health federalism framework
• Integrate the SUS with the Private Health Plans (the creation of ANS)
• Use of equity formulas to distribute federal sources among states and
  municipalities. These formulas need to pay attention to
  epidemiological needs, fiscal capability of each state and adequate
• Increase the management flexibility of the SUS. Use diversified
  models of public and private management to search for better
  efficiency on the sources allocation;
• Use the public subside for the poorest population and increase the
  possibility to cost recovery for the people who has capability to pay.
• Increase the use of demand driven payment mechanisms to providers;
• Use financial incentives based in outcomes, not in processes

To top