A deepening crisis in Colombia's health system has intensified a conflict between the country's leftist President Gustavo Petro and business leaders and opposition politicians who accuse him of ignoring parliament and pursuing radical policies.
After lawmakers shelved a landmark health care bill, Petro ordered regulators to take over the country's two biggest private health insurers, which have severe liquidity problems, a move that industry groups say means more than half of people's health accounts are now under state control.
Petro plans to try again to pass a health care bill soon, saying reforms are needed to root out corruption, make the system financially sustainable and expand rural coverage. But business and opposition leaders say Petro is allowing insurers to fail because of his ideological opposition to the private sector, rather than reforming the system to survive.
“[The government] “The government knows how to disrupt systems it doesn't like, but it doesn't have a strategy for fighting back against those disruptions,” said Bruce McMaster, president of Colombia's largest business association. “The government wants to interfere in every activity it thinks it should be involved in.”
More than half of the nation's health care spending is now state-managed, according to industry groups. © Raul Arboleda/AFP/Getty Images
For decades, private insurers, known collectively as Empresas Prestadora de Salud (EPS), have been the linchpin of a health-care system that covers about 98 percent of the country's 52 million people. Colombians' out-of-pocket costs are among the lowest in the region.
The government sets individual premiums through a means test, which are then deposited in a government-run fund that is then distributed to insurance companies and paid out to hospitals and other health care providers.
But Petro accuses the for-profit EPS of mismanaging its finances, perpetuating disparities in access to health care between cities and isolated rural areas. He has proposed transferring control of the funds from insurance companies to local mayors.
“Healthcare cannot be a business and patients are not customers,” Petro said last year when he introduced a reform bill in Congress. “We want to enable doctors to visit farmers' homes, no matter how far they are.”
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Analysts say Colombia's health system has many problems. Only seven of the 27 EPSs have sufficient financial and technical reserves as required by regulators. The others suffer from a lack of management capacity, and government payments are not covering the rising costs of upgrading hospital equipment and infrastructure, or the growing number of people seeking treatment.
Daniel Lopez Morales, a law professor at Bogota's Javeriana University, said there was no “magic formula” to solve the crisis, but any reforms needed to allow time for transition and be bought-in by all involved.
“The health care system should be thought of as a collaboration between the private sector, not an adversarial one,” he said.
In April, government regulators seized Colombia's two largest EPS companies, Sanitas and Nueva EPS, and replaced their boards for a year.
“Healthcare is not a business, and patients are not customers,” Gustavo Petro said last year. © Charlie Cordero/Bloomberg
At Sanitas, which insures about 5 million people, regulators found losses of more than $100 million and “unjustified increases in operating costs.” At Nueva EPS, Colombia's largest health insurer with about 11 million affiliates, authorities said $1.25 billion in invoices were missing from its financial statements.
Sanitas has not responded to the regulator's allegations, but the ousted Nueva board has said it was unaware of hidden invoices in accounting documents approved by Deloitte and KPMG.
Petro's reform bill would have created a government agency to replace private insurers to pay hospitals directly. After the bill was shelved in Congress in April, the president said big business had become “political owners” and vowed to introduce a new bill when the next legislative session begins in July.
Petro said that without intervention, parts of the EPS could start to collapse and the system could collapse. “If I wanted to abolish the EPS, you know what I would do? I wouldn't introduce a reform bill and I'd let the status quo continue,” he said last year.
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His prediction appears to be coming true. Sura, which has about 5 million affiliates, filed with regulators last month to withdraw from the health system, saying the funding it received from the government was not enough to cover its costs. It posted a net loss of $92.3 million in EPS for the 2022/23 financial year.
Gustavo Morales, president of the Private Insurance Association, said the government was not primarily responsible for the sector's financial crisis but could have signaled its willingness to work with insurers like Sula to keep the system afloat.
“What prompted Sula's decision was a perceived lack of short-term ambition. [from the government] “We need to sit down and resolve the issue with the urgency that is needed,” Morales said.
Business leaders fear that if Congress does not approve plans for reform in those areas before the session ends on June 20, the president's interventionist approach will be used to expand the government's role in education and overhaul labor laws.
Lawmakers in the lower house, where Petro's coalition holds a majority, approved his pension reform bill without debate on Friday, opening the door to the bill being subject to litigation before the president signs it into law.
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“In a democratic system, you present something and then it is subjected to a process of counterarguments and negotiations,” said Antonio Jose Ardila, a businessman and former Colombian ambassador to Britain, adding that the government had often eschewed a consultative approach.
Petro's shake-up of the private sector comes amid a sluggish 0.6% gross domestic product (GDP) growth forecast for 2023 and 1.2% this year, according to the OECD. A tax shortfall led the government to cut public spending by $5 billion on Monday, while the budget deficit this year is forecast to be 5.6% of GDP amid high inflation of 7%.
With finances becoming increasingly tight, opposition figures have called on President Petro to soften his aggressive stance on business and encourage more investment.
“We are seeing a clear persecution of the private sector by the government,” former right-wing President Iván Duque said at a banking conference last week.
“This means companies are cutting back on structural investments and foreign direct investment is flooding out of the country, creating uncertainty.”
