Report Nº: 104903/01/2024


The DNU stipulates that health insurance companies will compete directly, without the need to refer contributions from a social security organization. For all people to be able to choose freely, the per capita income of low-wage families must be raised. This can be achieved by ordering the Solidarity Redistribution Fund.

Until the 1990s, affiliation to the social security system was captive. Workers were compulsively affiliated to the social security entity (obra social) of the union that signed their collective bargaining agreement. This generated perverse incentives: waste of resources, corruption, and poor quality of services. With the reform of the 1990s, free choice among social security entities was allowed. As it was implemented by a simple decree (not a law decree or DNU), the health insurance companies entered the system through the derivation of wage contributions from a social security entity (obra social) paying a fee.

Now, with the DNU, which has more room for maneuver than a simple decree, the direct entry of the health insurance companies is allowed. The advantage is that 100% of the workers’ contribution goes to health coverage since the social security entity’s fee may be avoided. However, for this to work properly, it is necessary to solve the problem of households that, due to their larger size or low salaries, have an insufficient per capita contribution to finance the Mandatory Medical Program (PMO).     

This challenge can be solved by rethinking the use of the Solidarity Redistribution Fund (FSR). This fund is made up of approximately 15% of salary contributions to the system. According to data from the Superintendence of Health Services, for the accumulated to September 2023, it is observed that:

  • In subsidies to social security entities to compensate them for expenses in disability social services, $185 billion were allocated. 
  • In subsidies to social security entities to compensate them for expenses on high-cost treatments, $23 billion were distributed.
  • Only $4 billion was used in subsidies to low-income workers to raise their per capita family contribution.  

These data show that a very small portion of the FSR is used to increase the per capita contribution of lower-income households. The main consequence is that there are many underfunded families in the system. In other words, they are left helpless because their contribution does not cover the cost of the PMO. These people generally end up being treated in public hospitals, causing a huge hidden transfer of provincial resources, which finance the public hospitals, to the social security health system.

In order to guarantee more equitable access to health care, mitigate the spurious transfer of provincial resources to the social security health system, and allow for healthy competition between social security entities and health insurance companies, it is essential to order the FSR. The National Disability Agency (ANDIS) should be in charge of the disbursements to assist people with disabilities. This agency should finance social services for the disabled since it is the one that grants the Disability Certificate (CUD). With the same orientation, the National Commission for the Evaluation of Health Technologies and Clinical Excellence (CONETEC) –which is the state agency that evaluates when a very high-cost treatment should be performed– must be in charge of providing the financing. These changes can be implemented without increasing public spending, to the extent that the national programs –implemented by the national Ministry of Health in functions that are the responsibility of and are already financed by the provinces– are deactivated. 

In this way, the totality of the FSR could be allocated to raising the per capita contribution of low-income families and lowering the cost of the PMO by removing non-medical benefits (social services for the disabled) and benefits that must be financed collectively (very high cost). By raising the floor of the per capita contribution and lowering the cost of the PMO, it is possible to achieve financial consistency, which is essential for the freedom of choice between social security entities and health insurance companies.

The DNU is criticized because it encroaches on the powers of Congress. But the evidence shows that, since the freedom of choice was established in the mid-1990s, Congress has passed regulations that denote carelessness and opportunism. The most common one was to add benefits to the PMO without considering sources of financing. This contributed to degrading the health system, with particular damage to low-income families. Much more conducive than criticizing the DNU is to activate self-criticism and promote the complementary actions that the DNU needs to improve health coverage. Especially for the most vulnerable people. 


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