Social Policy in Colombia during the 1990s: The failure of good intentions Alejandro Gaviria

Outline Antecedents Constitutional and legal mandates about social spending. Results: Education Health Labor training Conclusions

Antecedents New Constitution gave priority to social spending. Social spending was given constitutional and legal protection.

Social spending in the Constitution ARTICULO 350… Excepto en los casos de guerra exterior o por razones de seguridad nacional, el gasto público social tendrá prioridad sobre cualquier otra asignación. ARTICULO 366. … Será objetivo fundamental de la actividad del Estado la solución de las necesidades insatisfechas de salud, de educación, de saneamiento ambiental y de agua potable. Para tales efectos, en los planes y presupuestos de la Nación y de las entidades territoriales, el gasto público social tendrá prioridad sobre cualquier otra asignación.

Constitution specifies the amount of social spending Level of spending on education, health and water is specified by the Constitution. Growth rate: 2% plus last year inflation. Labor training, child care, nutrition and other socials programs are financed with payroll taxes. Level of spending is legally mandated.

Provision of services: Education, health and water are provided in a decentralized fashion. Other programs are still centralized.

Social spending increased twofold

Results: education Public education: Increase in teacher’s wages. Marginal increase in coverage rates. No advances in quality.

Public sector teacher’s wages: Comparison group: private sector wage earners with similar socioeconomic characteristics.

Enrollment rates: basic education

Quality differences: private vs. public

Education reform Romantic stage: decentralization was going to solve all the problems. Local political markets didn’t work. Scientific stage: capitation transfers. Centralization of payroll decisions make legal mandates irrelevant.

Results: health Health reform in Colombia is considered one most ambitious policy interventions undertaken in Latin America. Health system has been consistently ranked as number one in LAC by the WHO and OPS.

Main premises of the reform Transformation from a supply-driven system to a demand-driven one. The poor were provided with a voucher that allow them to buy health services through an insurance company. Goals: full coverage and full transformation of resources within ten years.

Results I: The proportion of poor people with insurance rose from about 5% to about 50%. Use of services increased substantially:

Results II: Only 20% of resources (“subsidized regime”) go to the public hospitals. The public sector network maintained its original size.

Transformation of resources:

Health and consumption outcomes: insured vs. uninsured

Geographical matching

Comparison: No differences between people with insurance and people without are apparent in: Per capita consumption Birth weight Respiratory diseases Nutrition indicators

Transfomation AGAIN: The case of SENA: Available evidence suggests inefficiencies: low rate of return. Proposal: separate the financing from the provision, and transform resources from supply to demand.

but…

Conclusions Romantic reforms: increase spending and decentralized. Scientific reforms: demand subsidies and capitation.