1. Financing the Brazilian Health System: Challenges and Perspectives
John Hopkins Bloomberg School of Public Health
Department of International Health
Financing the Brazilian Health System: Challenges and Perspectives
André medici
BALTIMORE, february 3, 2016

2. CONTENTS A Brief History of the Brazilian Health System
Challenges in Financing the Brazilian Health System
Perspectives
CONTENTS

3. A brief history of the Brazilian Health System
From Bismarck to Beveridge

4. From the Bismarckian Origins ....
Since the twenties, The Brazilian State organized a social security health system to meet the formal labor market and their families.
This system was structured as a Bismarckian social security model (organized by companies and, after, by economic activity, through a gradual process of unification with the INPS (1960) and INAMPS (1970).
This system, with all possible faults, sought to ensure health standards that complemented the wages of workers, paid for medical expenses and contributed to maintain the regularity of workforce in the formal labor market.
Public hospitals, complemented by a network of charitable establishments were not sufficiently to meet the health needs of indigents and the poor. Middle class and the rich complemented social security schemes with medical expenses paid in out-of-pocket basis.

5. To the Beveridge Model....
After democratization in 1988, a New Constitution closed the public social security schemes for the formal labor market (INAMPS), and led the country to create institutional and financial mechanisms to ensure universal coverage (UHC) and to assemble a public single health system to meet the needs of the vast majority of the population.
The focus on primary and ambulatory care in the early years of the SUS was strategically very important to the success of the UHC strategy in Brazil.
Since the creation of the SUS in 1988, many improvements have been observed in epidemiological indicators, health coverage and utilization of health facilities by the population.
Life expectancy at birth increased from 67 to 73 years between and 2010, the infant mortality rates were reduced from 47 to 18 per 1000 live births. Infectious and parasitic diseases decreased their weight in the proportional mortality. In 2010, basic health indicators were much better than those existing at the time of the creation of the SUS.

6. But something was missed during this process...
After the creation of the SUS and the extinction of the Bismarckian Model, there was no immediate response to guarantee the health care coverage and quality levels required by the formal labor market.
The disarticulation of the Bismarckian Model (INAMPS) destroyed the institutional mechanisms to assure public health coverage to the formal labor market. The response was a huge expansion of private health plans, organized according the US model of HMOs. It also represented a increase of contracting out services or using schemes of private health insurance by firms and families, reaching the middle class and the worker’s households in the formal labor market.
In the late 1980s, health plans covered only 5% of the Brazilian population. Currently (2015) covers almost 30%.
Until 1998, health plans had tinny regulations covering only financial and fiduciary aspects and limited coverage through private health plans. Since then, the Brazilian Government created a strong public regulation for private health plans. In early 2000’s the Brazilian Government established the National Health Agency (ANS) to assure the compliance with this regulation.

7. And the system is still fragmented and inequal....
In the classic Beveridge Model , health plans are complementary to the services offered by the state to all citizens (as in UK, many European Systems and Canada).
In Brazil , private health plans and the public system offer no integrated health packages creating duplications and waste of public funds. Current legislation forbid the integration between the SUS and the private health plans.
Given the better quality of the private plans, the share of the population enrolled in this system has been growing steadily. Health plans are tax exempt and have a per-capita expenditure three to four times higher than the SUS.
The health plans coverage rates of the poorest 20% are very low when compared with the 20% richer. More than three quarters of health plans are collective and financed by companies to workers.
In conclusion, there are first and second class health schemes in Brazil, as in many other countries.

8. Main Achievements of the SUS
Decentralization of responsibility for health care provision to municipalities and states
Block grants from the federal government to states and municipalities, and Increasing own funding from state and local governments for health care
Better coordination of functions and priorities across federal, state and municipal governments leading to less overlap and reduced waste as well as rational use of tertiary services
Greater involvement in citizens and communities on health care priorities and delivery
Improved information systems at all levels

9. The Reforms under 1994-2002 (main achievements)
Strengthening financial sustainability
Tied funds for health (CPMF - tax related with financial transactions);
Constitutional Amendment % of state and 15% municipal tax collection tied to health expenditures;
Increased federal sources transferred to states and municipalities;
Increasing autonomy of States and Municipalities
changes on the financial schemes - prospective payment to block grants, despite the fact that prospective payment is not a limitation to decentralization;
decentralization of the health audit system from federal level to states;
Prioritizing primary health care:
definition of a primary care basic package of services fully funded (PAB);
financial incentives for family doctors and community health agents;

10. The SUS from
Some important strategies slowed down implementation….
Regionalization
Primary Care Programs
Electronic Medical Records
Integration between public and private health plans
But public health programs were implemented.
Tobacco free environments
Reproductive Health;
Access to emergency care in urban areas (UPA’s);
Increased health information and surveillance systems.

11. Family Health Program (PSF)
1994+
Primary care program
Active outreach and prevention
Tracking of family and community health
Based on Family Health Approach
Team: doctor, nurse, nurse auxiliaries and community health agents
Linked to performance since its establishment in mid 1990s

12. The family health program (PSF) has been a way to improve quality of primary care, but it is implementation has been very slow and iniqual.
The PSF coverage seems to have affected positively the health indicators in Brazil.
The data show that the coverage of medical, demand for health care and preventive exams for the beneficiary population of the PSF are larger than those for the population without any type of coverage for all income levels and age.
So for those who do not have access to health insurance, the PSF really makes a difference.
The problem is that it only covers 50% of the population and coverage increases had slowed down in the last years.

13. The SUS under the Current Crises: 2014-2015
Deterioration of coverage quality
High complaints of the population
Dissatisfaction with public sector but also with private health plans’ providers: two thirds of the population considers health care a big problem in the country
Increasing fraud and corruption in health public sector management;
Failures in public health issues and lack of coordination with other public policies: emerging epidemics such as dengue;
Politicization of the health management: new ministries chosen to strength alliances to grant government’s political support

14. Problems that still remain
High duplication of tasks among government levels;
The system is financed by supply side and not by demand side, despite that the private plans are very demand driven;
Federal funds are distributed without considering epidemiological needs and financial shortness of states and municipalities.
Lack of 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, despite the fact that they have rights to use the SUS;
There weak external audit systems. Only in some states it works well. The audit is done by the public sector and is a conflict of interest;
There are few opinion polls about consumers satisfaction and few evidence about the system satisfaction by the population;
There are over representation of health workers in overall health care priorities and decision making processes;

15. Challenges in Financing the Brazilian Health System

16. How much a country need to spend in health?
What is necessary to have a good health?
These needs would be satiated with the current, more or less public and/or private available funds?
The population really prefers to spend these public resources on health or they have other preferences on how to allocate such resources in unmet needs?
The amount to be allocated to health could be spent on other more urgent social or economic needs than health needs?
What is the health resources distribution that better attend the health needs of everyone?
Needs
Sufficiency
Preferences and choices
Efficiency on Allocation
Equity

17. How the Universal Health Coverage in Brazil is Financed?
Public Funds
Federal Tax Revenues (no defined rule)
State Tax Revenues (minimum of 12% of state tax revenues)
Local Tax Revenues (minimum of 15% of municipal tax revenues)
Is this Enough?
Social Sectors Activists, Health Civil Servants and Public Health Managers say no: (constant fight between Economics and Health Authorities
However, there is a huge problem of Efficiency: poor outcomes related with this spending.

18. Federal Health Spending in Brazil (1 US$ = 2 R$)

19. Financial Transfers for States and Municipalities
Federal transfers to states and municipalities represent a big share of the Public Health Expenditure (45%)
In the early eighties, most of the federal transfers went to the state level. During the nineties this trend was reversed. Most of federal sources today are transferred to municipalities;
Recently the transfers to States and Municipalities represented up to 60% of federal expenditures in health
On the other hand, federal transfers represented almost 30% of state health expenditure and 35% of the municipal health expenditure.

20. Total Public Health Expenditures (1980-2013)

21. Total Health Spending in Brazil
Public Health Expending is less than half of the Expenditures
Persistent increasing of state and local financing and reduction of federal financing following the decentralization process
High percentage of out-of-pocket expenditures
Health Plans expenditure is about one quarter of total health expending
Structurally is not has changed too much over the last years.

22. Health Expenditure Distribution in Brazil Current Estimations
Insurance 6.5%
Self-insured 5.1%
Nonprofit 0.6%
Medical
Cooperatives
6.8%
Group Medicine
6.7%
Municipal 11.3%
State 11,1%
Federal 21.6%
Out-of-Pocket
29.3%

23. Health Expenditures and Economic Cycle in Brazil

24. Poor Correlation Between Federal Health Spending and Economic Growth

25. Central Government Health Expenditures Never were bigger than 2% of the GDP

26. Financial Reform for Federal Health AllocationsI
Old system: Too many parallel systems (30+)
Difficult to track $
Much administrative overlap
Weakened already weak capacity
Awkward “agreement”- based system – fiefdoms
New “fund-to-fund” system (mid 1990s)
Single and consolidated financial platform - all health financing sources channeled through same financial system
Establishment of federal, state and municipal “Health Funds”
All programs and investments brought into single account
Subnational entities made responsible for entire financial package independent of funding source
Created opportunity for performance-based financing (P4P)

27. Old System (before 1996) GoB MOH State State Health treasury
Secretariat
Services,
Programs,
Investments
GoB
MOH
After decentralization
Municipal
Treasury
Municipal
Health
Secretariat
Services,
Programs,
Investments

28. Federal Financing Subsystem for Primary Care (After 1996)
TREASURY
MUNICIPAL
TREASURY
Budget allocation MS
HEALTH
FUND
MUNICIPAL
HEALTH
FUNDS
Purchase
goods
services
salaries
service
provider
Benefi-ciares
provider
provision
First in a series of diagrams to show how this works.
This is a financial and service flow diagram depicting how the federal government, health ministry, finances basic care services.
PAB—Basic care program – split into a number of transfers—the largest known as PAB fixo and PABpsf – PSF stands for the government’s Family Health Program.
$900 million p/yr to urban areas
Municipalities responsible for implementation of programs and service delivery
Transfers
STATE
TREASURY
STATE
HEALTH
FUNDS
Budget allocation

29. Health Per-capita Public Expenditure x Log Income per capita in 193 countries in US$ PPP (late 2000’s)

30. Health Expenditure as a Share of the GDP in LAC Contries 2008

31. Percapita Public Helth Spending in LAC Countries 2008

32. Equity Problems
Free access to the rich and middle class reduces the resources to finance access and coverage to the poor
Family expenditures inequality
Regional Disparities on Health Financing
The difficult trajectory of the poor to get access to the services;
The emerging chronic diseases epidemic driven by demographic transition and aging

33. Per-capita income decil Health Sources of Financing
Unequal Financing
Per-capita income decil
Health Sources of Financing
SUS
(%)
Health Plans (%)
Out-of-pocket (%)
Total (%)
Poorest
3,4
0,4
6,7
10,5 2
3,2
0,2
5,5
8,9 3
4,0
9,9 4
5,3
0,5
11,3 5
0,9
5,2
10,1 6
4,7
0,8
4,6 7
1,0
10,3 8
4,5
1,6
4,4 9
1,8
3,3
9,5
Richest
4,1
3,0
TOTAL
42,2
9,4
48,4
100
Source: Uga and Soares, 2007

34. Access has been unequally distributed (Lorenz Curve of Health Access by Income (Brazil – Family Budget Surveys )
Source: Monica Viegas Andrada and Kenia Noronha, 2010

35. Private Health Plans are also regressive (Brazil – Family Budget Surveys 1998-2008)
Source: Monica Viegas Andrada and Kenia Noronha, 2010

36. Regional disparities in Health Financing – Brazil
Regions
Public per-capita health expenditures
(In reais)
Federal
State
Municipal
Total
North
112,98
82,88
34,48
230,34
Northeast
104,57
33,16
30,68
168,41
Southeast
122,37
54,37
73,82
250,56
South
112,94
34,56
54,80
202,30
Center-West
123,31
58,38
48,21
224,90

37. Perspectives

38. Some Partial Conclusions About the Brazilian Health System
The Brazilian Health System holds two large fragmentations in access: (a) between those who have and who do not have access to health care, and (b) between the poor and the non-poor that use the SUS.
Despite that, the SUS improved the access to poor, but not intentionally. Those who have higher incomes end up using the health plans, reserving the SUS only for high-cost procedures and high technology that are not covered by the private health plans. But it is essential to have the middle class in the SUS to keep quality and informed complaints.
Brazil does not have a single health care system and the results of health policies – both, those directly offered by the SUS and those regulated by the state in the provision of private health plans - have asymmetrical results in access and in the health indicators of the population.
Current Crises ( ) could create huge damage and great losses on the health financing, specially for the poor, in a moment were health needs will increase exponentially

39. The political economy of the SUS
The SUS need to be understood as a political movement against the military dictatorship. The SUS has its roots on the academy, on the medical and health professional unions and in the public sector workers;
Some of the SUS principles conflict with the efficiency and equity needs of the health system;
Decentralization was successful in Brazil Health System, but many municipalities do not have the financing or capacity to deliver appropriated health services. Some programs as the QUALISUS (Health Networks Programs) are tackling this challenge.

40. Some solutions to improve the SUS
Integrating the SUS with the Private Health Plans by
Raise the efficiency and quality management in the SUS,
accreditation of delivery entities and certification and recertification of professionals
Recovering costs from public services used by individuals who have private health insurance
Using an equity based formula to distribute federal funds across states and municipalities. These formulas need to pay attention to epidemiological needs, fiscal capacity of each state and incentives; The formula need to set up incentives to efficiency an results agreements.
Increasing the management flexibility of the SUS. Use different models of public and private management to raise efficiency;
Using subsidies for the poorest population and establish cost recovery for those able to pay.
Increasing the use of demand driven payment mechanisms to providers (such as DRGs);
Using financial incentives based on outcomes rather than processes

41. What should be explored in an alternative no integrated scenario
Public-private partnerships between the SUS and Health Plans;
Contracts between SUS and health plans to buy-sell services
Using the SUS by users of health plans
Public subsidy according income level
Improvement of information systems and public transparency of operators and relations with users;
Actuarial medical and risk profiles
Legalization and consumer
User satisfaction and ombudsman’s processes
Sharing information as a basis for promotion and prevention

42. Muito obrigado (Thanks)