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Health Reform Costs Less Than Previous Government-Run System

Previous public health system would cost $1.6 billion today; offer fewer services than available under the Reform


April 25, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

The dual healthcare system that was replaced by the Health Reform would have cost $1.6 billion nowadays, according to former Health Secretary Carmen Feliciano.

So while the reform’s budget for FY 2003 could easily surpass $1.4 billion–when the cost of operating medical facilities that were never privatized and those that were returned to government after failed privatization are added up–it appears its costs will still come under what the old system would have cost today.

"Based on information from a study conducted by Estudios Tecnicos, we projected the costs of the previous government-run system to reach $1.7 billion by 2005," Feliciano told CARIBBEAN BUSINESS, stressing that while the reform costs less, it allows those who were medically indigent to use services that were once only accessible to those who could afford private medical insurance.

The dual healthcare system consisted of private medical services for those who could afford them and a public system–comprised of public hospitals and Diagnostic and Treatment Centers (CDTs by their Spanish acronym)–for the medically indigent. Back in fiscal year (FY) 1990, it cost the government around $600 million to keep the public system running, according to government statistics.

The Health Reform was implemented in an effort to eliminate the inequality of the dual system. As part of its implementation, by September 2000 the government had sold 47 of 84 CDTs and eight public hospitals to private entities such as medical groups and universities. According to statistics from the Government Development Bank, the sales brought more than $232 million in revenue.

According to government sources, in 2000 5,566 physicians were serving the reform, compared to 1,549 in the previous government-run healthcare system. Before the reform, there were 726 primary care physicians available, while in 2000 there were 3,220. The number of specialists jumped from 823 to 2,346, the number of pharmacies from 93 to 847, laboratories from 70 to 645, hospitals from 10 to 53, and dentists from 119 to 1,236.

However, by the time Gov. Sila Calderon took office in 2001, some privatized facilities encountered serious financial problems and closed. In order to keep them open, many of these facilities have had to be subsidized by the government. Although the initial plan was for the reform to only pay for services provided by health insurers, it is still paying for remnants of the previous system.

This means that in FY 2003, the costs of the insurance premiums under the reform plus those of maintaining non-privatized health facilities will be around $1.42 billion.

According to the Management & Budget Office, the government has proposed to assign $59 million to the Health Institution program of the Department of Health, which manages the Bayamon Regional Hospital and various health facilities such as CDTs in Culebra, Naguabo, Yabucoa, Las Piedras, Maunabo, Santa Isabel, Vieques, Adjuntas, and Jayuya. It will also assign $66 million to the Adults University Hospital, and $46 million to the Pediatric University Hospital. This adds up to $171 million.

When that sum is added to the proposed reform budget of $1.247 billion, the total amount of money destined to provide medical services to approximately 1.7 million beneficiaries tops $1.4 billion.

This Caribbean Business article appears courtesy of Casiano Communications.
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