Joint Learning Network for Universal Health Coverage

Chile: National Health Fund (FONASA)

11 million

Funding

Payroll Tax, Member contributions
Formal Sector, Government Employees, Informal Sector
Premiums, Co-payments

Population Covered

All populations

Service delivery system

Both Public & Non-state

Institutional structure

Centralized
Central Government, State Government
Central Government
Central Government, State Government
Central Government
Reform summary: 
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Chile’s health system is composed of mandatory health insurance that can be either public or private. Public insurance is offered through a single non-profit provider, the National Health Fund (FONASA). Private insurance can be purchased from many for-profit or not-for-profit private health insurance institutions known as ISAPREs. All formal sector workers who are not self-employed, self-employed workers with a retirement fund, and all retirees with a pension must enroll with either the public or private plan by paying 7% of their income or pension per month, up to a monthly income limit of approximately $2,000USD. Legally certified indigent citizens and the unemployed receive free coverage through FONASA.

Chile’s health system is composed of mandatory health insurance that can be either public or private. Public insurance is offered through a single non-profit provider, the National Health Fund (FONASA). Private insurance can be purchased from many for-profit or not-for-profit private health insurance institutions known as ISAPREs. All formal sector workers who are not self-employed, self-employed workers with a retirement fund, and all retirees with a pension must enroll with either the public or private plan by paying 7% of their income or pension per month, up to a monthly income limit of approximately $2,000USD. Legally certified indigent citizens and the unemployed receive free coverage through FONASA.

In 2005, a new set of Explicit Health Guarantee (GES) laws came into effect. An important facet of these laws is the Universal Access and Explicit Guarantees (AUGE) plan, which details coverage guarantees for 56 health problems. The plan was adopted gradually in order to mitigate fiscal pressure, with 25 problems guaranteed by 2005 and an additional 31 problems guaranteed by 2007. The AUGE plan requires that public and private health service providers supply the minimum services that will lead to successful clinical outcomes under a peremptory period of time. These guarantees do not pretend to be a basic health system. Rather, the guarantees make explicit rights to certain procedures that previously fell under the purview of general health rights. The AUGE plan, therefore, is conceived as a subset of the broader health system.

Prior to this reform, many types of health services were provided within the public system, but with limited access, quality, and financial protection. In FONASA access to different types of medical treatments faced widespread rationing through long queues. With the institution of the AUGE plan, citizens are now legally empowered to demand the established guarantees for access, quality, opportunity, and financial protection. The plan emphasizes prevention, early examination, and primary care, although the majority of its guaranteed services are curative, half of them are for chronic diseases. It also defines a maximum waiting period for the treatment of each condition, the procedures and technologies to be used, and the maximum amount that a patient will spend on health per year. Patients under AUGE are aware of the specifications of minimum service provisions during suspicion of disease, diagnostics, treatment, and follow-up.

The 56 problems were chosen based on a qualitative algorithm that captured the following variables: (1) burden of disease of different conditions, (2) inequity in mortality among socioeconomic groups, (3) effectiveness of treatment, (4) capacity of the health system to deliver the necessary services, (5) high-cost conditions, and (6) people’s preferences. The primary criterion for the selection of the diseases was Disability-Adjusted Life-Years (DALYS), which is the sum of years of potential life lost due to premature mortality and the years of productive life lost due to disability. The 56 health conditions account for approximately 75% of the disease-burden and 50% of all hospitalizations within Chile. In 2008, a pilot program with an additional 7 diseases was implemented under the public provider system. In 2009, this pilot program grew by an additional 2 disease conditions. The AUGE Plan reform also created the Network Sub-secretariat under the MOH in order to insure that human resources, infrastructure, and transportation logistics are adequate to meet AUGE guarantees.

Funding: 
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Monthly beneficiary contributions make up one third of FONASA funding, while half of FONASAs resources come from national coffers. The remainder is made up of operating income and copayments. FONASA is progressive in its funding mechanisms. Government subsidies are well targeted, with 90% directed to the indigent and 7.5% directed to low-income individuals. Furthermore, between 32% and 40% of high-income earner contributions cross-subsidize care for poorer beneficiaries.

Monthly beneficiary contributions make up one third of FONASA funding, while half of FONASAs resources come from national coffers. The remainder is made up of operating income and copayments. FONASA is progressive in its funding mechanisms. Government subsidies are well targeted, with 90% directed to the indigent and 7.5% directed to low-income individuals. Furthermore, between 32% and 40% of high-income earner contributions cross-subsidize care for poorer beneficiaries.

Primary health is free for all who enroll with FONASA. Hospital and ambulatory care under the Institutional Modality, however, require copayments that are determined by the income group in which the patient is classified. Group A (the indigent) and B (low income) receive free care, while group C pays 10% of the cost of the service and group D pays 20%. When enrollees undergo three family health events that require medical attention, those in groups D or C are transferred to groups C and B respectively. Catastrophic Insurance under FONASA is fully covered for patients who elect the Institutional Modality in accredited public hospitals. Furthermore, under the Free Election Modality, FONASA beneficiaries in groups B, C, and D can obtain a partial voucher from FONASA by making an out-of-packet payment for private health care from accredited providers.

Resources for FONASA to cover the cost of the AUGE plan come from a temporary increase in the consumer tax from 18% to 19%, a tobacco tax, customs revenues, and the sale of the state’s minority shares in public health enterprises. The AUGE Plan only takes up 23% of the general budget set aside for service provision. AUGE services are free for those in categories A and B. Enrollees in categories C and D must in principle pay a copayment equal to 20% of the cost of the service. After a yearly copayment limit based on income is reached, 100% of services are covered for those in categories C and D. To date, however, copayments have seldom been collected.

ISAPRE funding stems from the 7% monthly enrollee income contribution. Beneficiaries are also free to make additional contributions in order to purchase additional coverage. ISAPREs spend ten times more on per capita administration than FONASA, and despite the better health of its enrollees, they spend two times more on health care services per member. The average copayment under the ISAPREs was 35% in 2004. Although ISAPREs enrolled 22% of the population in 2004 they accounted for 43% of all health expenditures. Part of the reason for the higher expenditures is that ISAPREs rely almost exclusively on private providers that have higher cost and prices compared to public providers. These prices can be maintained because ISAPRE beneficiaries perceive the quality of private providers to be superior to the quality of public providers that are financed by FONASA.

Figure 1 highlights the primary financial flows within the Chilean health system. The top half of the figure includes the resource flows for FONASA and the bottom half demonstrates resource flows for ISAPREs.

 Financial flows within the Chilean health system

Population covered: 
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Enrollment into FONASA or ISAPREs tends to be tied to income, with lower income individuals joining FONASA and higher income individuals enrolling in an ISAPRE. In 2003, the mean income of ISAPRE members was four times higher than that of FONASA members. Formal sector workers must enroll by allocating 7% of their monthly income or pension (2,000USD monthly maximum) to healthcare. Those who do not work in the formal sector have the option to enroll by allocating 7% of their monthly income, but are not required to do so. These groups can enroll with either FONASA or an ISAPRE of their choice. The indigent and the unemployed are entitled to free coverage by FONASA.

Enrollment into FONASA or ISAPREs tends to be tied to income, with lower income individuals joining FONASA and higher income individuals enrolling in an ISAPRE. In 2003, the mean income of ISAPRE members was four times higher than that of FONASA members. Formal sector workers must enroll by allocating 7% of their monthly income or pension (2,000USD monthly maximum) to healthcare. Those who do not work in the formal sector have the option to enroll by allocating 7% of their monthly income, but are not required to do so. These groups can enroll with either FONASA or an ISAPRE of their choice. The indigent and the unemployed are entitled to free coverage by FONASA.

FONASA divides its beneficiary population into four categories based on income. Category A is composed of the indigent, category B is composed of the very low income population, category C is composed of the lower-middle income population, and category D is composed of the higher-middle income population. Copayment rates are based on these categories.

In 2005, FONASA enrollees numbered 11,329,481, about 70% of the population. ISAPRE enrollees accounted for 2,660,338 during the same year, equaling 17% of the population. In 2006 there were 15 ISAPREs, but over two thirds of members belonged to the three largest: Banmedica, Consalud, and ING Salud. Open ISAPREs are available to the population at large, while closed ISAPREs are only available to particular groups of individuals such as professional associations.

Table 1: Individuals covered per category

InsurerIndividuals coveredPopulation covered (%)
FONASA11,329,48169.65
Open ISAPREs2,521,44415.50
Closed ISAPREs138,8940.85
Uninsured1,701,64810.46
Others575,7713.54
Total population16,267,278100.00

Source: Bitran, R., Urcullo, G., 106

Benefits package: 
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The Explicit Health Guarantee (GES) laws contain provisions for basic primary care, emergency care, and targeted health problems. Primary care coverage includes preventative and curative services provided by a physician and a family medicine team. Acute illnesses, preventative health care, health screenings, special programs for mental and cardiovascular health, specialist referrals, and home visits are all part of the primary care menu.

The Explicit Health Guarantee (GES) laws contain provisions for basic primary care, emergency care, and targeted health problems. Primary care coverage includes preventative and curative services provided by a physician and a family medicine team. Acute illnesses, preventative health care, health screenings, special programs for mental and cardiovascular health, specialist referrals, and home visits are all part of the primary care menu. Emergency care is guaranteed through a network of facilities covering the entire country. Emergency services provided include pre-hospital care, transportation, diagnostic care, stabilization, and treatment of life-threatening situations. ISAPREs must offer the same benefits covered under the GES. Beyond this, they are free to provide additional coverage to those who wish to purchase it. As of 2008, there were over 10,000 plans available.

Coverage for targeted health problems is assured through the AUGE plan for both FONASA and ISAPRE enrollees. Table 2 outlines the health problems that are included in the plan.

Table 2: AUGE health problems

200520062007
No.Health problemNo.Health problemNo.Health problem
1.End-stage renal disease26.Preventative cholecystectomy for gallbladder cancer41.Hearing loss in individuals over 65
2.Operable congenital cardiopathies in children under 15 years27.Gastric cancer42.Leukemia in adults
3. Cervical uterine cancer28.Prostate cancer43Eye trauma
4.Pain relief and palliative care for advanced cancer29.Refractive disorders in individuals over 65 years44.Cystic fibrosis
5.Acute myocardial infarction30.Strabismus in children under 9 years45.Severe burns
6.Type I diabetes mellitus31.Diabetic retinopathy46.Drug and alcohol dependence in adolescents from 10 to 19 years
7.Type II diabetes mellitus32.Detached retina47.Complete prenatal and delivery care
8.Breast cancer in individuals over 15 years33.Hemophilia48.Rheumatoid arthritis
9.Spinal defects34.Depression in individuals over 15 years49.Mild and moderate osteoarthritis of hip in individuals over 60 years; mild and moderate osteoarthritis of knee in individuals over 65 years
10.Surgical treatment for scoliosis in individuals under 25 years35.Benign prostatic hyperplasia50.Ruptured aneurysms; ruptured ateriovenous malformations
11.Surgical treatments for cataracts36.Acute cerebrovascular accident51.Central nervous system tumors and cysts
12.Total hip replacement for advanced osteoarthritis in individuals over 65 years37.Chronic obstructive pulmonary disease52.Herniated disks
13.Cleft palate38.Bronchial asthma53.Dental emergencies
14.Cancer in children under 15 years39.Infant respiratory distress syndrome54.Dental care for adults over 65 years
15.Schizophrenia40.Orthotics and technical support for individuals over 65 years55.Multitrauma
16.Testicular cancer in individuals over 15 years56.Traumatic brain injury
17.Lymphoma in individuals over 15 years
18.Acquired Immunodeficiency Syndrome (AIDS) / HIV
19.Outpatient treatment for acute respiratory infection in children under 5 years
20.Walking pneumonia in individuals over 65 years
21.Primary (essential) arterial hypertension in individuals over 15 years
22.Nonrefractory epilepsy in children 1 to 15 years
23.Complete oral health care for children under 6 years: prevention and education
24.Prematurity - Retinopathy of Prematurity - Hypoacusia Prematurity
25.Major conduction disorders requiring a pacemaker in individuals over 15 years

Source: Bitran, R., Urcullo, G., 105

There are also special FONASA programs such as the Catastrophic Insurance program and the Seniors program. Catastrophic Insurance covers complex and high cost diseases such as cancer, cystic fibrosis, and brain tumors. Meanwhile, the Seniors program is designed to increase the coverage of pathologies that affect seniors over the age of 65 for the Institutional Modality and seniors over 55 for the Free Election Modality. This program is free to those enrolled. Among the benefits included are prosthetics, high-cost procedures, and expedited wait-listing for certain surgeries.

Service delivery system: 
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In 1985, two modalities of health service provision were established for FONASA beneficiaries. Under the Institutional Modality (IM), FONASA beneficiaries can access the public system in order to use public hospitals. Financial coverage under this modality is dependent upon the income of the beneficiary. Under the Free Election Modality (FEM), FONASA beneficiaries can opt to use private health service providers that have entered into agreements with FONASA. Financial coverage under this modality depends on the category to which the health service provider is subscribed. Generally, FEM copayments are larger than IM copayments.

In 1985, two modalities of health service provision were established for FONASA beneficiaries. Under the Institutional Modality (IM), FONASA beneficiaries can access the public system in order to use public hospitals. Financial coverage under this modality is dependent upon the income of the beneficiary. Under the Free Election Modality (FEM), FONASA beneficiaries can opt to use private health service providers that have entered into agreements with FONASA. Financial coverage under this modality depends on the category to which the health service provider is subscribed. Generally, FEM copayments are larger than IM copayments.

Chile’s service delivery system is composed of 26 autonomous health authorities responsible for hospital care. Primary health care was decentralized down to the level of the municipality. In Chile, 80% of hospital beds are public. FONASA is required to purchase most of its health services from public institutions, although it does provide a subsidy to its enrollees wishing to purchase services from private providers. Public health care providers must sell most of their services to FONASA and have strict guidelines on the type and number of services they can make available to private patients or ISAPRE beneficiaries. FONASA categories B, C, and D can elect to receive care outside of the public system for a higher co-payment. Category A enrollees must receive services from the public provider system.

Of all the AUGE procedures carried out, 86% are conducted at the primary health level. Meanwhile, of the AUGE procedures for FONASA beneficiaries performed in the private sector, 90% correspond to dialysis treatment. Whenever there is a risk of falling behind on the guarantees, services must be purchased from elsewhere. For example, in the case of cancer a public hospital will normally purchase services from another public hospital. In the case of cataracts, however, a public hospital will normally purchase services from the private sector.

The AUGE plan has changed the manner in which health service delivery is viewed. In the past, supply determined how many cataract interventions were performed based on the internal capacity of the institution. But now, with certain services explicitly guaranteed, the health system has to detect the prevalence of cataracts and determine how to best reorganize resources in order to satisfy demand.

Chile has also instituted a free telephone line that responds to inquiries regarding a number of different health situations. It is staffed by a team that has the ability to provide medical advice and set up consultations. This service has led to a significant reduction in emergency room visits, as problems that are deemed non-urgent can be resolved through primary care personnel.

Finally, it is worth noting that ISAPREs are not allowed to provide health services directly to their enrollees. They must rely on horizontal networks of health care providers and hospitals for the delivery of services.

Institutional structures: 
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The National Health Fund (FONASA) is a public insurer responsible for providing health coverage to persons who contribute 7% of their monthly wages as well as to the indigent. FONASA provides health coverage to all its beneficiaries without exclusions based on age, sex, income, number of family members, or preexisting conditions. It is also responsible for financing both the Institutional and Free Election modalities by collecting, administering, and distributing health resources. FONASA also finances the purchase of equipment, instruments, implements and other infrastructure elements that are needed for the public health system.

The National Health Fund (FONASA) is a public insurer responsible for providing health coverage to persons who contribute 7% of their monthly wages as well as to the indigent. FONASA provides health coverage to all its beneficiaries without exclusions based on age, sex, income, number of family members, or preexisting conditions. It is also responsible for financing both the Institutional and Free Election modalities by collecting, administering, and distributing health resources. FONASA also finances the purchase of equipment, instruments, implements and other infrastructure elements that are needed for the public health system.

The Ministry of Health (MOH) exercises many responsibilities within the health system: (1) it formulates, controls, and evaluates general plans and programs within the health sector; (2) it defines national health objectives; (3) it directs all national activities related to the provision of health activities; (4) it establishes general norms relating to technical, administrative, and financial matters within the health sector; (5) it monitors the fulfillment of health norms through the Regional Ministerial Health Secretariats; (6) it evaluates the states of public health issues; and (7) it formulates, evaluates, and implements the Universal Access with Explicit Guarantees (AUGE) plan.

The National Health Superintendence was established in 2005 and charged with the responsibility of watching and controlling FONASA and the ISAPREs. Its primary tasks are to license both public and private health providers and to oversee AUGE compliance by both FONASA and the ISAPREs.

The Health Insurance Institutions (ISAPREs) are for-profit or non-profit private insurers that must offer a minimum benefits package that is equal to the benefits covered under GES. However, they are free to provide additional coverage to those willing to purchase it.

 Chile's Health System, 2006

Provider payment mechanisms: 
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FONASA transfers money to public health care providers through fee-for-service mechanisms for certain services and groups of services that are assigned a fixed value. The remainder of resources for health care services and facility maintenance in the public sector is transferred based on historical budgets, which tend to be antiquated and therefore undervalued. In terms of transfer mechanisms, FONASA funds are not transferred directly to the individual health care providers.

FONASA transfers money to public health care providers through fee-for-service mechanisms for certain services and groups of services that are assigned a fixed value. The remainder of resources for health care services and facility maintenance in the public sector is transferred based on historical budgets, which tend to be antiquated and therefore undervalued. In terms of transfer mechanisms, FONASA funds are not transferred directly to the individual health care providers. Rather, funds are transferred to the regional health entity (under the purview of the MOH) for the geographical region where the provider is located. The regional health entity pools the funds for all public health care providers in the area and then is charged with determining the budget of each provider. FONASA also transfers funds prospectively to the regional health entities for primary care facilities through capitation mechanisms. These funds are based on a region’s health care needs and its disease burden.

FONASA and the ISAPREs transfer funds to private providers on a retrospective fee-for-service basis. Private providers always receive funds through fee-for-service mechanisms, and they have no ceiling on income, regardless of whether the source of the funds is FONASA or an ISAPRE.

Regulation: 
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The principal regulatory body is the National Health Superintendence, which is composed of two separate intendancies. The Intendancy for Funds and Health Insurance is responsible for auditing the ISAPRES, FONASA, and the AUGE regime. Its regulatory functions focus on beneficiary protection, financial solvency of the ISAPREs, and compliance by both FONASA and the ISAPREs. It can inspect all operations, goods, accounting books, files, and documents from ISAPREs and request clarifications.

The principal regulatory body is the National Health Superintendence, which is composed of two separate intendancies. The Intendancy for Funds and Health Insurance is responsible for auditing the ISAPRES, FONASA, and the AUGE regime. Its regulatory functions focus on beneficiary protection, financial solvency of the ISAPREs, and compliance by both FONASA and the ISAPREs. It can inspect all operations, goods, accounting books, files, and documents from ISAPREs and request clarifications. It also has the authority to access ISAPRE financial statements at any time. The Intendancy for Providers, on the other hand, is responsible for auditing private and public health service providers.

Results of the reform: 
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Health indicators have improved significantly since 1990. Infant mortality per 1,000 live births has fallen by 55%, from 18 in 1990 to 8 in 2006. Under-five mortality per 1,000 live births has fallen by 57%, from 21 in 1990 to 9 in 2006. Furthermore, life expectancy has increased from 72 in 1990 to 78 in 2006, making Chile country with the highest life expectancy in South America.

Preliminary results from the AUGE plan seem to indicate that it is producing positive results.

Health indicators have improved significantly since 1990. Infant mortality per 1,000 live births has fallen by 55%, from 18 in 1990 to 8 in 2006. Under-five mortality per 1,000 live births has fallen by 57%, from 21 in 1990 to 9 in 2006. Furthermore, life expectancy has increased from 72 in 1990 to 78 in 2006, making Chile country with the highest life expectancy in South America.

Preliminary results from the AUGE plan seem to indicate that it is producing positive results. As of 2009, 92% of Chileans thought the AUGE plan was equal to or better than the pre-2005 health system. Furthermore, 79% of those who had benefited from the plan were satisfied. Tangibly speaking, the AUGE plan has increased the supply of important interventions to those who need them. Cataract interventions exemplify this trend. In 2000, no more than 1,000 cataract interventions were performed. In 2007, as a result of the AUGE guarantees, 32,000 cataract interventions were performed. In regards to access, the percent of Chileans who feel that they don’t have a health system that they can access has dropped from 12.3% in 1990 to 5.2% in 2006. Finally, a recent study has found that the new prevention protocols that are part of the AUGE plan have made it possible to detect some forms of cancer earlier and thus provide more timely treatment, leading to falling mortality rates. This study also highlighted that hospitalization rates for chronic diseases such as HIV/AIDS, hypertension, and type 1 diabetes have declined while hospitalization rates for services like depression have increased. The former can be attributed to the improvement in access to diagnosis, treatment, and financial coverage which leads to better ambulatory treatment, while the latter can be attributed to improved accessibility to previously unavailable services.

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