Coronavirus in Chile ECONOMY

Private Health Companies to Raise Prices Amid Pandemic

In the middle of the COVID-19 pandemic, the private health companies have said they are going to raise the prices of their services nearly 5%.  However, the government managed to reach a deal that would freeze the current prices for three months. The decision was met with disapproval across the political spectrum, with some politicians declaring it an “unacceptable abuse.”

After failing to reach a deal to freeze their prices, seven private health companies, known as Provisional Health Institutions (ISAPRES), will raise their prices in July. The Fundación y Cruz Del Norte ISAPRES will not be raising their prices, making Isalud the only private ISAPRE to raise its payment. The ISAPRES and the percentage that they will be raising their base prices are:

  • Colmena: 4.9%
  • Vida Tres: 4.9%
  • Banmédica: 4.9%
  • Nueva Masvida: 4.7%
  • Cruz Blanca: 4.0%
  • Consalud: 4.0%
  • Isalud: 3.0%

Those who are affiliated with these ISAPRES will have a choice between paying the new prices or accepting an alternative plan that will be presented by the ISAPRES. Health Superintendent Patricio Fernández said, “The superintendence lacks the legal capabilities to force an ISAPRE to modify its base price.” He added that Congress was the only body capable of reversing this decision.

President Sebastián Piñera and Health Minister Jaime Mañalich, however, managed to broker a deal with the ISAPRES and postponed the price hike three months.

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“An Unacceptable Abuse”

The decision of the ISAPRES was met with disapproval from politicians on both sides of the aisle. The current president of the Senate, Jaime Quintana, tweeted, “While the income of millions is reduced due to the [coronavirus] crisis, the ISAPRES raise their prices yet again.”

Former Presidential Candidate Carolina Goic similarly tweeted “Let’s hope they change their announcement due to their ethics instead of shielding themselves in an unreleased bill.”

From the ruling coalition, Representative Diego Schalper tweeted, “How can they have so little empathy?” While Representative Erika Olivera appealed to the ISAPRES by tweeting, “We are experiencing a huge health crisis in the country and the world, it is everyone’s duty to take care of our citizens.”

From the opposition, representative Catalina Pérez tweeted, “This is unsurprising,” and urged the rest of the opposition to move along with a universal healthcare plan. Representative Gabriel Boric simply called the ISAPRES miserable and said, “we will do everything we can to prevent it.”

Some politicians went on to urge Piñera to undo the decision. Former presidential candidate Tomás Hirsch tweeted, “Does Sebastián Piñera approve of this? The state of Catastrophe allows him to intervene and fix the prices of private healthcare.” Representative Camila Vallejo echoed Hirsch’s remarks, tweeting, “President Piñera can use his power and stop the increase. It is time to demonstrate that he cares about the people and not just about his friends.”

In the end, Piñera managed to postpone the Price Hike.

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What are ISAPRES?

The current Chilean health system was created by Article 19 in the 1980 Constitution. This article states that every Chilean citizen will have a right to healthcare and that they will have a right to choose the healthcare system they want, whether it is private or public.

In 1981, the Ministry of Health officially created a mixed system, consisting of a public government funded healthcare option, which is the Fondo National de la Salud, known as FONASA; and a private option, largely left to the free market.

The ISAPRES fall into two categories, public and private. Private ISAPRES are company-specific, and the only way to join one is by working for the company, whereas anyone can join a public ISAPRE as long as he or she has the ability to pay and isn’t rejected by the ISAPRE for some other reason besides inability to pay.

ISAPRES work by charging 7% of a participant’s monthly income, as well as additional charges depending on the plan. In order to join one, it is necessary to sign a contract that lays out the plan and prices. Before drafting an individual plan, the ISAPRE checks the applicant’s health records for any preexisting conditions, which might result in higher costs related to the plan.

In contrast, FONASA only charges 7% of a participant’s monthly income and does not discriminate due to preexisting conditions. However, it does not offer reimbursement for medical expenses, while ISAPRES do.

When COVID-19 was declared a pandemic by the World Health Organization, Chile’s Health Superintendent said that the ISAPRES could not exclude coronavirus treatment from their current plans, meaning that they couldn’t charge more for treating COVID-19 or for testing for it.

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