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Improving health system efficiency: Chile: Implementation of the Universal Access with Explicit Guarantees (AUGE) reform

6 octobre 2015 Organisation mondiale de la santé

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IMPROVING HEALTH SYSTEM EFFICIENCY

CHILE Implementation of the Universal Access with Explicit Guarantees (AUGE) reform Ismael Aguilera Antonio Infante Héctor Orme~ no Carlos Urriola

Health Systems Governance & Financing

IMPROVING HEALTH SYSTEM EFFICIENCY

CHILE Implementation of the Universal Access with Explicit Guarantees (AUGE) reform Ismael Aguilera Antonio Infante Héctor Orme~ no Carlos Urriola

Health Systems Governance & Financing

WHO/HIS/HGF/CaseStudy/15.3 © World Health Organization 2015 All rights reserved. Publications of the World Health Organization are available on the WHO website (www.who.int) or can be purchased from WHO Press, World Health Organization, 20 Avenue Appia, 1211 Geneva 27, Switzerland (tel.: +41 22 791 3264; fax: +41 22 791 4857; e-mail: bookorders@who.int). Requests for permission to reproduce or translate WHO publications –whether for sale or for non-commercial distribution– should be addressed to WHO Press through the WHO website (www.who.int/about/licensing/copyright_form/en/index.html). The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the World Health Organization concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Dotted and dashed lines on maps represent approximate border lines for which there may not yet be full agreement. The mention of specific companies or of certain manufacturers’ products does not imply that they are endorsed or recommended by the World Health Organization in preference to others of a similar nature that are not mentioned. Errors and omissions excepted, the names of proprietary products are distinguished by initial capital letters. All reasonable precautions have been taken by the World Health Organization to verify the information contained in this publication. However, the published material is being distributed without warranty of any kind, either expressed or implied. The responsibility for the interpretation and use of the material lies with the reader. In no event shall the World Health Organization be liable for damages arising from its use. The named authors alone are responsible for the views expressed in this publication.

Original graph of the cover by Paprika, France Design and layout by CommonSense / Fokion Kopanaris & Revekka Vital, Greece

IMPROVING HEALTH SYSTEM EFFICIENCY

ACKNOWLEDGEMENTS This report is produced under technical guidance of Joseph Kutzin, Coordinator for Health Financing Policy in WHO Geneva and Cristian Morales, Regional Adviser, Health Financing and Social Protection, Pan American Health Organization. The lead author of this report is Ismael Aguilera, Adviser on Administration and Financing of Health Services, the South-East district of Santiago, Chile. Co-authors are Antonio Infante, Héctor Orme~ no, and Carlos Urriola. The authors acknowledge contributions of Emilio Santelices, Rodrigo Salinas, Manuel Inostroza, Gonzalo Simﬁn, Carmen Aravena, Elba Estefan, Patricia Navarrete y Rodrigo Callejas by participating in the interview. The views presented in the report are not necessarily the views of WHO. David Bramley edited the report. Cover design and layout services were provided by Fokion Kopanaris and Revekka Vital. Funding from the EU–WHO Partnership for Universal Health Coverage and the Bill & Melinda Gates Foundation towards preparation of this report is gratefully acknowledged.

CONTENTS

EXECUTIVE SUMMARY .......................................................................................................................... 4 1. INTRODUCTION .............................................................................................................................. 6 2. AUGE REFORM DESCRIPTION............................................................................................................ 7 2.1 Historical Background of the Chilean Healthcare System ............................................................ 7 2.2 AUGE reform architecture ........................................................................................................ 10 2.3 Implementation of the Reform.................................................................................................. 19 3. MAIN RESULTS OF THE AUGE REFORM .......................................................................................... 24 3.1 AUGE’s efficiency .................................................................................................................... 24 3.2 Impact on several Fields .......................................................................................................... 27 4. CONSECUENCES IN PRIVATE HEALTH INSURANCE .......................................................................... 39 4.1 AUGE gap in ISAPREs................................................................................................................ 39 4.2 Do ISAPREs under-provide AUGE services or their beneficiaries do not demand them? ................ 41 5.CONCLUSIONS ................................................................................................................................ 45 5.1 Recommendations.................................................................................................................... 46 CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

6. REFERENCES .................................................................................................................................... 47 7. ANNEXES ........................................................................................................................................ 50 Annex 1: List of interviewees .......................................................................................................... 50 Annex 2: Interviews guidelines ........................................................................................................ 51 Annex 3: Disease covered by AUGE and period of incorporation ...................................................... 52

EXECUTIVE SUMMARY

The purpose of this study is to share a successful Chilean experience in the field of health coverage, identifying what works and what does not. This will contribute to the PAHO/WHO discussion about universal health coverage in the Americas. This report deals with the reform of the Universal Access to Explicit Guaranteed Entitlements (AUGE in Spanish) process which was drawn up at the beginning of the 2000s, implemented in 2005 and is still in force. It has had a positive impact on the efficiency of the Chilean health system throughout four presidential governments. For the study, eight key informants related to AUGE were surveyed and there was a comprehensive review of the literature on relevant topics. The AUGE plan prioritizes and guarantees a number of issues or health conditions that are considered to be priorities (cancer, congenital heart diseases, high blood pressure, life-threatening injuries, premature labour and others) based on people’s needs. According to the needs, diagnosis, treatment and rehabilitation are defined for each of the 80 priority issues. The target group of each issue has the right of access, with a defined maximum time for the delivery of the service; the right to financial protection, which regulates the co-payment according to the type of health insurance that the beneficiary may have; and right to quality, which means receiving health care that is guaranteed by the registered provider who is accredited according to the law. The implementation of the AUGE reform, was probably the most complex and ambitious process that Chilean public health has ever faced, involving various change management strategies. The most important factor was that discussion of the reform took place in the parliament. In order to facilitate the discussion, some topics such as regulation of the health-care market and the insurance, were omitted as they might have closed the door to “solidarity” measures. By not including management measures and payment mechanisms in the discussion, the focus was on solving priority care issues and procedures, which resulted in gradual implementation based on scientific evidence. As a consequence, AUGE was rapidly approved with the participation of all stakeholders. The funding source for AUGE was a 1% increase in value added tax. Originally, a compensation fund was considered; however, this was not approved by the parliament so, in order to ensure approval of the reform, the idea of a compensation fund was dropped. This detracted from the principle of equity, but the equitable impact was taken into account in the percentage of co-payment in relation to health insurance. Thus copayment is not required of beneficiaries of public insurance (FONASA) with low or no ability to pay. In addition, co-payment amounts were ranked with higher payments made by persons with higher incomes who are affiliated to FONASA or to private health insurance (ISAPRE), in which case they have a 20% charge of copayment for the service provided. Each service is associated to a guaranteed health issue and its value has been fixed independently of the health-care provider. AUGE improves efficiency of the Chilean health system, since the resources (public expenditure) are used on health priorities that have a high impact in reducing the years of potential life lost (outcome). This is accomplished with protocols that define how to solve the health problems associated with the AUGE’S services. AUGE has shown that productivity in 19 out of 56 prioritized services increased by 23.61% on average (each with p-value < 0.1) and decreased by 4.32% in 10 services.

IMPROVING HEALTH SYSTEM EFFICIENCY

AUGE impacts that are reviewed correspond to the use of priority services, waiting lists, quality and opportunity of services, equity, effects on Chilean people’s health care and the State budget. Important results include: ñ Over time, the frequency of health concerns that correspond to the ones that are guaranteed, and the increase in use of services, indicate that the original prioritization was effective. ñ There has been a reduction in waiting times but not in the size of the queues. However, it is important that the reform has highlighted this issue which also applies to non-AUGE pathologies. ñ With regard to the quality of services, we can see that for FONASA affiliates there is no significant change. For ISAPRE affiliates there has been an 8% improvement. Regarding the opportunities for services, FONASA affiliates have reduced dissatisfaction and ISAPRE affiliates have increased their satisfaction. ñ In terms of equity, there has been a 20% increase in coverage of the lowest income quintile. ñ The cost of AUGE decreased slightly compared to the total expenditure on health. The increase in productivity and cost-containment has generated more efficiency in health-system spending and the State budget. Another impact found during this case study is the use of technologies. Public investment has permitted the strengthening of the national network of treatments and the use of more precise and sophisticated equipment. Thus, it has had a democratizing effect on the use of medical technology, as a greater number of the population may now have access to it. This investment was made through a leasing purchase system, which had at least two advantages: it made it possible to replace the equipment for a more modern version after 7 years, and the contract made regular maintenance and servicing mandatory which guaranteed the operation of the equipment for the whole year. As for private health insurance, it became apparent that ISAPRE have provided about one fifth in comparison with what FONASA has given. A study shows that about 10% is covered by ISAPRE’s plan for priority services and almost 15% has been out-of-pocket payments by ISAPRE beneficiaries. The main reasons why ISAPRE affiliates chose not to be covered by AUGE are: (i) they preferred another doctor or institution, or wished to continue with their usual doctor (41%), and (ii) they decided not to wait to obtain medical advice through AUGE but wanted to solve their problems more quickly (13%). This suggests that ISAPRE beneficiaries are demanding more quality and timeliness in using AUGE’s prioritized services. In short, the AUGE reform had a modernizing effect in several fields related to public health-care services in Chile. This makes it a successful and important case that should be considered in efforts to achieve universal health care coverage in the Americas. CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

INTRODUCTION

In general terms, the aim of the study was to share successful experiences in the health care coverage of different countries from a perspective of financial efficiency in order to contribute to a global review of what works and what does not in achieving universal health care coverage (UHC). The study consists of at least three lines of development. It provides a wide and comprehensive description of AUGE (Chapter 2), gives evidence of the achievements of this health-care reform (Chapter 3), and specifies the effects that this has had on private health care insurance (Chapter 4). Chapter 5 provides the main conclusions of the report. Each of the sections include the interviews with key informants related to AUGE: four members of the board of directors of Health-care Services (two from the metropolitan area and two from other areas) and two public health specialists who had experience with AUGE. We are grateful for the participation of those who were interviewed: Emilio Santelices, Rodrigo Salinas, Manuel Inostroza, Gonzalo Simﬁn, Carmen Aravena, Elba Estefan, Patricia Navarrete and Rodrigo Callejas.

IMPROVING HEALTH SYSTEM EFFICIENCY

DESCRIPTION OF THE AUGE REFORM

2.1 Historical background of the Chilean Health-care System Between 1900 and 1950, the health-care system was formed for workers and employees, while the poor received medical attention through different initiatives of State public welfare. In the 1960s and early 1970s, there was strong investment in infrastructure and services which had a bearing on variables that led to a positive effect on human development (Ranis & Stewart, 2002). Important investments in education and progressive increases in the coverage of drinking-water and sewer systems, along with the consolidation of the National Health System (SNS in Spanish), explain the sustained decline in infant mortality which is shown in Figure 2-1. Among the remarkable measures of the military government (1973–1900) were nutritional programmes aimed at pregnant women and undernourished minors under 6 years of age or at risk of malnutrition, along with a network of community centres for hospitalization and recovery of undernourished children. This partly explains why infant mortality continued falling until 1984, as it is shown in Figure 2-1.

Figure 2-1. Infant mortality and per capita income (US$1993) Chile 1960-2003 70 60 50 40 CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

140 120 100 80 60 40 20 0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Dollars per capita / left axis Infant mortality / right axis

30 20 10 0

Source: Chilean Ministry of Health (MINSAL).

Health reforms during the military government were founded in the idea of the subsidiary role of the State, which aimed to foster private initiative and leave to the State the provision of public goods and minimal welfare conditions for the most in need (Larroulet, 1984). This reduced the state’s contribution and left health financing for those male or female workers with an employment contract to be paid from an insurance costing a fixed 7% of monthly income. Moreover, private health funding through a Chilean health plan provider (ISAPRE in Spanish) was allowed. The State’s health financing funds are administered by the Health National Fund (FONASA in Spanish) for those citizens who were not profitable for the private sector.

In that same period, a programme of investment was launched whereby the network of primary care centres was practically doubled. In the field of equipment, there was investment in complex imaging networks, radiotherapy centres and improvements in laboratories and equipment.

Figure 2-2. Strengthening of the public care network, investments 1990-2009 (Chilean pesos at 2009 value)1 180 000 Million of Chillean pesos ($)

160 000 140 000 120 000 100 000 80 000 60 000 40 000 20 000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Investment and Equipment Programme Source: Ministry of Health.

Between 1991 and 1993 the Opportunities of Attention Programme was launched, which contributed to first efforts to solve problems relating to waiting lists, adult and infant surgery, ophthalmology, orthopaedic surgery and otolaryngology. However, the programme did not have continuity and the effort was revived several years later. The FONASA study named “Opportunity in Attention Programme” of 1998 estimated that some 25 619 patients were diagnosed and medically stable and waited 6 months on average. At the beginning of this century, a reform process was initiated with the purpose of strengthening public health policies with a long-term perspective and having an impact on the Chilean population’s health. Two types of segmentation were noticed: ñ Segmentation by income: At the beginning of the new millennium, less than the 66% of the population had FONASA insurance and nearly the 20% was in ISAPREs. ñ Segmentation by risk: The risk selection operating in the private sector produced a segmentation of the population according to the expected cost of an individual. This produced a deep inequity which can be seen in Table 2.1 which shows how the risk of dying due to cancer and other diseases varies according to the years of academic background of the population. Within this context, the administration of President Lagos took measures intended to reform the health system, including some that we find in the AUGE reform, such as: (i) Health Objectives Installation 20002010 2, (ii) Health Reforms Definition3 and (ii) five draft laws.4 IMPROVING HEALTH SYSTEM EFFICIENCY

In 2009, 560 Chilean pesos were equal to US$ 1. The health objectives are focused on improving levels of health equity, facing the challenges of an ageing population and changes in society, and meeting the expectations of users. 3 This has the following objectives: to improve population health, prolonging life and years of life free of disease, reducing health inequalities and improving the health of disadvantaged groups. 4 The five draft laws were: (i) financing for the implementation of the health reform through the 1% increase in value added tax, (ii) separation of functions of the Ministry of Health and its undersecretariats’ public health and health care networks, (iii) the AUGE Law, which is studied in depth in the next chapter, (iv) the Law of rights and duties of people in health services, which regulates aspects related to discrimination, access to information on treatment and health conditions and confidentiality, and (v) the ISAPRES Oversight Act, which also defines the participation of the private sector in AUGE. 1 2

Table 2-1a. Mortality rate, cause-specific and by level of education, adjusted for age, Chile 1997–1999 Rate x 100 000 Women 20 years and over Gallblader cancer Cervical cancer Men 20 years and over Diabetes Cirrhosis Homicides None (1) 44.9 22.0 None (1) 37.7 22.9 0.8 1 to 8 (2) 33.0 19.6 1 to 8 (2) 33.0 20.3 0.4 9 to 12 (3) 14.6 11.0 9 to 12 (3) 11.0 7.7 0.4 13 and over (4) 6.8 4.5 13 and over (4) 6.2 4.3 0.1 Total 27.0 15.3 Total 25.0 15.0 0.3 Relative risk (1) / (4) 6.6 4.9 Relative risk (1) / (4) 6.1 5.3 8.0

Source: Revista Universitaria No. 73, 2001

2.1.1 Aditional coverage of catastrophic diseases (CAEC) At that time the ISAPRE initiated efforts for self-regulation, so in 2000 with the aim of improving their public image ISAPRE agreed to offer an additional coverage called Additional Coverage of Catastrophic Diseases (known as CAEC in Chile). This coverage is nowadays given by some ISAPREs which permit the financing, once certain requirements have been fulfilled, of up to 100% of the expenses arising from high-cost treatments, both in hospital or as outpatient within the country. The coverage of CAEC is activated when a diagnosis may become a catastrophic disease in terms of the cost of the services which will be required. This coverage operates once the amount of co-payments has exceeded the deductible amount, which is between 60 and 126 UF 5 for each catastrophic disease or diagnosis. It is notable that the conditions of CAEC require that the medical attention is “closed” – i.e. it may be given only by providers within the CAEC network, and is an option under the complementary health plan. This way the beneficiary can freely choose to use either the CAEC network or his/her current health plan. The ISAPREs do not cover, through CAEC, services associated with health problems that are not covered by AUGE. Nevertheless, CAEC does cover services that are not in the specific list of AUGE’s provisions but are in the clinical guidelines of the Ministry of Health if the patient has the complementary health plan coverage. This was confirmed by an expert of the AUGE council. CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

2.1.2 The current health system in Chile, 2010-2014 Nowadays, the Chilean health system is still characterized as a mixed system of health insurances – one a public health insurance and the other private. The public health insurance is administered by FONASA and is currently the insurance with the widest coverage in terms of beneficiaries. According to statistics generated by FONASA in 2012 (Table 2-1b), 76.5% of Chilean people are members of FONASA. FONASA financing is based on its beneficiaries’ contributions (7% of gross remuneration) and on a State subsidy that permits FONASA to cover the costs of those beneficiaries with low or no ability to pay at all.

Table 2-1b. Participation in the Chilean social protection system of health, 2012 Insurance FONASA ISAPRE

Beneficiaries 13 377 082 3 064 076 1 038 565 17 479 723

Percentage 76.5 % 17.5 % 5.9 %

Others Total

Source: Statistics Report, FONASA, 2012.

1UF = 23 691.47 Chilean pesos (17 April 2014); US$ 1 = 555.84 Chilean pesos (19 April 2014). 60 UF = US$ 2557 / 126 UF = US$ 5370.

FONASA has four types of insurance: ñ Class A and B insurances cover homeless people or those with low incomes, for whom the State covers the costs. ñ Class C and D insurances cover people who contribute with their own funds, for which the State provides a low subsidy as contribution. The second type of insurance that is given in Chile is private insurance. In Chile private health insurances are provided by ISAPREs and in 2012 these covered 17.5% of the Chilean population. The ISAPRE insurances receive no subsidy from the State. It is also important to note that ISAPREs are financed by the 7% contribution of each user’s gross remuneration, though the users may contribute a higher percentage if they wish to.

2.2 AUGE reform architecture The AUGE reform has four dimensions that are summarized in Figure 2-3.

Figure 2-3. Dimensions of the reform of Universal Access to Explicit Guaranteed Entitlements (AUGE) 1. AUGE reform value proposition ñ Aim ñ Target group ñ Guaranteed rights ñ Guaranteed pathologies ñ Requirements 2. Processes and resources 3. Organizational of the AUGE reform architecture ñ Processes ñ Monetary resources ñ Physical resources ñ Functional diagram 4. Regulations, policies and other instruments ñ Law No. 19.966 ñ Decree No. 121 ñ Guarantees decree ñ Clinical guidelines ñ Sanctions for noncompliance

Source: Compiled by the authors.

2.2.1 Value proposition of AUGE reform 2.2.1.1 Reforms aims The main goal of the AUGE reform is prioritization in the use of resources in the public and private sectors, generating the right to universal access and guaranteeing treatment for the most relevant health problems. Additionally, the AUGE reform has a series of specific goals, including: ñ giving priority to a health policy that focuses on prevention and target populations; ñ reducing the equity gap between the most vulnerable and the well-off sectors, as well as between rural and urban areas; ñ providing guaranteed treatment in terms of opportunity, quality and financial protection for an important number of high-impact health issues; IMPROVING HEALTH SYSTEM EFFICIENCY

ñ reducing the opportunity gap between the public and private systems of insurance, which have co-existed since the end of the 1970s. There was consensus among those persons interviewed that AUGE has maintained the original idea of prioritization with the focus on guaranteed health attention. 2.2.1.2 Target group The AUGE reform beneficiaries are the entire Chilean people and the target group of each guarantee is defined by age or the characteristics of each disease.

2.2.1.3 Entitlements guaranteed by the AUGE reform The rights that the AUGE reform guarantees are defined as access, opportunity, financial protection, and quality.

Table 2-2a. Entitlements guaranteed by AUGE Guarantee Access Explanation This right ensures the provision of the guaranteed health services by FONASA and/or ISAPREs in the manner and according to the conditions stipulated by the corresponding Decree for each of AUGE’s issues. This is the right to receive guaranteed treatment within the maximum deadline, in the manner and according to the conditions stipulated by the corresponding Decree for each of the AUGE’s issues. This right determines the amount to be paid for the treatment the patient receives, according to the AUGE tariff, the regulations that rule the calculation of copayment and the authorized maximum limits. (The co-payment of the cost of service is: zero for the affiliates of FONASA classes A and B, 10% for FONASA class C, and 20% for FONASA class D and for persons affiliated to ISAPREs). This is the right to obtain the guaranteed health treatment by a registered provider or by one accredited by Law No. 19,937.

Opportunity

Financial protection

Quality

Source: FONASA, translated from: https://www.fonasa.cl/portal_fonasa/site/artic/20140622/pags/20140622114645.html (accessed 13 may 2015).

Additional financial protection (Ministry of Health, 2012) is a specification of the afore-mentioned warranties. It is part of the financial protection warranty in that 100% coverage of co-payments is established if the annual deductible amount has been exceeded with the sum of the 20% of the co-payments associated with an AUGE health issue. The deductible amount will depend on the economic level of the beneficiary, the number of health issues that he/she has, and the type of membership. 2.2.1.4 Diseases covered by the AUGE plan The AUGE reform has involved an increasing process in terms of coverage of diseases. It began in 2005 with 25 health issues and ended in 2013 with 80 ones. The diseases are listed in Annex 3 by incorporation period and additional requirements. 2.2.1.5 Requirements for access to the guarantees According to the law, the requirements that must be fulfilled to obtain access to the benefits of the AUGE reform are: ñ The patient must be a FONASA or ISAPRE beneficiary. ñ The disease or health issue must be included in AUGE. ñ The patient must comply with the special conditions on age and other health factors, as defined for each of the AUGE plan pathologies. ñ The patient must go to the providers network determined by FONASA or the ISAPRE. 2.2.2 Processes and resources of the AUGE reform 2.2.2.1 Prioritization process of the diseases in AUGE On the basis of Decree No.121 of the Ministry of Health, each phase of the prioritization process of diseases covered by AUGE is detailed.

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

Phase 1: Starting the procedure for determination of the guarantees The Ministry of Finance establishes the resources to finance treatment for the AUGE diseases through FONASA and sets the amount of the universal premium. In order to define a list of health priorities, the Undersecretary of Health determines the working groups and the requirements of the health and economic scientific studies and technical analyses. Phase 2: Studies and technical analysis of health care and economics The following studies are carried out: ñ Epidemiological studies of disease burden in order to update knowledge of the magnitude and trends of the main causes of death and disability in the population (Ministry of Health, 1996, 2007b, 2008). ñ Economic studies of existing interventions to prevent, treat or rehabilitate persons with the priority conditions, evaluating the available scientific evidence of the outcome of these interventions (Ministry of Health, 1999, 2005a, 2005c, 2007a, 2010a, 2010b). ñ Social studies focused on the needs and expectations of the population and on social preferences, designed to define the health problems to be covered (Ministry of Health, 2005b, 2009). These studies enable the priority health issues and services that can be guaranteed. Phase 3: Prioritization of health problems and associated interventions The prioritization is ordered by the degree of certainty that the intervention contributes to the survival or quality of life of those affected, discarding those interventions for which there is no evidence. Health problems are prioritized with the following variables: ñ magnitude – i.e. the number of cases related to a disease (incidence and prevalence), with numbers of deaths or years of life lost; ñ significance of the impact of the disease on the population; ñ vulnerability, understood as the sensitivity of each problem to possible interventions, whether preventive, curative or rehabilitative; ñ cost of selected interventions; ñ analysis of the potential demand for these interventions; ñ supply of interventions available in the public and private systems; ñ financial burden on households. With the information obtained, a scale is created for each of these variables. Later the health problems and the interventions associated with them are hierarchized on the scale. Phase 4: Procedure for determining the expected cost With the proposed health problems, conditions and health programmes and interventions prioritized, the cost is calculated for an average beneficiary. The Decree establishes the basic elements of the methodology for the calculation. Phase 5: Study of verification of expected cost per beneficiary The Undersecretary of Health initiates, coordinates and directs the study that will be called by national and international public tender. Preliminary results of the study are presented in a public hearing to both insurance institutions (FONASA and ISAPRE) which may make observations that must be taken into account by the implementer of the study. Whenever there is a new Decree (or changes in one) related to the AUGE diseases, the law requires that the Ministry of Health must conduct a study to verify costs for these diseases. Phase 6: Consultation of the advisory council At this stage, the proposal’s guarantees and its study of verification of expected costs are presented to the Council. The Advisory Council makes a report on the proposal within a period not exceeding 30 days and may request more background. The proposed modifications of the Advisory Council should keep costs within the

IMPROVING HEALTH SYSTEM EFFICIENCY

defined budget. Also applied at this point is the condition that the costs of a verified proposal should not differ significantly from the universal premium. Phase 7: Final formulation of guarantees The Ministries of Health and Finance proceed to prepare the final draft guarantees, taking into account the analysis of, and informed opinions about, the process. The procedure is completed with the enactment of a Supreme Decree which comes into force some 6 months later. Regarding the interviews, it should be noted that: ñ According to one specialist of the body, there is a prioritization in the health systems of all countries; the difference of AUGE is that this process is explicit and more transparent for the citizens. ñ There is a consensus among the interviewed specialists in which the prioritization has been effective. ñ Some members of the board of directors of the services area say that some health issues were inputted into the plan due to external pressure, but those cases are exceptions Figure 2-4 provides an illustration to explain the prioritization process.

Figure 2-4. AUGE prioritization AUGE is built by prioritization LIST OF ALL THE ISSUES Priorities for people The most frecuent The most severe The most expensive Priorities for the health system Is there an effective treatment? Are we able to offer it to the whole country?

DISCUSSION AND SOCIAL CONSENSUS

Explicit Guaranteed Entitlements Source: Compiled by the authors.

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

2.2.2.2 Monetary resources: Cost and financing of the AUGE premium The cost per contributor to the AUGE premium is the result of estimates made by the Ministry of Finance and the Ministry of Health. Below it the number of explicit health guarantees is shown, with the maximum amount for the universal premium and the incorporation of data into AUGE. This premium takes account of the payment of a co-payment or deductible per event, which varies according to whether the user is part of the public system or an ISAPRE. This co-payment is calculated as shown in Figure 2-5.

Figure 2-5. Number of pathologies and universal premium amount per AUGE incorporation period 90 80 70 No of diseases

4.5 4 Universal premium (UF)

3.5 3 2.5 5 1.5 1 0.5 0 Julio 2005 Julio 2006 No of dideases / left axis

60 50 40 30 20 10 0 Julio 2007 Julio 2008 Julio 2009 Universal premium (UF) / right axis

Source: Compiled by authors.

Table 2-2b. Co-payments associated with AUGE financial protection Event Section FONASA FONASA FONASA FONASA ISAPRE

Section A Homeless, people who do not have incomes

Section B Taxable monthly income lower than 210 000 Chilean pesos 0 0

Section C Taxable monthly income between 210 001 and 306 600 Chilean pesos 10% 21* Monthly contribution (up to, 122 UF)

Section D Taxable monthly income more 306 601 Chilean pesos 20% 29 Monthly contribution (up to 122 UF)

Users who have hired a private health plan

One event

Deductible 0 Maximum 0 deductible dependent worker Maximum 0 deductible independent worker Deductible 0 Maximum deductible dependent worker Maximum 0 deductible independent worker

20% 29* Monthly contribution (up to 122 UF)

1.47* Average 2* Average 2* Average monthly income monthly income monthly income (up to 122 UF) (up to 122 UF) (up to 122 UF) 10% 31* Monthly contribution (up to 181 UF) 20% 43* Monthly contribution (up to 181 UF) 20% 43* Monthly contribution (up to 181 UF) IMPROVING HEALTH SYSTEM EFFICIENCY

More than one event

2.16* Average 3* Average 3* Average monthly income monthly income monthly income (up to 181 UF) (up to 181 UF) (up to 181 UF)

Source: FONASA.

Regarding the financing model (Figure 2-6) which was designed to finance the coverage associated with the AUGE plan, it is worth mentioning that the following risks are established: ñ the State contribution towards payment of the AUGE premium for persons in public service; ñ the ISAPRE contribution and/or the contribution of the ISAPRE user; ñ the co-payment contribution per event or events. The increase in value added tax from 18% to 19% 6 should have ended on 1 January 2007. However, the new rate has been permanent since 2006. The fact that the financing of the use of the public system is through an increase in value added tax, and that a compensation fund was not created as originally intended, implied a lower equity potential; however, it did not diminish the efficacy and efficiency effects of the reform with regard to the use of fiscal resources and the impact on the health of the Chilean population.

Figure 2-6. Financing model Premium financing FONASA users Premium financing ISAPRE users

Premium of FONASA contributor has been 100% financed by the State

Premium of ISAPRE contributor was initially financed by ISAPREs, because several pathologies were already included in their health plans

It was financed by a “temporary” value added tax increase of 1 percentage point (achieving the 19%), that financed other government programmes in addition to AUGE Event financing FONASA users

Later, the cost was financed, adding gradually to the value of health plan of each contributor

Event financing ISAPRE users

Payment of a 0 -20% co-payment per event CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

Payment of a 20% co-payment per event

Maximum per event 122 UF and for more than one event 181 UF Source: FONASA, Superintendence of Health.

Maximum per event 122 UF and for more than one event 181 UF

The persons interviewed on this topic expressed the following views: ñ An expert of the AUGE council said that there had been little subsequent supervision and study of this topic. ñ A member of the board of directors of services pointed out that, for many services, the financing is not enough, especially in regions different from the Metropolitan area. ñ Another member of the board of directors of services noted that there is a strong restriction on increasing spending on public services but not in the payment of the more expensive treatments in the private sector. ñ An external specialist said that ISAPREs calculate the price that is to be charged to their users in the same way as in other plans.

Value added tax is the main consumption tax in Chile and is set at a rate of 19% of the movable and immovable property (when immovable properties are owned by a building company). The tax is also levied on services provided or used in the country and is stipulated by law.

2.2.2.3 Physical resources, centres of attention and equipment The AUGE reform determined that FONASA affiliates must use the corresponding welfare network which can be accessed through primary health care, except in urgent cases or emergencies. These affiliates can choose the health-care professional they prefer (within the network, so long as this complies with the guarantee of opportunity). FONASA affiliates may choose to receive medical attention under a free-choice option, in which case the AUGE rules do not apply. It is important to note that there has been investment in equipment, infrastructure and personnel in many public health institutions. ISAPRE affiliates must receive medical attention from one of the health providers approved by the ISAPRE to which they are affiliated. Affiliates may choose to receive medical attention according to their complementary plan, in which case AUGE does not apply. The AUGE reform has led to equipment modernization and the employment of new staff in order to examine patients to treat some pathologies. This, is because initially several health services were not able to provide the warranties effectively. However, the inclusion of new pathologies has not had the same modernizing effect on health institutions. 2.2.3 AUGE reform organizational architecture 2.2.3.1 Functional design of the AUGE plan One of the key points in the AUGE reform has been the definition and coordination of the key actors, as described below. 1. Undersecretariat of Public Health. This undersecretariat has the responsibility to propose priority issues and the best ways to deal with them in order to achieve the greatest impact. This implies defining prevention strategies, early investigation, treatment and rehabilitation, and also specifying in which locations of the welfare network and with what activities these would be accomplished in the best way possible. The undersecretariat is also in charge of elaborating the clinical treatment guidelines on the basis of scientific evidence. 2. Undersecretariat of welfare networks. This undersecretariat is responsible for adapting the design of the guarantees to the reality of the public welfare network, by nominating people to be in charge of solving the most complex issues and, with this, facilitating the fulfillment of the opportunity warranty. This implies specifying the patient flow in health services, and also specifying the need for human resources and equipment at the different points of the public welfare network. The undersecretariat also defines the criteria for health authorization, accreditation of providers and certification of health professionals, as well as the mechanisms for overseeing the quality of the entire process. 3. FONASA. This is the body in charge of administration and response to the beneficiaries of public insurance for the AUGE warranties. FONASA ensures that the adopted decisions are accessible to all beneficiaries, which involves checking the capacity for public and private offers, including infrastructure, equipment, human resources and availability of medications. It is also essential to take into account the enhancement of all services associated with a health issue guaranteed by AUGE in the clinical treatment guidelines. 4. ISAPREs. These are responsible for looking after the delivery of AUGE services to persons who have private health insurance. 5. AUGE Executive Secretariat. The secretariat coordinates AUGE and both publishes and implements the decisions of the AUGE board of directors in which all the State’s institutional actors come together. The secretariat defines the guidelines for the process of implementing AUGE. 6. Judicial Consultancy of the Ministry of Health. This is the unit of the Ministry knows the laws of the reform in detail and monitors legislative discussions. It is also responsible for drafting and undertaking the Supreme Decree of Warranties, which is the document that makes the warranties law and gives a detailed description of each of them. IMPROVING HEALTH SYSTEM EFFICIENCY

7. Bureau of Health. This is responsible for supervising all matters related to the private health sector. 8. Ministry of Finance. This ministry, through the Budget Office and the Minister’s advisers, monitors all aspects of design and implementation in terms of budget and expenses, certifying the quality of the figures and, later, including the requests in the Budget Law. 9. Advisory body. This body is in charge of responding to citizens’ requests and giving advice to the Ministry of Health on the basis of proposals regarding the analysis, evaluation and review of the AUGE warranties made by its technical teams and by scientific societies. The advisory body consists of (Ministry of Health, 2012): ñ one representative of the Chilean Academy of Medicine, nominated by the academy; ñ two representatives of the medicine faculties of the officially recognized universities in Chile, nominated by these universities according to the regulations; ñ two representatives of the economics or administration faculties of the officially recognized universities in Chile, nominated by these universities according to the regulations; ñ one representative of the chemistry and pharmacy faculties of the officially recognized universities in Chile, nominated by these universities according to the regulations; ñ three members appointed by the President of the Chilean Republic, who must ensure adequate regional representation among appointments. Members of the advisory body will stay in their position for 3 years and will be elected only once. Members of the advisory body receive no remuneration for their duties. 10. Health Services. These are the AUGE’s administrators for FONASA beneficiaries and are also responsible for adapting performance in fulfilling the warranties, which are evaluated with regard to their capacity in terms of infrastructure, equipment and human resources. They also determine the gap between availability and demand, thus showing the need for investment. Furthermore, Health Services established the patient flow for each of the issues and which will need to be complemented with services from another public or private source in case of complex health problems. This requires that services establish coordination opportunities such as the Advisory Body of the Welfare Network Integration (CIRA) and counterpart teams to the implementation at central level, known as AUGE teams. Figure 2-7 summarizes the functional-organizational structure of the AUGE reform. CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

Figure 2-7. The actors in implementation of the AUGE reform

Goverment AUGE Decree AUGE Decree and Financing AUGE Decree

Advisory Body AUGE’s proposal sending Analysis and improvements register

Parliament AUGE’s proposal sending

Universities Evidence and clinical guidelines

Ministry of Health Offer and gaps

AUGE Technical Secretariat Resources premium valuation

Scientific societies Public Health Undersecretariat Lobby

Welfare Networks Undersecretariat Optimal flows definition Clinical model

guidelines

Medical industrial complex

Treasury

Superintendence Complaints in the second instance Resources premium valuation Certifies and oversees Complaints in the second instance

Certifies and oversees

FONASA Complaints in the second instance Purchases and monitors public providers

ISAPRE Complaints in the second instance Purchases and monitors private providers

Public provider Give medical attention according to the warranties

Private provider

Expresses needs

Users and civil society

Source: Compiled by the authors.

IMPROVING HEALTH SYSTEM EFFICIENCY

2.2.4 Legal aspects, key instruments for the AUGE reform The key elements of the AUGE reform consist of the following legal and technical instruments: ñ Law No.19266 on the Explicit Health Warranties Regimen ñ Decree No.121 on Regulations for the Explicit Warranties determination ñ Decrees on explicit health warranties ñ Clinical guidelines ñ Noncompliance sanctions.

2.3 Implementation of the reform The setting up of the AUGE was probably the most complex and ambitious process that Chilean public health has ever faced since the foundation of the National Health System. Many different change management strategies were necessary for its implementation. Some of these strategies and important activities at the start of the reform are shown in Figure 2-8.

Figure 2-8: Steps in implementation of the AUGE reform STEP 1. Political design of the strategy for the reform STEP 2. Searching for similar experiences STEP 3. Definition of the change management strategies

STEP 4. Definition of the strategic design of the AUGE reform

STEP 5. Identification of the key actors and their relationships

STEP 6. Process of priritization of the AUGE diseases

STEP 7. Setting up the clinical guidelines CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

STEP 8. Setting up AUGE’s financing

STEP 9. Beginning of the staggered implementation

Source: Compiled by the authors.

2.3.1 STEP 1: Political structure of the strategy for the reform The first step to initiate the strategy for the Health Reform, among which was AUGE, was to create a team that could design it and set it up. This started when President Lagos appointed Michelle Bachelet, a prestigious female doctor, as the Minister of Health, giving her task of finding a solution to the problem of access to medical attention in municipal clinics, which had long queues during the morning. Secondly, the President created an Interministerial Committee for the Health Reform composed of the Ministers of Labour, Finance, Health and the Presidency Secretariat, and appointed Dr Hern an ã Sandoval, another prestigious doctor, as executive secretary. This committee was created independent of the Ministry of Health as it was felt that changes could not be made from within the involved ministries. This strategy was correct in the long term for the design and implementation of the reform. However, the independence of the committee from the Ministry of Health confused some of the actors in the sector, who

saw a female minister who had no real powers over what was being discussed and implemented. In addition, as the reform moved forward, the different unions headed by the Medical Association demanded direct participation in the project’s design, with the natural idea of moving ahead their particular agendas before the proposal of the reform could reach the Parliament. However, the Executive (whose vision was the one that prevailed) stated that the natural place to get closer to the proposals was, precisely, the Parliament. The parliamentary discussion was extended for two years and all of the concerned actors were able to express their views about the reform. The main discussions between the technical interministerial teams were about: ñ the cost that the provision of explicit warranties in health would have (the figure was later approved after the Ministry of Finance made its own study); ñ the role of the Bureau of Health (with the final agreement that the oversight of FONASA and ISAPREs should be the same and that citizens insured in different entities had the same rights); ñ autonomy in choosing the place of one’s hospitalization. 2.3.2 STEP 2: Searching for similar experiences In order to design the AUGE Law, national and international data were collected in an effort to ensure medical treatment for a series of health issues and to make it mandatory. Chile’s experience in introducing, and guaranteeing, compulsory primary education in 1920 was also reviewed, showing that warranties were later expanded up to 13 years of formal schooling, including secondary education and pre-school. 2.3.3 STEP 3: Definition of the change management strategies As a first step, the keys for the change management strategy were determined, as follows: 1. Settlement of the guaranteed rights of the citizens and a systemic view. A new paradigm was envisioned to reflect the guaranteed rights of citizens in order to face the epidemiological and equity challenges in Chile. This innovation implied a systemic view of the public and private sectors and of the structure of health care, taking into account the diversity of actors and variables and how they interact. The paradigm promotes welfare activities with clinical guidelines based on evidence, and includes the necessary procedures to ensure efficiency. 2. Resume coordination and networking activities. By guaranteeing that everyone who needs more complex procedures may have access to them, AUGE aimed to democratize something that so far had been the privilege of a few. This compelled the system to resume coordination and networking activities which in the medium term will mend the fissures that reforms of the 1980s caused. 3. Close contact with the medical world and universities. To implement AUGE, there was close contact with the medical world and its specialists and scientific societies, which was reinforced by the drawing up of clinical guidelines. Contacts with universities were also increased by strengthening academic groups and promoting methodologies for making technical recommendations based on scientific evidence. The strength of this process generated recognition among many specialists in the health services and encouraged them to become involved in the implementation process. 4. Gradual implementation of the development and pilot experience warranties. Probably the major success of this process was to develop the AUGE pilot and, later, as a consequence of the parliamentary discussion, the gradual implementation of the warranties. This allowed the innovative process to become an institutional and collective learning experience. At this point, according to one of the interviewed specialists, a strategy of reality was used by which “those services, that by nature are going to tackle prevailing issues in the country and that have a proven effectiveness and enough capacity, were identified”. 5. Change in the evaluation of “Evaluate activities to be evaluated” resulted in the health issues solution. A consequence of AUGE was the emergence of the citizen/user/beneficiary/patient as main focus of the welfare process. The change of paradigm that put aside the evaluation of activities and centred on people’s (with first and last name) issues, was something totally new for the health teams. Although changes in the way the staff approach people are still in progress, they are more proactive and provide better treatment for the general demands that people have.

IMPROVING HEALTH SYSTEM EFFICIENCY

At this point in the evaluation, the interviewed specialists considered that the use of metrics, evaluation methodologies and other tools to measure results and impact, were missing, as were baselines. Thus the approach generated record systems but did not generate analysis for use in decision-making. 2.3.4 STEP 4: Definition of the strategic design of the AUGE reform The implementation of the AUGE reform (Infante, 2006) needed first to create an strategic design or structure for AUGE. To achieve this, the following activities were carried out: 1. Define the health objective to achieve each intervention and decide how we want to accomplish it. 2. Analyse in detail the requirements to make it possible, from the point of view of: a. Who would do it? b. How much would it cost? c. How would the information be recorded? d. Who would oversee it? 3. Enact the AUGE Decree in which the following is detailed: e. warranties on waiting times; f. welfare activities included in the guaranteed programme; g. financial support for those Chilean men and women who have insurance plans that require a certain level of co-payment. 2.3.5 STEP 5: Identification of the key actors and their relationships With the strategic design of AUGE defined, the main actors (sectoral and non-sectoral) in the AUGE implementation, and the relationships between them, were identified. The key element in the implementation of AUGE was the close conversation between the public health subsecretariats and the welfare networks’ offices – FONASA and Finance – provided by the technical secretariat. 2.3.6 STEP 6: Prosess of prioritization of the AUGE diseases In this step the first process of prioritization of the diseases covered was developed. Despite being based on the last published decrees, it was estimated that some 900 days were necessary for the completion of the whole process. In a first iteration, the process showed a list of 56 health issues for which diagnosis and treatment should be guaranteed and also implemented within three years. These 56 health issues account for about 65% of the disease burden of the Chilean population. 2.3.7 STEP 7: Developing the clinical guidelines Once health issues had been prioritized, clinical guidelines were developed for each one. One feature of this process of drawing up the guidelines was their validation by scientific societies of specialists and their endorsement by the Ministry of Health. 2.3.8 STEP 8: Setting up of the financing of the AUGE reform The Congress approved the Reform Financing Law (Law No. 19888) with a “temporary” 1% increase in value added tax (bringing the tax to 19%), at the same time increasing taxes on tobacco, alcohol and diesel oil. A study (Ministry of Health, 2007) looked at alternative scenarios for demand and prices of services, concluding that there was an estimated average cost of US$ 47.606 per FONASA beneficiary in AUGE. This amount did not take into account that certain pathologies may be more common in certain population groups (e.g. those with lower incomes). It was also considered that beneficiaries in FONASA classes C and D should be subject to copayments of 10% and 20% respectively. The AUGE Decree (2007) established the co-payment percentages for all treatments related to AUGE pathologies, with a maximum of 20% of the AUGE tariff regardless of the

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

group that the beneficiary belongs to. It was assumed that none of the beneficiaries of this group exceed the financial protection limit set by AUGE and, for that reason, would not need additional resources. 2.3.9 STEP 9: Beginning of the staggered implementation Once it was determined which pathologies should be included in AUGE and which could or could not be guaranteed immediately (due to resistance of some institutions and limitations in what could be offered) a staggered implementation began over a three-year period. Thus the Warranties of Opportunity in Public Service trial phase began two years before the AUGE started. The staggered implementation enabled several complementary processes to be triggered in welfare networks that were essential for the AUGE operations (Infante, 2006). First, in each welfare network it was necessary to define structures that would then take charge of different aspects of implementation, namely: ñ Medical subdirector. This was the technical coordinator of the network who was the counterpart inside the health service. ñ Clinical specialists (technical reference). These were responsible for validating the clinical guidelines in each network. ñ Technical teams. These teams were in charge of implementation, which meant making the guidelines known to and accepted by the medical and clinical staff of each network. Technical teams visited all welfare networks to ensure dissemination of the guidelines because the validity of the guidelines depended on local specialists accepting them as legitimate, which in some cases implied adopting work modalities different from existing ones. The success of implementation in a network depended in many cases on the enthusiasm with which technical staff adopted a guideline and contributed to its dissemination and monitoring in cooperation with primary care doctors and other technical teams. ñ Welfare Network Integration Council (CIRA in Spanish). This council was in charge of resolving implementation issues, particularly those that required close coordination between the municipal primary care and medical specialties. ñ AUGE coordinator and team (usually a female nurse and diverse contributors). The coordinator and his/her team were in charge of monitoring the implementation process – i.e. the medical record at the first contact with the patient, examination and confirmation of the case as an AUGE one, completion of the different diagnostic and therapeutic activities (in accordance with the clinical guidelines and within the defined time-limit for each of them), and the closing of each case because of discharge, nonattendance or other reasons. The accuracy of these teams was fundamental for the success of the implementation. On a few occasions, for instance in the case of failure of the computer back-up systems, the process continued with manual records. ñ Purchasing directory. This was compiled by FONASA for each network and sometimes for a group of networks, as in the metropolitan area of the capital city. The FONASA regional team assisted, along with medical subdirectors of several networks, by examining the existing difficulties in complying with the AUGE warranties. There was discussion about the possibility of combining the available resources of different networks when possible, and about options for purchasing solutions (from more distant public networks or from the private sector) to comply with the established warranties. Secondly the national network was strengthened in terms of treatments (imaging, laboratories, pathological anatomy, clinical procedures, etc.), as well as in equipment (endoscopes, bronchoscopes, cystoscopies, anaesthesia machines and surgical ward equipment). Likewise, it was decided where the most complex equipment (e.g. for neurosurgery, heart surgery and radiotherapy) would be located in order to provide services to local welfare networks. For the most complex technology and for that which became obsolete – such as imaging (scanner, radiotherapy equipment, angiography devices) – it was necessary to resort to a system of leased purchase. This had at least two advantages: it allowed for the possibility of replacing equipment for a more modern

IMPROVING HEALTH SYSTEM EFFICIENCY

version after 7 years and, since the contract stipulated mandatory maintenance and servicing, it guaranteed that the equipment would operate every day of the year. This process enabled the successful implementation of the AUGE reform from a management perspective. Weaknesses The interviews revealed the following weaknesses in the implementation process: ñ absence of a route sheet that would allow one to see with certainty the capacity of the physical and human resources in order to satisfy the warranties (Advisory Body specialist); ñ the lack of conformity in the plan design (Service Directorate); ñ lack of plans for expanding the warranties in terms of number and coverage (Advisory Body specialist); ñ lack of sufficient information for patients (Service Directorate); ñ insufficient assistance for medical specialists (Service Directorate); ñ little support to the systems accreditation process (External specialist). The gradual nature of the process, according to an External Specialist, “gave time to ISAPREs to do the agreements they had to do throughout Chile, which is a difficult task to do”.

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

MAIN RESULTS OF THE AUGE REFORM

This chapter first addresses AUGE’s efficiency, and then its impact on (i) use of the priority services, (ii) waiting lists, (iii) quality and opportunity of the given services, (iv) equity, (v) consequences for the health of the Chilean population and (vi) the State budget.

3.1 AUGE’s efficiency We review some of the background in order to measure AUGE’s efficiency appropriately. Afterwards, a global analysis of AUGE’s technical efficiency is shown. Financial efficiency is discussed in section 3.2.4 on impact on the budget. 3.1.1 Background according to the efficiency measurement The analysis of health-system efficiency has an important role in the literature. According to the Organisation for Economic Co-operation and Development (OECD, 2010), the measurement of efficiency requires supplies and products to be defined. Products may refer to outputs or outcomes. While outputs refer to concrete products of a health system, such as the number of patients treated in a hospital, number of hospital discharges or medical attention per doctor, the outcomes definition has to do with results on global health such as better standards of quality of life, equity in having access to medical attention, or health condition (OECD, 2010). Nevertheless, there is greater interest in the measurement of outcomes because outputs are often approximations to the medical treatment results. Secondly, efficiency can be measured at three levels: disease, sub-area and system levels (OECD, 2010). While the first focuses on analysing the cost-efficiency of medical treatments for specific diseases, the second looks at a sub-area of homogeneous activities – such as a hospital – with the purpose of elaborating policies for that sub-area. Lastly, measurement at the system level is a global approach whereby the focus is on people’s health condition as a product, and the total expense in health is the main supply. Even though each of the three approaches has advantages and disadvantages, they have to describe the issues involved. The present report takes a pragmatic approach to the measurement of AUGE’s effects on efficiency. The reasons, as explained below, are that, because of the availability of data, the temporary horizon may be too small to cover AUGE’s effects from different perspectives in the long term. This pragmatic approach involves covering the effects that AUGE has had over the long term on main health indicators: expense, health condition, equity, etc. For that, we adopt different measurement methodologies. In our view, this analysis yields very important information, particularly when the effects of a policy have different and complex effects on the health condition. 3.1.1.1 Efficiency measurement: international literature The concept of efficiency may be described from the point of view of technical efficiency, assignative efficiency or global efficiency (Coll & Blasco, 2006). Technical efficiency has to do with what a unit is able to produce relative to a reference group – production of a bigger quantity of products due to its supplies or utilization of a smaller quantity of supplies because of production (Farrel, 1957). Assignative efficiency means that the mix of supplies chosen minimizes the cost of production when the prices are already given or when the mix of production maximizes the total income due to the product prices (Hollingsworth, 2008).

IMPROVING HEALTH SYSTEM EFFICIENCY

These two types of efficiency constitute global efficiency and imply that the unit is operating within its cost and income limits. There is a broad literature on efficiency measurement at international level, which uses the system-level approach (Retzlaff-Roberts et al., 2004; Afonso & St. Aubyn, 2006; OECD, 2010; Mirmirani & Lippmann, 2011; Hadad et al., 2013; Anton, 2013 to mention just a few). A first approach to the AUGE’s effects on the efficiency levels of the health system requires a review of this measurement. OECD (2010) has a complete review of the efficiency measurements at country level, which have regularities such as Data Envelopment Analysis (DEA), sectional regression and panel-data regression. Another particularity is that, in most of the cases, a product of life expectancy and/or infant mortality is used, while as inputs there are measurements of expense and of tobacco and alcohol consumption. This last structure of inputs has to do with those that determine people’s health level, which can be divided into monetary or physical resources, lifestyles and socioeconomic factors (Anton, 2013). Below, there is a brief analysis of the literature consulted at system level. Retzlaff-Roberts et al. (2004) apply DEA to OECD, having as inputs beds per 1000 inhabitants, magnetic resonance imaging tests (MRIs) per million inhabitants, doctors per 1000 inhabitants and health expenses as a percentage of gross domestic product (GDP). As outputs, they use infant mortality and life expectancy. Moreover, social environment inputs, such as life schooling expectancy, are considered. Gini coefficient (income distribution) and tobacco consumption (Afonso & St. Aubyn, 2006) consider infant mortality, life expectancy and potential years of life lost, as outputs. As inputs, they use the number of working doctors, nurses, acute-care beds per 1000 inhabitant and MRIs. As noncontrollable inputs, there are many variables related to wealth, levels of education, tobacco consumption and obesity. Mirmirani & Lippmann (2011) analyse G12 countries, using as outputs the average life expectancy of men and women and the infant mortality rate. As outputs, they use per capita expense in health, number of hospital beds per 1000 inhabitants, the number of doctors per 1000 inhabitants, number of MRIs per one million inhabitants and the average of life schooling expectancy. Hadad et al. (2013) use the DEA analysis to study the levels of efficiency in the health systems of the OECD countries. For that, they define as discretionary inputs, the density of doctors, density of hospital beds and health expense, while non-discretionary inputs are GDP, consumption of vegetables and private health expense. As outputs, they use life expectancy and child survival rate. Anton (2003) evaluates the efficiency of 20 European health systems. The outputs he considers include life expectancy and infant mortality per 1000 lives, with inputs being hospital beds per 1000 people, doctors per 100 000 and total health expense. It may be true that this literature permits analysis of efficiency levels in health systems worldwide. However, because the aim of this document is to analyse the effects of a particular policy in Chile (i.e. AUGE), it is necessary to know which global measurements studied the effects of this programme. 3.1.1.2 Effects of the AUGE plan Literature about the effects of the AUGE plan in health systems can be divided according to OECD (2010) into disease-level and system-level effects. The following sections present some of the pieces of work that have analysed the effects of the AUGE plan in Chile. Evidence regarding the effects of AUGE: disease-level Through the analysis of chronic renal failure in a public hospital in Santiago, after six months of implementation of the pilot of the AUGE plan, Gonzalez ã (2003) found an extension of waiting times and an increase in the number of patients seeking medical attention for renal failure. He concluded that the programme will be successful only if its operation changes and more financial resources are received. Gonzalez ã (2006) found that implementation of the AUGE plan for chronic renal failure reduced the quality of medical attention for patients who went through haemodialysis. Concha et al. (2008) found that during the AUGE period there was greater detection of congenital heart diseases, leading to more diagnoses of these diseases and a greater neonatal survival. Nazzal et al. (2008), through the analysis of 3546 patients (2623 before AUGE and 906 after AUGE) in 10 public hospitals, came to the conclusion that AUGE reduced mortality caused by acute myocardial infarction.

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

Bitrã an et al. (2010) present, among the consequences of AUGE implementation, an increase in access to and coverage for high blood pressure, types 1 and 2 diabetes, and depression. For these diseases and for HIV, the hospital mortality rate shows a decrease. In short, the effects vary depending on the features and specificities of the disease and the treatment involved, so the additional impact of AUGE is not very clear from this literature. Evidence regarding the effects of AUGE: system-level Romã an & Munoz (2008) state that AUGE has solved some serious medical attention issues in the health system. However, three years after AUGE was set up, they noted control and management failures. They say there is a segmentation of the diseases in terms of integral control, inflexibility and medical records that is far from a medical approach based on evidence. They mentioned absence of an “intelligent control, experienced by the clinical specialists involved in this plan”. Valdivieso & Montero (2010), after using a report requested by Ministry of Health, which consists of a survey on AUGE, stated that people interviewed had positive feelings about better access and more opportunity to have access to medical attention, about the responsiveness to complex diagnosis and treatment for the underprivileged and about the warranty of financial protection. Becerril-Montekio et al. (2010) stated that AUGE allowed medical attention to be provided to more than 300 000 patients in 2009, that it contributed to the modernization of the public and private sectors, and that it enabled infrastructure and equipment investment, among other advances, to be made. Gilbert (2012) states that since AUGE’s implementation, from 2006 to 2009, users grew to more than 2 million cases a year, mortality rates for several cancer types decreased and there was earlier detection of diseases. Also, mortality from certain diseases had diminished and people’s perception of AUGE was positive. Moreover, FONASA affiliates were the main users of the programme. However, negative elements included waiting lists, which were longer for non-AUGE treatments, and inequity in access to services. The lack of information about the programme and the lack of evaluation of AUGE were also criticized. WHO (2012) noted evidence of increases in public investment for infrastructure, health professionals and their wages, in conjunction with AUGE requirements. This coexisted with a sustained reduction in people’s out-of-pocket expenses, despite continuing co-payments.

Cid & Prieto (2012) considered that even though the out-of-pocket expenses of households had increased between 1997 and 2007, and AUGE had helped to stop that increase, more financial protection policies were needed. Dawes & Gonzã alez (2010) say that a relevant variable for an individual’s decision to use AUGE was the offer of public hospitals. Particularly, people living outside Santiago, where there is a reduced offer of public hospitals (in terms of availability of hospital beds), are less likely to use AUGE. This shows that the lack of infrastructure and resources do not help AUGE to achieve its goals. In short, the literature reveals both positive and negative effects of AUGE implementation, with a clear emphasis on the need for more resources and infrastructure. IMPROVING HEALTH SYSTEM EFFICIENCY

The persons interviewed noted that: ñ There is not a full consensus regarding efficiency of the system. A specialist from the AUGE Advisory Body felt that the plan lacks a preventive focus and acts only when there is a health issue. ñ Another specialist from AUGE’s Advisory Body stated that AUGE does improve efficiency in the system “as long as it can identify services that are effective and must be prioritized”. ñ A member of the Service Directorate mentioned that efficiency “is still not enough. It can be improved in terms of resource management.”

ñ An external specialist believed that there is a structural inefficiency in the services that AUGE does not handle, because “a hospital cannot operate with that level of inefficiency … 7 of 10 planned surgeries in the end are not performed”. The following sections aim to clarify the concrete effect that AUGE implementation has had in different areas of interest.

3.2 Impact on several fields This section assesses the impact of AUGE on: ñ use of priority services ñ waiting lists ñ quality of and opportunity for the given services through private and public providers ñ equity, consequences for people’s health, and the State budget. 3.2.1 Impact of the AUGE reform (set of measures) on the use of priorityservices Since the implementation of the AUGE reform, there has been a continuous increase in new cases due to the amount of services that have been made available, such as the incorporation of new pathologies. This increase in new cases can be seen in Figure 3-1, which shows totals of AUGE cases for FONASA and ISAPRE. Table 3-2a shows the effect of the new cases, as well as the general evolution of each group of services by each Supreme Decree.

Figure 3-1. AUGE new cases, per health insurance in each year, 2005-2011 2 900 2 800 2 700 2 600 2 500 2 400 2 300 2 200 2 100 2 000 1 900 1 800 1 700 1 600 1 500 1 400 1 300 1 200 1 100 1 000 900 800 700 600 500 400 300 200 100 0 200 000 2 683 180 000 2 212 2 175 1 984 1 692 123 950 1 323 1 338 89 786 110 509 95 706 80 000 60 000 47 555 40 000 20 000 0 2005 * 2006 2007 2008 2009 2010 2011 FONASA ISAPRE

160 000 140 000

FONASA (thousands)

100 000

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

Source: Superintendence of Health. *2005 July to December.

ISAPRE

124 810 126 952 120 000

Table 3-2a. Number of AUGE cases in millions of people, per group associated with each Supreme Decree, 2005-2012 Health issues 25 AUGE diseases 15 more AUGE diseases 16 more AUGE diseases 13 more AUGE diseases Total 1370 1428 1788 2336 2286 2005 * 1370 2006 1138 290 2007 987 499 302 2008 1015 518 803 2009 1035 492 759 2010 924 413 638 125 2099 2011 1367 467 687 289 2810 2012 ** 720 246 335 160 1461

Sources: Superintendence of Health and FONASA. *2005 July to December period; **2012 January to June In 2011, the Ministry of Health made a study to determine the impact of the entry into force of the AUGE programme at the level of total production and expenditure for public health during the period 2001-2009. The study showed a normalized production index of prioritized services tracers with a unit value for the year in which each service was incorporated into AUGE. The results reveal that 10 prioritized services of AUGE had a decrease in production after incorporation (each with p-value < 0.1), with an average annual variation of -4.32%. The prioritized service related to “nontraumatic rhegmatogenous retinal detachment” decreased the most in an annual variation of -18% (p=0.02). These results may be due to a change in technology or treatment of choice and the fact that this condition was handled by public services before the AUGE programme began.

Figure 3-2. Production of nontraumatic rhegmatogenous retinal detachment service, 2001- 2009 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 Production index Source: Ministry of Health, 2011. IMPROVING HEALTH SYSTEM EFFICIENCY

Moreover, 19 prioritized services increased their production after incorporation in AUGE, with an average increase over 23.61% annually (each with p-value < 0.1). Treatment of refraction errors showed the highest increase in production (84.20%; p=0.06). This sharp increase in the post-AUGE period reflects the elasticity of demand for this service.

Figure 3-3. Production of treatment for refraction errors in people aged 65 years and over, 2001-2009 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 Production index Source: Ministry of Health, 2011.

To observe the services with more frequency of use, cases from both FONASA and ISAPREs were collected until June 2012. A differentiated ranking was developed according to the type of service. Table 3-2b shows the 10 most frequent health issues for FONASA health insurance, representing 76.7% of total AUGE cases of FONASA. In general, these cases are the most frequent ones each year.

Table 3-2b. Top 10 of most frequent health issues for FONASA FONASA ranking 1 2 3 4 5 6 7 8 9 10 ISAPRE ranking 6 4 1 5 2 15 13 3 18 9 Health issue 46. 19. 21. 7. 34. 29. 3. 23. 5. 11. Outpatient dental urgencies Acute respiratory infections High blood pressure Type 2 diabetes mellitus Depression in persons aged 15+ years Refractive error in persons aged 65+ years Cervical cancer Oral health Acute myocardial infarction Cataracts Accumulated to June 2012 2 373 032 2 291 708 2 144 641 807 228 793 742 757 124 715 727 583 876 510 585 373 307 Participation 16.0% 15.5% 14.5% 5.5% 5.4% 5.1% 4.8% 3.9% 3.5% 2.5%

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

Source: Superintendence of Health.

Table 3-2c shows the most frequent AUGE health issues for ISAPRE, representing 88.8% of all AUGE cases for ISAPRE health insurance.

Table 3-2c. Top 10 of most frequent health issues for ISAPRE ISAPRE ranking 1 2 3 4 5 6 7 8 9 10 FONASA ranking 3 5 8 2 4 1 15 28 10 12 Health issue 21. 34. 23. 19. 7. 46. 39. High blood pressure Depression in person aged 15+ years Oral health Child acute respiratory infections Type 2 diabetes mellitus Outpatient dental urgencies Moderate to severe bronchial asthma in teenagers under 15 years of age 8. Breast cancer 11. Cataracts 66. Integral oral health for pregnant women Accumulated to June 2012 150 491 137 964 82 824 74 439 69 620 52 017 23 735 15 273 13 321 12 409 Participation 19.2% 17.6% 10.6% 9.5% 8.9% 6.6% 3.0% 2.0% 1.7% 1.6%

Source: Superintendence of Health.

As can be seen in Tables 3-2b and 3-2c, the most frequent health issues differ or, if they are the same, they have different positions in the rankings. Consequently further study was done to identify the services that are mostly used by ISAPRE in comparison to FONASA. This is summarized in Table 3-2d. The 10 health issues shown represent 48.2% of all AUGE cases in the country.

Table 3-2d. Top 10 health issues, mostly for ISAPRE rather than FONASA NÆ Health issue Percentage difference 12.3% 6.6% 4.7% 3.4% 1.9% 1.5% 0.9% 0.8% 0.6% 0.5% Average tariff Co-payment in Chilean pesos (20% of tariff) in US$ 9 862 30 075 10 600 72 998 15 586 439 150 18 130 468 690 155 347 29 210 3.54 10.79 3.80 26.19 5.59 157.53 6.50 168.12 55.72 10.48

34 23 21 7 39 8 61 44 6 52

Depression in persons aged 15+ years Oral health High blood pressure Type 2 diabetes mellitus Moderate to severe bronchial asthma in teenagers under 15 years of age Breast cancer Bronchial asthma in persons aged 15+ years Lumbar surgical treatment (herniated nucleus pulposus) Type 1 diabetes mellitus Rheumatoid arthritis

Source: Compiled by the authors, based on Superintendence of Health data.

Regarding the AUGE results, the experts interviewed highlighted the following: ñ Subjectively AUGE is seen as having an impact on both the public and private sectors, but studies and instruments to check this are lacking (consensus among all interviewees, specialists and managers). ñ In the private sector, competition has increased, resulting in technological improvements and a fall in prices (External specialist).

IMPROVING HEALTH SYSTEM EFFICIENCY

In order to have an idea of cost, the average tariff (in Chilean pesos) and the expected co-payment in US dollars have been included for the service associated with each of the health problems. It is important to note that each health problem comprises services for different types of health intervention – such as diagnosis, treatment and/or monitoring – but does not always include all types. Consequently, averages are not comparable.

In summary, the use of the services that are prioritized by the AUGE reform has increased overall and especially after each new set of health problems was incorporated. Moreover, more than half of the original health problems are in the top 10 AUGE services of both ISAPRE and FONASA. Thus, the original priority has been effective, but tools are still lacking to verify this assumption. As for those health problems that are more commonly treated by ISAPRE rather than FONASA, the low co-payments gives an idea of why patients are interested in these treatments. 3.2.2 Impact of AUGE reform (set of measures) on waiting lists Waiting lists are a phenomenon in most health systems. They occur when the flow of patients entering the list exceeds the outflow for treatment. According to Siciliani et al. (2013), the input flow is related to the demand for interventions, which in turn is determined by the ageing population, the state of medical technology, patients’ preferences, the financial conditions such as co-payment and insurances, the proportion of people with private insurance and the cost of private care. Doctors also have a role in determining this demand. Furthermore, the outflow depends on, among other things, public and private capacity and productivity where productivity is influenced by the way in which payments are made to hospitals and specialists. The payment for activity through Diagnosis Related Groups (DRG), and the doctors’ fee for service are examples of factors that influence productivity. From the foregoing, it is concluded that the causes behind the waiting list are complex. Due to the lack of information for the construction of a time series, it is difficult to establish the effects of the AUGE plan; however, you can use approaches to the phenomenon. From the section “effects at disease level” it is held that after six months of programme implementation, there is an extension of the waiting lists of chronic kidney disease (Gonzã alez, 2003). The literature at “system level” indicates that there have been delays that impede the fulfillment of the guarantee of opportunity (Valdivieso & Montero, 2010), and the waiting lists are longer for non-AUGE treatments (Gilbert, 2012). In view of empirical data and Tables 3-2g and 3-2h below, one notes that from 2006 to 2009 AUGE treatment timing improved, which can be interpreted as an improvement in waiting lists. Furthermore, since there is a negative correlation between waiting time and the availability of hospital beds (Siciliani et al., 2013), the results of Dawes & Gonzã alez (2010) on the shortage of hospital beds show that this can be interpreted as the existence of inherent waiting lists. These two findings may indicate that waiting lists in general have decreased over time but that scarce resources generate waiting times within the system. CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

An external public health specialist, speaking of the implementation of the AUGE plan, notes that if “the rise in terms of supply generates rise in terms of demand, then we may not necessarily have so drastically reduced waiting lists”. While a member of the AUGE Council notes that “if the waiting list is within the AUGE specialty, it tends to decline”. However, waiting lists for “the pathologies that are outside the AUGE programme have tended to rise”, such as the waiting list for varicose veins. A director of health services says that AUGE “changed the composition of the waiting list, especially the surgical waiting list”, arguing that “the area production greatly increased” but has reached a plateau due to lack of additional funding. Likewise, “AUGE does not have more time” – i.e. to do more things. On the other hand, another health service director says there is a “high AUGE impact and non-AUGE. The non-AUGE complaints bring pressure and move the organization. The non-AUGE waiting list remains high, despite waiting lists being reduced by 50%.” And another health service director said that “The AUGE waiting list was resolved. The work on waiting lists contributed to knowing and vindicating, and therefore, making them visible to the population, which for non-AUGE means pressure for the system”.

Finally, a service manager said that “the traditional eternal waiting lists that existed, no longer exist”. However, he said that the orthopaedic surgery waiting lists “are still waiting lists equally important” as “they are of great magnitude”. Regarding non-AUGE waiting lists, he noted that these are increasing as a result of resources being limited. Thus, the experts agree that AUGE has had important effects, but there remains a shortage of resources to address the non-AUGE waiting lists. 3.2.3 AUGE reform impact (set of measures) on the quality and opportunities supplied by public and private providers Quality measurement is a controversial issue because on the one hand inefficiency increases, while on the other it decreases (Valdmanis et al., 2008.). The quality increase involves resources, which would increase costs; however, this increase in resources, such as more hours for nurses, could lead to a lower rate of medication errors, pressure ulcers and patients’ complaints (Haberfelde, 2005). Other studies found that the efficiency and quality need not be dissimilar objectives; in fact, it is found that hospitals with high efficiency levels also have high levels of quality (Nayar & Ozcan, 2008). Valdmanis et al. (2008) state that the objectives of quality and efficiency can be achieved through a better use of resources. However, due to the lack of data coverage with respect to quality, both in time and in extension, and the pragmatic approach taken in this work, it was decided to analyse quality along with opportunity from people’s points of view. For this, the National Socio-Economic Characterization Survey (CASEN) was used. In tables 3-2e to 3-2h, the data are observed with respect to attentions and compliance with AUGE service timing. The question in 2006 was in reference to “How did you find it was – the attention compliance?” The question for 2009, however, was directly about “quality “. However, we believe that the spirit of the question is the same, so it can be used as a proxy for quality attention in a comparison of results from 2006 and 2009. Such information is found in CASEN only for 2006 and 2009. Regarding the fulfillment of attentions in 2006, there are high percentages of “very good” and “good” and “regular” compliance, with higher percentages in the case of “good” compliance. The average of “good” assessments within the FONASA section corresponds to 56% and “very good” corresponds to 21.6%. In ISAPRE the behaviour is similar, with a strong focus on “very good” (23.7%) and “good” (56.84%).

Table 3-2e. AUGE attention compliance (%), CASEN 2006 Very good FONASA A FONASA B FONASA C FONASA D

Good 55.78 57.72 54.16 50.65 59.28 56.84

Regular 14.69 13.72 13.65 13.10 5.87 5.90

Bad 7.67 6.25 10.75 5.47 4.73 3.14

Very bad 1.32 1.56 2.01 1.16 0.56 4.64

Don’t know 1.70 1.56 3.78 2.88 1.68 5.77

Total of interviewees 175 915 167 819 39 493 41 151 5 897 25 342 IMPROVING HEALTH SYSTEM EFFICIENCY

Public (Don’t know) ISAPRE

18.85 18.79 15.66 26.75 27.88 23.71

Source: Author’s calculations based on CASEN 2006. Question S20A: “How did you find it was – the attention compliance (%)”.

Table 3-2f. AUGE attention compliance (%), CASEN 2009 Very good FONASA A FONASA B FONASA C FONASA D

Good 52.76 50.89 47.76 49.37 48.65 51.64

Regular 16.26 16.89 17.56 15.15 23.37 11.43

Bad 5.67 5.45 6.79 5.65 3.30 2.54

Very bad 2.55 3.11 3.31 2.88 1.94 0.86

Don’t know 1.67 1.38 2.07 3.64 2.71 2.77

Total of interviewees 613 005 446 035 123 990 86 967 46 662 81 740

Public (Don’t know) ISAPRE

21.09 22.28 22.51 23.31 20.03 30.76

Source: Author’s calculations based on CASEN 2009. Question S29B: “In general, how do you think the quality of attention you received in the AUGE system was in terms of ...? Compliance of attention involved in the treatment (outpatient, control, surgery or tests, as appropriate)”.

For 2009 there is a slight deterioration in terms of quality in compliance with actions for FONASA-insured people because the average “good” assessment is 49.9% and “very good” is 21.8%, with “regular” assessment increasing the most; however, the primacy of good and very good evaluations was maintained. In ISAPREinsured people, “very good” evaluations increased from 23.71% to 30.76%, whereas regular evaluations almost doubled and bad evaluations fell from 4.64% to 0.86%. Regarding fulfillment of the timing, we use as a proxy the opportunity of AUGE services for 2006 (Table 3-2g). There was a primacy of “good” evaluation (average 46.3%) for the FONASA-insured people, followed by “very good” (17% average) and “regular” (17% average). For the ISAPRE-insured, evaluations also focus on “good” (50%), and “very good” (24.7%), being greater than in the case of the FONASA-insured. In 2009 (Table 3.2-h), there was a similar structure in evaluations for persons insured by FONASA, but “very good” and “good” evaluations increased slightly, with reductions in “bad” and “very bad”. Likewise, for those insured by ISAPRE, “very good”, “good” and “regular” assessments increased. In short, in the case of FONASAinsured people, bad evaluations decreased, and in the case of ISAPRE-insured people more positive evaluations increased.

Table 3-2g. AUGE timing compliance (%), CASEN 2006 Very good CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

Good 45.02 47.82 48.72 41.36 48.99 50.07

Regular 19.50 19.15 15.80 20.34 11.23 8.27

Bad 12.45 11.61 14.83 8.01 9.68 4.80

Very bad 5.42 3.71 4.32 5.19 6.78 6.60

Don’t know 2.77 2.67 3.66 2.98 1.68 5.58

Total of interviewees 175 915 167 819 39 493 41 151 5 897 25 342

FONASA A FONASA B FONASA C FONASA D

Public (Don’t know) ISAPRE

14.85 15.04 12.67 22.12 21.64 24.67

Source: Author’s calculations based on CASEN 2006. Question S20B: “How do you find ...was? Length of time (%).”

Table 3-2h. Compliance timeouts involved in AUGE attentions (%), CASEN 2009 Very good FONASA A FONASA B FONASA C FONASA D

Good 51.55 49.81 46.76 50.22 49.66 52.40

Regular 17.74 17.77 19.14 14.57 20.09 12.92

Bad 6.60 5.87 7.69 7.02 5.99 1.80

Very bad 2.17 3.65 3.90 2.77 2.37 1.40

Don’t know 1.45 1.37 1.58 2.95 2.38 2.66

Total of interviewees 613 005 446 035 123 990 86 967 46 662 81 740

Public (Don’t know) ISAPRE

20.48 21.53 20.94 22.47 19.51 28.82

Source: Author’s calculations based on CASEN 2009. Question S29A: “In general, how do you think the quality of attention you received at the AUGE system was in terms of ...? Compliance timeouts involved in the attention.”

Thus, for persons insured by FONASA, compliance in terms of medical attention remains slightly constant, while for ISAPRE-insured people it shows a significant improvement. Regarding timing, in the case of those insured by FONASA bad evaluations decrease, and for those insured by ISAPRE more positive evaluations increase. 3.2.4 Impact on equity, consequences for Chilean health and the State budget In order to analyse the level of impact on AUGE equity, the health consequences for Chileans and the State budget, it was decided to separate these three analyses and thus get more details for each. 3.2.4.1 Impact on equity Regarding equity, there is a wide range of literature on the social determinants of social health. A review of the concept of health determinants indicates income and social status, education levels, environmental and working conditions, social support networks, genetics, personal behaviour, access to health services and their use, and gender as some of the main determinants of health (WHO, 2014a). Furthermore, these social determinants “are the circumstances in which people are born, grow, live, work and get old, including the health system. These circumstances are the result of money distribution, power and resources at global, national and local levels, which in turn depend on the policies adopted (...) Social determinants of health explain most of health inequities, i.e. the unfair and avoidable differences in and between countries in regard to health status” (WHO, 2014b). From the above, we infer the importance of social factors on the health status of people. Thus, based on that causality, there must be a dimension of concern from the point of view of public policy. A relevant question relates to the effects of AUGE on equity. To answer this question the CASEN survey was used. In the health module of this survey, people were asked if they received medical attention in the previous 12 months and whether such attention was covered by AUGE.7 Tables 3-2i to 3-2k present the results for the household income quintile in Chilean pesos for each respective year. While coverage rates have increased across the board for all quintiles (from 48.84% in 2006 to 56.54% in 2009 and 70.66% in 2011), by analysing the variation of the percentage covering 2006-2009, quintiles which are more likely to increase coverage are Quintile 1 (from 52.42% to 63.83%) and Quintile 2 (from 51.08% to 60.93%). Regarding the variation between 2009 and 2011, the greatest increases were in quintiles 3, 2 and 1. If the variation between 2006 and 2011 is observed, the ones that increased the most were quintiles 1 and 2 (with an increase in coverage of 25%) and Quintile 3 (with an increase to about 23%). The interviews conducted at this point showed that: ñ In spite of the fact that the AUGE plan has as its main objective the prioritization of resources, it has a good component of equity because: – patients pay according to their abilities and receive according to their needs (specialist of the AUGE Council); – there is greater territorial equity (specialist of the AUGE Council). IMPROVING HEALTH SYSTEM EFFICIENCY

Questions S18 in CASEN 2006, S27 in CASEN 2009, and S35 in CASEN 2011.

Table 3-2i. AUGE coverage of by household income quintile, 2006 (%) CASEN 2006 Average income Chilean pesos (2006) Yes No Don’t know /do not remember I 96 811 52.42 18.34 29.24 II 146 079 51.08 22.66 26.25 III 189 775 53.87 22.86 23.26 IV 288 349 46.46 31.04 22.50 V 834 944 40.37 49.06 10.57 Average

48.84 28.79 22.36

Source: Author’s elaboration based on CASEN 2006. Question S18: “Was this medical attention covered by AUGE?” (%).

Table 3-2j. AUGE coverage of by household income quintile, 2009 (%) CASEN 2009 Average income Chilean pesos (2009) Yes No Don’t know /do not remember I 119 874 63.83 14.39 21.77 II 181 263 60.93 18.54 20.54 III 239 041 60.76 20.97 18.27 IV 355 364 54.86 26.71 18.42 V 1 031 992 42.32 45.06 12.62 Average

56.54 25.13 18.32

Source: Author’s elaboration based on CASEN 2009. Question: S27: “Was the treatment of this disease covered by AUGE?” (%).

Table 3-2k. AUGE coverage of by household income quintile, 2011 (%) CASEN 2011 Average income Chilean pesos (2011) Yes No Don’t know /do not remember I 130 084 77.44 9.73 12.83 II 197 655 76.92 10.59 12.49 III 252 349 77.33 12.95 9.72 IV 371 622 66.88 20.38 12.74 V 1 106 709 54.71 36.74 8.55 Average

70.66% 18.08% 11.27%

Source: Author’s elaboration based on CASEN 2011. Question S35: “Was this medical treatment covered by the AUGE system?” (%).

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

To sum up, in terms of equity there is a coverage increase for lower-income quintiles. One explanation for this may be a gradual increase in diseases that have been incorporated into AUGE, but it may also be due to the greater information there is about it. Vulnerability is also related to lack of information; people with lower salaries, education, income and communication skills have fewer possibilities to inform themselves, limiting their potential in terms of health. Because of this, Table 3-3l shows people who did not know they were covered by AUGE, by both ISAPREs and FONASA sources. The table shows that people who did not know they were covered are older on average and in FONASA class A, the most vulnerable section. Not knowing they were covered decreases as the class increases. In ISAPREs, only 16.47% of people did not know about AUGE. However, when analysing over time, it can be seen that the numbers of people not knowing have fallen more in FONASA classes A, B and C, which has direct implications for equitable access to health care. Table 3-2l. People who did not know they were covered by the AUGE (%) Model FONASA A FONASA B FONASA C FONASA D

Public (Don’t know) ISAPRE

CASEN 2006 54.53 44.29 47.92 33.52 27.23 22.69

CASEN 2009 41.31 31.92 28.48 16.58 31.19 16.23

CASEN 2011 27.09 17.98 15.86 21.30 17.22 10.48

Average 40.98 31.40 30.75 23.80 25.21 16.47

Source: Author’s calculations based on CASEN 2006, 2009 and 2011.

3.2.4.2 Impact on consequences for Chileans’ health To analyse the consequences for Chileans’ health, the Years of Potential Life Lost (YPLL) indicator was used. According to the Department of Health and Information Statistics (DEIS) of the Ministry of Health of Chile: “The Years of Potential Life Lost indicator (YPLL) illustrates the society’s loss resulting from the death of young people or premature deaths. The case in which YPLL is based is that the more premature death, the greater the loss of life” (DEIS, 2014). This indicator is widely used to measure health status. Indeed, the Human Development Index takes it into account in its dimension of health, stating the inverse, that for “the greater value for the indicator, the lower achievement is accomplished” (UNDP & Ministry of Planning, 2006). In fact, using data from the OECD (2013), the correlation between life expectancy and YPLL for men and women in Chile during 1990 -2009 was -0.98 (p < 0.01), so its inverse can be considered as a proxy of life expectancy. Although in section 3.1.2.1 life expectancy was globally modelled, in this section a much more accurate analysis is performed, which does not show temporal AUGE causality in all terms and is meant to account for the effects AUGE has had on people’s heath nationwide. The YPLL happens to be disaggregated at community level, which allows us to make a more specific analysis as it enables us to identify certain characteristics of people who were not likely to be identified at the aggregate level. Thus the proxy of the health status of people is the communal YPLL inverse. Regarding the determinants of health, the WHO definition was used (WHO, 2014a), which considers determinants of income, education, physical environment, social support, health behaviours and access to services, among other things. A database with panel data8 was developed for the period 2006 -2010, where the unit of observation is the town. The dependent variable is the inverse to the YPLL which was obtained from DEIS (2014). As proxy of social status, the municipal average of autonomous income was used, and as a proxy of the educational levels the average schooling at town level was used (CASEN). The hypothesis is that higher levels of income and education entail greater access to quality health services and a greater awareness of health status, increasing people’s life expectancy. Additionally, this is controlled by the rate of civility (SINIM, 2014). As a proxy of environmental conditions, drinking-water coverage was used from the national municipal information system (SINIM, 2014). The hypothesis is that the higher the coverage, the better the health status of the population because people benefit from improved access to basic services. As a proxy of the community networks support and social support, the number of community organizations in the community population is used. According to WHO (2014a) further support from friends and the community is linked to a better health status. As a proxy of access to health services, and their quality, geographical spread of doctors’ offices and infant mortality rate are used respectively (SINIM, 2014). The hypothesis is that the more doctors’ offices there are by area in sq km, the more access there will be. Regarding infant mortality, a series of tasks for measuring efficiency at the primary health care level use infant mortality as a proxy for quality. Finally, since the goal is to determine the effects that AUGE has on communal life expectancy, two variables are used. One is access to AUGE coverage for treatments to which people have accomplished. In this case, coverage questions analysed in the “equity impacts” section (Questions s18 in CASEN, 2006; s27 in CASEN, 2009) are used, and communal access to AUGE coverage ratios is obtained. Moreover, as a proxy of service timing, levels of compliance “good” and “very good” are used (Questions s20b in CASEN, 2006; s29 in CASEN, 2009). The hypothesis is that a higher level of AUGE coverage at the community level has a positive impact on the health status of the population. Additionally, if the treatment timing is short, by shortening waiting lists, the effect on the status of health of the timing is positive.

Longitudinal data combined with cross-sectional data that had observations over time.

IMPROVING HEALTH SYSTEM EFFICIENCY

Table 3.2-m shows the results of the regression with panel data 9. As noted, the AUGE coverage makes the communal YPLL reverse increase, i.e. as it increases, the proxy for life expectancy also increases (p < 0.01). Additionally, when AUGE service timing is faster, it has a positive effect (p < 0.01). The other results are consistent with the hypothesis - i.e. incomes and education have a positive effect on life expectancy (p < 0.05) and clean water as well (p < 0.01). Other results of interest suggest that a larger network of social support has positive effects on life expectancy. The infant mortality rate has a negative effect on the inverse of YPLL, suggesting that higher quality in the management of public health would have an impact on community life expectancy. In summary, an analysis at the community level for the period 2006-2010 suggests that the AUGE plan coverage positively affects the levels of life expectancy of the communities, when controlled for other determinants of health. This is further supported by the results of the interviews. Respondents (external and AUGE Council specialists, Service Directors) stated that there is a perceived impact, although there is no methodology to confirm this point.

Table 3-2m. Panel data regression for reverse YPLL, 2006-2010 Model AUGE coverage (ratio) Good attention timing In (income) Schooling Urbanization (ratio) Drinking water (ratio) Organization per capita CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

Fixed effects 0.004 * (1.85) 0.004 ** (2.05) 0.004 ** (2.18) 0.012 *** (7.85) -0.012 (-0.70) 0.013 *** (3.63) 0.078 ** (2.36) 0.0003 (0.02) -0.103 *** (-5.60) -0.161 (-5.60) Yes 9.94 *** 134.90 *** 1.513

Doctors’ offices/area Infant mortality/1000 Constant Temporal effects Test F Chi2’s Hausman test Observations

Note: t-statistics in parentheses. Significance at 1% ***, 5% ** and 10% *. 10 Source: Authors’ calculations based on CASEN, 2006, 2009, 2011; SINIM 2006–2011; DEIS-MINSAL, 2006–2011.

9 10

It is estimated as a two-way model, which controls for communal and temporal fixed effects. All variables are shown in terms of town averages, ratios and rates, and were obtained from respective factors of town expansion in each CASEN survey.

3.2.4.3 Impact on State Budget The study of the Ministry of Health (2011) on “Impact of Explicit Guarantees in Healthcare Spending and Production of Healthcare Network in 2001–2009” shows estimated costs associated with each AUGE service before and after AUGE implementation. We took this estimation of total costs of AUGE-prioritized services and used it as a share of total health spending in the same years, and then we obtained Figure 3-4. The figure shows a slight decrease and a negative trend.

Figure 3-4. Total cost of priority services as a share of total health spending 23 Total cost of priorities health conditions as share of total health spending

22.5 22 21.5 21 20.5 20 19.5 19 18.5 2002 2003 2004 Pre-AUGE

2005

2006

2007 Post-AUGE

2008

2009

Source: Authors’ elaboration based on Ministry of Health (2011).

The study also evaluates the behaviour of non-AUGE tracer services, where 75% of these increased production and 25% decreased. Furthermore, it shows that, while AUGE’s spending in prioritized services grew faster than the spending in non-AUGE services, the difference was smaller at 8.9% and 7.6% respectively. Thus, the suspicion that AUGE could obtain more production by increasing public spending on prioritized services is discarded, since the expansion of public spending on health did not favour the prioritized services over others. This shows that the budget allocated to AUGE has enhanced efficiency of resource allocation, as it has generally not had to increase the proportion of health expenditure for AUGE, and secondly it has not led to cutting spending on other benefits. Regarding the interviews, respondents noted the following: ñ An external specialist mentioned that “there is a sub-fund of the benefits” which is reflected in a deficit in the system; this same point is supported by a service director. ñ The same specialist mentioned that the budget impact is significant, which fits with the data. ñ In the private sector, an external specialist mentioned that clients were told the cost as the guarantees exceeded the CAEC coverage and their health plans.

IMPROVING HEALTH SYSTEM EFFICIENCY

CONSEQUENCES FOR PRIVATE HEALTH INSURANCE

This chapter answers the following questions: 4.1: Why had ISAPREs provided about half of what is collected in AUGE premiums in AUGE services? How does this compare with FONASA? How does one explain this gap between the foreseen incomes and the supplies assigned to the AUGE services? 4.2: Are ISAPREs underproviding AUGE services, or do their beneficiaries simply not demand the same service quality as FONASA beneficiaries do?

4.1 The AUGE gap in ISAPREs Given that the proportion of FONASA and ISAPRE patients’ is 4 to 1, it is expected that the relation between the quantity of FONASA versus ISAPRE cases per health problem would be stable. Nevertheless, the health problems that have a close relation to the 4 to 1 proportion are eight out of 69 cases analysed. Some 54 FONASA cases exceed this relation considerably. The relation between the total FONASA and ISAPRE cases for the period from 2005 to June 2012 showed that 18.9% of cases were dealt with by ISAPRE, which means that approximately one fifth is provided by ISAPRE. Table 4-1a shows some cases with a higher relation and high participation with respect to the countries’ total AUGE cases. Table 4 -1a. Comparison of FONASA to ISAPRE in selected health problems NÆ Health problem 54 Birth analgesia 36 Orthotics (or technical help) for persons aged 65 years or older 20 Outpatient management of community-acquired pneumonia 50 Severe ocular trauma 65 Luxating hip dysplasia 64 Secondary prevention of ESRD 29 Refraction errors in persons aged 65 years or older 27 Gastric cancer 3 Cervical cancer 5 Acute myocardial infarction 46 Outpatient dental emergencies 19 Acute child respiratory infection 21 Arterial hypertension FONASA cases 319 371 266 086 164 504 86 776 149 659 38 693 757 124 81 542 715 727 510 585 2 373 032 2 291 708 2 144 641 ISAPRE cases 849 893 625 414 874 310 6 893 872 9 170 6 622 52 017 74 439 150 491 Total country FONASA/ISAPRE participation relationship 1.1% 1.0% 0.6% 0.3% 0.6% 0.2% 3.0% 0.3% 3.0% 2.1% 11.3% 12.5% 16.9% 376.17 297.97 263.21 209.60 171.23 124.82 109.84 93.51 78.05 77.10 45.62 30.79 14.25

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

Source: Authors’ elaboration based on Health Superintendence data.

The above demonstrates that, in the vast majority of health problems, ISAPREs provide their services to a much lesser extent than FONASA does.

On the other hand, a study by the Superintendence of Health along with the Ministry of Health on the “Financial performance of explicit guarantees in health in the ISAPREs system” shows that the total expenditure on 13 selected health problems in the period of July 2005 to August 2007 was 9868 million Chilean pesos in the ISAPREs system. In addition, the total expenditure for which financial coverage was partially or totally given by AUGE for the 13 studied problems was 7402 million Chilean pesos, representing 75% of the total expenditure on all health problems studied in the same period.

Table 4-1b. AUGE expenditure and total of 13 health problems studied in terms of type of health intervention Type of intervention Diagnostic Treatment Tracking Total Expenses covered by AUGE 559 708 6 712 804 129 988 7 402 501 Total expenditure on the 13 health problems 1 407 221 8 248 784 212 470 9 868 475 Relation between AUGE and total expenses 0.398 0.814 0.612 0.750

Source: Superintendence of Health (2008), “Financial performance of explicit guarantees in health in the ISAPREs system”.

Thus, in general, about 25% is not covered by AUGE, which means that this percentage may be covered by each ISAPRE beneficiary’s out-of-pocket expenditure or by their health plan. To check this, each of the 13 health problems was reviewed and this showed that out-of-pocket expenses comprised 15% weighted in relation to the number of cases per health problem. This means that 10% is provided by the plan associated with ISAPRE, which is much less than the AUGE premium. In April 201311 the Superintendence of Health published a study showing that, after entry into force of the Decree No.1 which expanded coverage of health problems from 56 to 69, the ISAPREs readjusted their prices of the AUGE premium, increasing their revenue and spending on prioritized services only 51.4% on average. This can be seen in Figure 4-1. Thus, there is a disuse of guarantees in ISAPRE. This explains why there is a lower frequency of use in comparison with FONASA for each health problem and shows why ISAPREs do not have to incur additional expenses. Some guidelines are shown in the next section.

Figure 4-1. AUGE’s income and cost in private insurance (ISAPRE) in millions of US dollars 400 Millions of US$ (at June 2012) 367.3 379.1

350 300 250 200 150 100 50 0 Jul 07 - Jun 08 Jul 08 - Jun 09 Jul 09 - Jun 10 Jul 10 - Jun 11 AUGE cost 147.8 87.8 143.7 109.7 148.1 142.0 162.6 194.7

Jul 11 - Jun 12

AUGE income Source: Superintendence of Health, 2012.

See: http://www.supersalud.gob.cl/568/w3-article-8207.html (accessed 30 April 2015).

IMPROVING HEALTH SYSTEM EFFICIENCY

4.2 Do ISAPREs under-provide AUGE services or do their beneficiaries not ask for them? To answer this question we turn to the CASEN survey, in which there is a section where the people who underwent treatment or care are asked why their treatment or care was not covered by AUGE (Question s35 in CASEN, 2011). Table 4-2a shows the reasons why persons were not covered by AUGE. For the FONASA-insured people the main reason was that they “preferred to choose another doctor or venue, or continue with their regular doctor” with a 25.7% average, followed by the fact that they “decided not to wait to access the medical attention through AUGE, but to solve their problems faster”, with a 13.4% average. Another important cause was “another reason” with a 22.47% average although the reason was not specified. It is noteworthy that, while there has been an increase in the numbers of persons insured by FONASA in all classes from A to D, i.e. from low to high income, the numbers choosing another doctor or medical establishment have steadily increased too, indicating that the insured make informed choices and have more sophisticated demands. Regarding the ISAPRE-insured people, the main reasons for not using AUGE were that they “preferred to choose another doctor or venue, or continue with their regular doctor”, they “decided not to wait to access the medical attention through AUGE, but to solve their problems faster,” and they “did not know that their illness was covered by AUGE”. The percentage giving the first reason is greater among the ISAPRE-insured than among those insured by FONASA, indicating the strict limits that the use of AUGE means for the first group.

Table 4-2a. Reasons why persons were not covered by AUGE (%), CASEN, 2011 Reasons Preferred to choose another doctor or venue, or continue with their regular doctor Decided not to wait to access medical attention through AUGE but to solve their problems faster CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

FONASA A B 11.60 21.55

ISAPRE C 28.4 D 32.35 Do-not-know group 35.05 40.74

4.86

18.78

14.95

15.06

13.31

13.22

Thought AUGE attention could be 0.72 of poor quality Their health insurance plan covered 0.79 their needs better than AUGE The procedure to access AUGE is very difficult 4.25

1.1 0.85 2.83 7.06 17.98 7.5 2.16 20.2

0.64 2.49 4.67 11.61 15.86 2.57 0.44 18.37

3.96 1.82 2.37 4.41 21.3 1.5 0.62 16.6

1.71 0.2 2.13 7.12 17.22

1.94 5.06 3.98 7.26 10.48 2.03

AUGE did not cover the necessities 9.04 of the illness Did not know their illness was covered by AUGE I do not belong to the age range that is covered by AUGE Doctor recommended not being assisted by AUGE Another reason 27.09 5.66 1.89 34.09

0.17 23.09

0.83 14.46

Source: Authors’ elaboration based on CASAES, 2011, question s35: “Why was this medical treatment not covered by the AUGE system (%)?”.

While this analysis responds to the specific reasons why ISAPRE affiliates did not want to take AUGE coverage, another type of analysis examines causality of individual variables, convenience of AUGE plans, and hospital supply. Within this literature are the works of Fernandez ã (2006) that make conclusions about which variables affect AUGE underutilization. The main results of these works are listed in Table 4-2b. Since the dependent variable is reversed, the results with similar variables have reverse signs. Dawes & Gonzã alez (2010) are framed. These works, through an econometric modeling, reach conclusions about which variables afeect AUGE underutilization. The main results of these works are listed in Table 4-2b. Since the dependent variable is reversed, the results with similar variables have reverse signs. Fernandez’s ã results (2006) show that a higher human development index (HDI) of the affiliates’ commune and their ISAPRE membership increase the likelihood of not using AUGE coverage. On the other hand, the greater differential between the actual cost paid and what is paid with AUGE (means there is a greater likelihood to choose AUGE). A dynamic analysis is shown in Figure 4-2, in which variations are observed in the main reasons why ISAPRE affiliates were not covered by AUGE.

Figure 4-2b. ISAPRE affiliates’ main answers to the question: “Why was it not covered by AUGE?” 60% 54%

50% 40% 32% 39% 41% 37%

46%

30% 20% 13%

10% 5%

7% 4% 0%

0% (A) CASEN 2006

(B) CASEN 2009

(A) + (B) CASEN 2011

(C)

(A) Preferred to choose another doctor or venue, or continue with their regular doctor. (B) Decided not to wait to access the medical attention through AUGE but to solve their problems faster. (C) AUGE did not cover the necessities of the illness. Source: Authors’ elaboration based on CASEN, 2006, 2009 and 2011.

IMPROVING HEALTH SYSTEM EFFICIENCY

Dawes & Gonzã alez (2010) obtained results that agree with those of Fernã andez (2006) in terms of age and marital status. In addition, they found that at a higher income there was less likelihood of choosing AUGE and that, if one was a FONASA affiliate, this probability was even greater. However, their work focuses on how the hospital supply, measured through the provision of hospital beds, affects the choice for AUGE. Thus they found that a greater supply of hospital beds implied a higher probability that a person would choose AUGE. With more sophisticated analysis, they showed that this supply variable is important for FONASA affiliates and for ISAPRE affiliates with low income. They further found that a greater quantity of primary care centres and supply of private hospitals increases and decreases respectively the probability of choosing AUGE.

Table 4-2b. Reported coefficients in explanatory models about the choice for AUGE Model Depending variable Feminine gender Age Marital status (married) HDI Log (entry) ISAPRE FONASA Dummy for health problem Coverage differential Public health services (bed provision hospital primary care) Care centre (primary care) Private hospitals Observations Pseudo R-squared 332 0.714 -1.42E-06 ** (-2.500) 0.135 ** (0.066) 0.010 *** (0.004) -0.005 *** (0.002) 9.127 0.034 0.112 *** (2.638) 0.315 *** (0.024) 0.017 * (0.010) Fernã andez (2006) Binomial Probit P(No AUGE) 0.680 ** (2.359) -0.023 *** (-2.789) -0.359 ** (-2.344) 48.466 *** (4.662) Dawes & Gonzã alez (2010) Probit P(AUGE attention) -0.001 (0.010) 0.001 *** (0.000) 0.028 * (0.016)

-0.029 *** (0.006)

Note: Only the significant variables of interest for the authors are reported. Significance at 1%*** 5%** and 10%*. Source: Ferna ã ndez (2006) and Dawes & Gonza ã lez (2010). CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

In summary, these results are consistent as—although people do not choose AUGE due to the fact that they have specific preferences for doctors and venues, according to the CASEN analysis — higher levels of income allow people to access their specific preferences. On the other hand, people believe AUGE slows down the process, which is consistent with a supply shortage of hospital beds and which in turn leads to long waiting lists for treatment. Additionally, the experts’ opinions are taken into account when considering the underutilization of AUGE. While information about AUGE’s existence and benefits has increased over time (Table 3-2l on people who did not know they are covered by AUGE), it is important to wonder whether AUGE underutilization by ISAPREs is related to information problems for ISAPRE affiliates. A health director said that “ISAPREs do not deliver much information, or it is given in such a way that makes it difficult to understand, and one does not spend time to research it all”. Another health director stated: “I think it has a lot to do with the information they give to their users. I think this is not very regulated, ISAPREs are not obliged to do anything.” Finally a Health Service manager indicated that “ISAPREs are for-profit organizations and it is inconvenient for them to encourage AUGE. Closed networks undermine free choice. Then there is vertical integration. On the other hand, the users lack information and doctors do not care to inform them since in some cases they may lose their patients.”

From the point of view of the way ISAPREs operate, a Public Health specialist claimed that “they have a network malfunction”. The specialist added: “The non-historic culture, which now weighs against them, of not having formed networks or virtuous relationships with their providers, or payment mechanisms for sharing risk, works against them because they are not able to offer the network everywhere.” Then this becomes “an access barrier for the person, and the person decides to give up AUGE and take the supplement plan with free choice ... but then you give up your guarantees, primarily for financial protection in the private sector.” An external specialist noted that: “the information that people handle there is more restrictive: I recognize two groups of people – those who already have the health issue, they are indeed informed, (and the second group are) those who did not have any issue, (probably) they know about the existence of a benefit and of certain guarantees, but they are not clear about what it is.” The specialist added that “ISAPREs find it convenient for people to use AUGE and therefore they make every possible effort ... and why is it convenient? Because the average cost of treatment in the network installed by ISAPRE is lower than the average cost on free choice. It is as simple as that: it is convenient for ISAPRE that people use AUGE, but is difficult to fight the habit.” With respect to the experts’ opinions, there is disagreement, however. Many people feel that there are incentives for the ISAPREs not to inform patients about the benefits of AUGE.

IMPROVING HEALTH SYSTEM EFFICIENCY

CONCLUSIONS

This report describes AUGE widely and comprehensively, highlights the achievements of the health care reform and states the effects it has had on private health insurance. In general, AUGE triggered a steady improvement in several areas – particularly in more precise technologies – by strengthening the national network of treatment (medical imaging, laboratory, pathological anatomy, clinical procedures, etc.) and equipment (endoscopes, bronchoscopes, cystoscopies, anaesthesia machines and equipment for surgical wards). This was attained through leasing-purchase arrangements with at least two advantages: they provided the possibility to replace a piece of equipment with a more modern one after seven years, and the contract included maintenance which ensured that the equipment would be operational every day of the year. This indicates, in addition, that the implementation of the AUGE reform was successful in terms of resource management and the democratization of public technology. The discussion about the reform took place in the Parliament in a short time with the participation of all those interested, demonstrating the complexity of the process. The fact that no regulations for the health and insurance markets were addressed facilitated the discussion but excluded any possibility for “solidarity” measures. The fact that management measures and payment mechanisms were put aside made it possible to focus on priority health problems, and treatment procedures also facilitated the discussion, aiming at gradual implementation based on scientific evidence. Among the results that stand out, we know that AUGE is correlated with a 53% life span improvement since its implementation, and FONASA beneficiaries’ lack of knowledge about AUGE coverage decreased by 50% between 2006 and 2011. CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

With regard to its impact on the use of prioritized services, AUGE has shown that production in 19 out of 56 prioritized services increased by 23.61% annually on average (each with p-value < 0.1), and decreased in 10 services by 4.32%. It can also be shown that production has been increasing by a 12% annual average in total and has particularly grown each time that a set of new health problems was added. Moreover, more than half of the original health problems are in the top 10 for which both FONASA and ISAPRE beneficiaries sought assistance. In general, seven health problems are repeated in both rankings. Thus, the original priority was effective. It can be observed that there has been a reduction in waiting times, though not in the length of the queue. Both the interviewees and the literature review suggest that there is a lack of resources to speed up the process. The AUGE reform has made clear, as a public health issue, that some patients have to wait for a long time for assistance with their health problem, especially if it is a non-AUGE pathology. This has made it possible to take remedial measures that had previously not been considered. We see that there is no significant change in the quality of services for FONASA affiliates, while ISAPRE affiliates have seen an improvement of 8%. AUGE’s impact on service opportunity has led FONASA beneficiaries to decrease their dissatisfaction and ISAPRE beneficiaries to increase their satisfaction. As for equity there has been a 20% increase in coverage for the three lower income quintiles.

In terms of health improvement, coverage of the AUGE plan positively affects the life span levels of communities when other determining factors of health status are controlled for. In addition, the cost of AUGE has decreased slightly compared to the total expenditure on health. The increase in production and cost-containment generates efficiency in health system spending and in the State budget. Regarding the consequences on private health insurance, ISAPREs have provided about one fifth of the funding compared to FONASA. In addition, one study shows that about 10% is covered by the ISAPRE plan for prioritized services and about 15% has been out-of-pocket expenditure by ISAPRE beneficiaries. The main reasons why ISAPRE beneficiaries were not covered by AUGE are: 1) they preferred to choose another doctor or venue, or continue with their regular doctor (41%), and 2) they decided not to wait to access medical attention through AUGE but to solve their problems faster (13%). This means that there is still a lack of quality and opportunity for these beneficiaries to use AUGE’s prioritized services. This is also stated in the literature.

5.1 Recommendations Finally, Table 3-1 lists the interviewees’ recommendations on the future of the AUGE plan.

Table 5-1. Interviewee recommendations on the future of the AUGE plan Dimension Future plan Recommendation Work on no more than 80 pathologies and focus on improving existing services. Emphasize preventive work in future prioritizations and service improvements. Take into account the waiting lists for possible new prioritizations which should come with additional resources. Establish a “waybill” for the future in terms of the number of services and associated improvements. Develop studies on the impact and evaluation of implementation in order to improve and refine the policy. Improve record systems and make appropriate use of data to strengthen the capacity for analysis. Study regional costs for adequate funding adjusted to their health services. Accompany the model with a more efficient and effective public providers’ management model. Improve human resources policy associated with each problem for which treatment is guaranteed. Integrate private and public systems, especially in regions. Interviewee AUGE advice specialist Service director Service director AUGE advice specialist AUGE advice specialist External specialist Service director Service director External specialist External specialist

Impact assessment

Financing Management model

IMPROVING HEALTH SYSTEM EFFICIENCY

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WHO (2014b). Determinantes sociales de la salud. Geneva: World Health Organization http://www.who.int/social_determinants/es/, accessed 4 January 2014).

ANNEXES

Annex 1. List of interviewees Type of interviewee AUGE Board specialists External specialists Health Service directors Interviewee Emilio Santelices Rodrigo Salinas Manuel Inostroza Gonzalo Simﬁn Carmen Aravena Elba Margarita Estefan Sagua Patricia Navarrete Rodrigo Alejandro Callejas Callejas Role in connection with AUGE Member, AUGE Advisory Council Member, AUGE Advisory Council Former health superintendent Investigation Manager, Association of ISAPREs Deputy Medical Manager, South Metropolitan Health Service na del Mar – Quillota Health Manager, Vi ~ Service Deputy Manager of Care Management, South-East Metropolitan Health Service Manager, Chiloé Health Service

IMPROVING HEALTH SYSTEM EFFICIENCY

Annex 2. Interview guidelines GENERAL INTERVIEW GUIDELINES 0. INTERVIEW DESCRIPTION a. Relationship with AUGE (charges, studies or investigation) b. Date on which the person was a decision-maker associated to AUGE (period) A. DESCRIPTION OF AUGE Description of the AUGE reform Strategy for implementation of the reform Funding model Why could the reform not integrate a compensation fund? How was the AUGE prioritization of diseases done? What was the decision process for including new diseases (was it based on political considerations [influence of actors])? 6 What new tools for measuring results/impact were generated along with AUGE? How do you evaluate them? 7 What new plans, programmes or policies were generated as a result of AUGE? B. USE OF AUGE BY ISAPREs BENEFICIARIES 8 Why do ISAPREs provide about half of AUGE services of what is collected in AUGE premiums? 9 How are the information and institutional obstacles managed? 10 Is there any other reason for AUGE’s underutilization? C. AUGE IMPACTS / RESULTS 11 What level of importance assigned toAUGE? 12 What results did AUGE obtain when accessing to interventions and associated services to guaranteed pathologies? 13 What impact did AUGE have on waiting lists? 14 What impact did AUGE have on the quality and opportunity of the services provided? 15 What contribution did AUGE have on equity? 16 What impact did AUGE have on the health of the Chileans population (regarding DALY quality of life or on YLL mortality)? 17 What impact did AUGE have on the State budget? Did AUGE have enough funding? 18 What results did AUGE have on the efficiency of resource allocation? D. RECOMMENDATIONS 19 Recommendations for AUGE 20 Recommendations for documents (studies, reports, consulting, etc.) 1 2 3 4 5

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

Annex 3. DISEASES COVERED BY AUGE AND DATE OF INCORPORATION Incorporation date 1 July 2005 Disease illness End-stage renal disease Operable congenital heart disease Cervical cancer Relief of pain from advanced cancer and palliative care Acute myocardial infarction Diabetes mellitus type I Diabetes mellitus type II Breast cancer Spinal dysraphias Surgical treatment of scoliosis Surgical treatment of cataract Total hip endoprostheses Cleft lip and palate Cancer Schizophrenia Testicular cancer Lymphomas Acquired immunodeficiency syndrome HIV/AIDS Acute lower respiratory infection outpatient management Community acquired pneumonia outpatient management Primary or essential hypertension Nonrefractory epilepsy Comprehensive oral health Prematurity Disorders in cardiac impulses and their conduction 1 July 2006 Preventive cholecystectomy of gallbladder cancer Gastric cancer Prostate cancer Refraction errors Strabismus Diabetic retinopathy Nontraumatic rhegmatogenous detachment of retina Haemophilia Depression Surgical treatment of benign prostatic hyperplasia in symptomatic persons Orthotics (or technical help) Ischaemic stroke Chronic obstructive pulmonary disease of outpatient treatment Severe bronchial asthma Respiratory distress syndrome in the newborn Requirements

Under 15 years of age

15 years of age and over Under 25 years of age 65 years of age and over with severe hip arthrosis limitation Under 15 years of age 15 years of age and over 15 years of age and over Under 5 years of age 65 years of age and over 65 years of age and over 1 to 15 years of age 6 years of age 15 years of age and over in need of a pacemaker 35 to 49 years of age 15 years of age and over 65 years of age and over Under 9 years of age

15 years of age and over

65 years of age and over 15 years of age and over IMPROVING HEALTH SYSTEM EFFICIENCY

Under 15 years of age

Disease covered by AUGE by date of incorporation (continued) 1 July 2007 Medical treatment of osteoarthritis of the hip and/or knee, mild or moderate Subarachnoid secondary haemorrhage to ruptured cerebral aneurysms Surgical treatment of primary tumours of the central nervous system Surgical treatment of lumbar herniated pulposus nucleus Leukemia Outpatient dental urgency Comprehensive oral health Severe polytraumatized Urgent care of moderate or severe head injury Severe ocular trauma Cystic fibrosis Rheumatoid arthritis Harmful consumption of and dependence on alcohol and drugs Birth analgesia Highly burnt Bilateral hearing loss Retinopathy of the premature baby Pulmonary dysplasia of the premature baby Bilateral sensorineural hearing loss of the premature baby Non-refractory epilepsy Bronchial asthma Parkinson disease Juvenile idiopathic arthritis Secondary prevention of ESRD Laxative hip dysplasia Comprehensive oral health in the pregnant Relapsing-remitting multiple sclerosis Hepatitis B Hepatitis C Colorectal cancer Epithelial ovarian cancer Bladder cancer Osteosarcoma Surgical treatment of lesions of the aortic valve Bipolar disorder Hypothyroidism Treatment of moderate hearing loss Lupus erythematosus Surgical treatment of lesions of the mitral and tricuspid valves Eradication therapy for Helicobacter pylori 55 years of age and over

15 years of age and over 15 years of age and over 60 years of age

Under 20 years of age

65 years of age and in need of hearing aids

1 July 2010

15 years of age and over 15 years of age and over

CHILE. IMPLEMENTATION OF THE UNIVERSAL ACCESS WITH EXPLICIT GUARANTEES (AUGE) REFORM

1 July 2013

15 years of age and over 15 years of age and over 15 years of age and over 15 years of age and over 15 years of age and over 15 years of age and over Under 2 years of age 15 years of age and over

Source: FONASA.

Health System Governance, Policy and Aid Effectiveness (HGS)

Health Financing Policy (HFP)

Cost Effectiveness, Expenditure and Priority Setting (CEP)

WE ARE ALSO PROUD TO HOST THE SECRETARIATS FOR:

In an increasingly interconnected world, we know that we achieve more when we work with others. Recent collaborations include: Abt Associates Inc.; Australian Agency For International Development (AusAID); Bill & Melinda Gates Foundation; European Commission – Europeaid Cooperation Office (AIDCO); France, Ministry Of Foreign And European Affairs; Global Alliance for Vaccines and Immunisation (GAVI); Germany, Deutsche Gesellschaft Für Internationale Zusammenarbeit (GIZ) Gmbh; Global Fund To Fight Aids, Tuberculosis And Malaria (GFATM); Luxembourg Development Cooperation; Netherlands, Ministry of Health, Welfare and Sport; Norwegian Agency For Development Cooperation (NORAD); Republic of Korea, Ministry of Health and Welfare; Republic of Korea, National Health Insurance Service (NHIS); Rockefeller Foundation; Susan G. Komen Breast Cancer Foundation Inc.; Spanish Agency for International Cooperation and Development (AECID); Swedish International Development Cooperation Agency (SIDA); United Kingdom-Department For International Development (DFID); United Nations Development Programme (UNDP); United States Agency For International Development (USAID). And we are proud to be part of the Providing for Health Initiative (P4H) and to co-host the secretariat for International Health Partnerships (IHP+). Work with us so we can support countries to reach our shared objective: country health governance and financing systems that ensure universal and sustainable coverage.

For additional information, please contact: Department of Health Systems Governance and Financing Health Systems and Innovation World Health Organization Email hgfdepartment@who.int Website www.who.int/topics/health_systems/en/

Informations clés

Organisation Organisation mondiale de la santé (OMS)

Type de document Technical Documents

Date d'adoption 6 octobre 2015

Source Organisation mondiale de la santé