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Health Reform: Insurers Say Proposed Budget Cuts Are Not Feasible

Government’s proposal would require insurers to lower cost per insured by 25%


June 7, 2001
Copyright © 2001 CARIBBEAN BUSINESS. All Rights Reserved.

Health insurance companies participating in the government’s health reform are baffled by the government’s intention of saving $300 million by cutting reform expenses.

In their opinion, not only will this make it practically impossible to offer satisfactory services, it may even have a negative impact on the island’s economy.

The proposed cut would force insurers to lower cost per insured by 25%, according to Miguel Vazquez Deynes, president of Triple-S Management Corp., which manages reform provider Triple-C. Cost per insured is now estimated at $59.60. The budget cut would reduce this figure to $46.30, he told CARIBBEAN BUSINESS.

"We are in a tight situation with the current cost per insured. Imagine how we’ll be with a lower cost," Vazquez Deynes said.

"If the government doesn’t reduce coverage or the number of insured, I don’t see how it expects to save $300 million," said Carlos Muñoz, president of Medical Card Systems (MCS), another reform participant. "I really don’t understand the government’s math," he added.

"It’s very difficult to have coverage as it is today. The price the government is proposing will only be possible if the product is reconfigured or copayments are increased," Vazquez Deynes added.

Muñoz stated in a recent health insurance conference that the proposed cut could hurt the economy and accelerate the economic slowdown that is already in place.

"The reform took money from the government and put it in private hands through community laboratories, dentists, pharmacies, and other private health providers. It redistributed the income that was once left in the hands of government and passed it on to the population. This served as a stimulus to the economy because the population began consuming more health services. If they cut $300 million, that’s $300 million that the population will not be able to invest in services that now stimulate the economy," he said.

The comments stem from letters from the Health Insurance Administration (ASES by its Spanish acronym) received last week by some insurers (MCS, Triple-C, and La Cruz Azul) stating that their contracts would be canceled on Aug. 26 if they didn’t adapt to the government’s budget cuts by July 1.

"The government announced the cancellation of contracts to redefine the reform’s terms and then issue a Request for Proposal (RFP). Insurers will respond to the RFP and send in their proposals. If the insurers don’t agree with the terms set forth by the government, they will have until Aug. 26 to undergo a transition process (to turn over the region it previously covered to a new insurer)," explained Muñoz. Regarding MCS, Muñoz said it will only continue to participate in the reform as long as it represents a successful business endeavor.

Zoraida Marchany, president of La Cruz Azul, told CARIBBEAN BUSINESS that the changes the reform’s coverage will suffer in order to make it less costly are still unknown. She did mention some alternatives, among them to have the insured pay capitation fees according to income or to reduce coverage. But until now, the insurers don’t know exactly what changes the government will expect the insurers to make to lower costs.

Vazquez Deynes said Triple-C is looking for alternatives and will submit a proposal to the Health Insurance Administration.

Government Development Bank President Juan Agosto Alicea told CARIBBEAN BUSINESS the reason for the cancellation was to have all contracts run concurrently starting July 1. Agosto Alicea said that way it will be easier for the administration to pinpoint areas that could of yield greater savings, which could help reduce the $300million deficiency in the fiscal 2002 budget.

This Caribbean Business article appears courtesy of Casiano Communications.
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