The new legislation and governmental proposals are part of a larger effort by the Chilean government to make the public system more attractive and move towards a universal public healthcare system that improves healthcare experiences while reducing disparity between social classes. Employers with group health plans in place today should continue to monitor the development of these proposed evolutions as the shifting market may lead to unknown cost increases for employees and difficulties in the overall delivery of care for all Chileans.
Concurrently, the government has also proposed reforms to the national tax code and to the public pension system.
The healthcare system in Chile is bifurcated between an often-overcrowded public system, Fonasa, and a system of private healthcare funds, Isapres, typically used by higher-income individuals. Isapres are intended to provide individualized levels and types of coverage rather than the standard offering available through the public system. Under an Isapre, services are delivered through affiliated private facilities and practitioners separate from the Fonasa system. Employees cannot participate in both systems.
On 1 September 2022, new legislation (Copago Cero) came into effect aiming to relieve the financial burden of healthcare by eliminating all copayments on services received through Fonasa. Copago Cero has fundamentally restructured a major cost-sharing mechanism under the public system which historically required people earning above the poverty line to pay for a portion of their care according to their income level.
Enhancements to Fonasa include expanding access to services from external providers and facilities and improving access to quality care by encouraging people to seek care at private facilities that accept Fonasa patients. These enhancements are in response to criticism that Fonasa is not able to provide comprehensive care at the same levels as facilities only accepting Isapre patients.
Additionally, with the proposed improvements to Fonasa, the government intends to further minimize the financial stress of paying for healthcare coverage by providing better care for a standardized contribution. Today, employees contribute a base amount of 7% to either Fonasa or an Isapre. For employees contributing to an Isapre, many will pay an additional amount to cover dependents or for enhanced coverage.
In recent months, the government has proposed major reforms to the regulatory framework governing Isapres, which cover higher earners or approximately 15% of Chileans. The proposed reforms to Isapres include removing the ability to determine premiums based on gender or on a participant’s health history. The reforms also aim to harmonize service levels by requiring funds to provide universal plan options, over which the government’s regulatory body would have control.
Further control has been asserted over Isapres’ pricing practices. Premium determination and the pricing of services are often publicly scrutinized and have been ruled on by the Chilean Supreme Court—a recent decision by the Court could result in several Isapres owing up to USD 1B in excess premium charges.
The proposed reforms to both Isapres and Fonasa are profound and could ultimately reshape the private, supplemental insurance market in Chile. Employees may soon have the ability to better control the cost of healthcare by moving from an Isapres fund to Fonasa while maintaining the same or similar levels of care.
Additionally, if Isapres are eliminated or if their place in the market diminishes, people will have to look for additional solutions by paying more to receive healthcare in the private health system. For people with Fonasa, hospital waiting lists may increase if agreements with additional private providers are not established. The collapse of private health insurance companies (Isapres) would generate a healthcare delivery crisis affecting their members, private clinics, and even patients with Fonasa, as there wouldn’t be enough capacity to deliver adequate care to everyone.
Employers in Chile should continue to monitor legislative developments and prepare for considerable evolutions in the supplemental healthcare market should these reforms come to fruition. The Lockton Global People Solutions Compliance team will provide updates on these developments as they unfold, and more details are released.
Sr. Global People Solutions Researcher, Intellectual Capital | Lockton Companies
Carola Orellana Santos
Head of People Solutions | Lockton Chile