Private medicine: a tweet and underfunding

In Argentina, the private health sector is the majority. For example, public hospitals throughout the country there are about 1,500. But private clinics and sanatoriums there are about 4,000 and private clinical analysis and imaging centers 20,000. Physicians nationwide number 200,000 with a similar number of nurses. Both doctors and nurses often combine their work in the public sector with private practice.

Most of the people who access a doctor, a diagnostic center or a private clinic do so through a social work or prepaid medical company. That is, it makes a monthly contribution to social or prepaid work and they hire doctors, diagnostic centers, clinics and sanatoriums where their affiliates receive care. Then, the social work and prepaid pay the medical providers.

When the pandemic came, the Government decided to freeze the prices of prepaid, which, in turn, had to freeze medical fees and tariffs. Then came 2021 and in the first half of the year the Government remained reluctant to update the prices of prepaid, fees and tariffs.

In June 2021, the peak of the second wave of Covid occurred and private medicine collapsed due to the number of patients, the increase in the price of supplies, and long-delayed medical fees and tariffs.

The situation was so critical that there was a collective presentation to the Justice asking that it order the Government to adjust the prices. The judge must have been scared (with the second wave) because he made room for them to touch. The Government, then, gave discretionary increases during the second half of 2021 and the first half of 2022, while designing an automatic adjustment formula for prepaid medicine prices.

This formula was born in June 2022 under the name of “Health Cost Index” and debuted in August 2022 with a bimonthly increase of 11%, another in October of 11% and in December of 13%. More or less as inflation comes, which is 6% per month.

Sure, but since there were partial recompositions in the first half of 2022, with the accumulation of the 3 increases in the Health Cost Index in the second half of 2022, the total increase in the price of private medicine will be 114%. This is more than the 100% inflation expected in December 2022.

Then came a tweet from the Vice President of the Nation saying that this was unacceptable. The rest of the cabinet, starting with the president and continuing with the Ministry of Health, instead of stopping the ball and explaining to the vice president that she may be wrong, that this story dates back to the freezing of the first wave of Covid, they reacted suddenly by changing the formula for another that takes 90% of the variation of the RIPTE (the index that measures the variation observed in wages and is the one with which retirements are adjusted).

response to increases

What should have been the response to the vice president’s tweet? The result of making the calculations since 2020. That year, the Government had authorized only 10% adjustment in the prices of private medicine, when inflation was 36%. In 2021, the adjustment in private medicine was 47% when inflation was 51%. In 2022, the private medicine adjustment will be 114% and inflation will be 100%.

If one capitalizes on all these increases, the prices of private medicine are still 15% lower, in real terms, than before the pandemic. The response to the tweet was that this year’s increase above inflation only made up for part of what was lost in the pandemic. But hey, that’s it.

Well, no. Because defining that the new adjustment formula will be only 90% of the variation in wages in the economy means that the prices of private medicine continue to depreciate. After a year, that is, in December 2023, they will have lost an additional 5% to the 15% that they could not recover due to the vice president’s tweet.

The public often welcomes the freezing of prepaid prices. What happens is that they are eyes that do not see that, what the prepaid does not receive, it does not pay to the doctors. The result: there are no shifts, co-payments increase, doctors are dissatisfied, fewer or lower quality supplies are purchased. All of which leads to the loss of medical quality in Argentina, which used to be advanced.

Sample button. In public hospitals and private clinics, it is not possible to fill all the available places for medical residences. Critical specialties, such as pediatrics and general medicine, do not have enough residents. You don’t have to be a fortune teller to realize that this will lead to a lack of professionals. This is another of the manifestations of the damage caused by demagogy, which in this case is the denial of the good practice of making public policy based on evidence, which is how good medicine should be done, say the doctors.

*IDESA Economist

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