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basis and to the public services on the basis of diagnosis-related groups (DRG). The private insurance system is funded by public subsidies, by a compulsory withholding of 7 percent of insured parties' salaries, and by voluntary contributions to purchase a better plan. Delivery is provided by clinics and hospitals dispersed throughout the market. (ISAPRES chose to become pure third-party payers, and vertical integration did not occur until very recently.) The main trend is to have a list of providers selected by each insurance company, with the freechoice option increasingly restricted to the more expensive plans. The insured population is eligible for different health care plans, according to purchasing power. The dual model is presented in Figure 1.1. The duality of the model is seen in the distinct agents' performance of each function in the private or in the public system and the relations and flows that exist among them. Making contributions to both systems at the same time is prohibited. Basically, each system has its own coverage, financial mechanisms, organizational structure, and delivery network, and both function as comprehensive, integral health care systems. Some interactions do occur between the two systems, in terms of the subsidiary role of the public system (there are government subsidies in favor of the private system) and by the continuing need to guarantee health care to all individuals refused by the private system. Regulation is also a bridge between public and private systems, since the ISAPRES authority is an agency of the Health Ministry. The course of this dual system in Chile has not been free of problems, such as segmentation, inequality, and risk-averse selection. With access to health insurance being dependent upon individual riskbased private health insurance, the population was effectively segmented into different groups, each eligible for different benefits and services. This segmentation occurred between public and private users and then within both groups. The right to health care was thus regulated by the purchasing power of each individual, unless fiscal contributions from general taxation increased to compensate and support those unable to afford care. According to Baeza,14 in 1990, ten years into the reform, there occurred a significant reduction in the fiscal contribution to the public health care sector. As a consequence, while annual per capita expenditure in the public sector was about $65 (58 percent of which consisted of payroll tax revenues), the average annual per capita expenditure in the ISAPRES sector was about $250 (90 percent of which 14
Baeza 1998, p. 11.
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HEALTH CARE IN CHILE, BRAZIL AND COLOMBIA