Health insurance in the contributive and subsidized regimes and its impact on the service providers

Abstract

The performance of 18 private Health-promoting (EPS) and Family Compensation (CCF) entities, as well as their general balances for 1997, 1998 and 1999, were studied to determine the profit margins achieved by EPS's in their work of administering health insurance. The average behavior of each EPS balance sheet was analyzed to reduce the effect produced by extreme cases; each EPS's value was thus weighted by the number of its affiliated people. The expected behavior of the costs and expenses of companies whose main business is providing health insurance could thus become determined. The main source of operational income for a private EPS is the contributive regime's per capita unit of payment (UPC). Subsidized regime participation and that of other sources of income has decreased year by year. By contrast, public EPS's have shown decreasing participation in income obtained from UPC (contributive and subsidized) and growing dependence on other sources of income; this can be interpreted as being a symptom of weak commercial management. According to the balance sheets provided by the SNS, the EPS (public, private and Family Compensation entities), including the Social Security Institute (ISS), together obtained a total of 4.18 billion pesos operational income in 1999, an increase of 21.7% as compared to 1998. Income received from the ISS amounted to 1.93 billion dollars in 1999 (46% of the total). At 2000 prices, the total amount of operational income was 4.54 billion pesos in 1999 (15.6% real increase). Taking the behavior of 4 EPS's as our reference point (Sanitas, Humana Vivir, Coomeva and Famisanar), it can be concluded that an EPS whose main business is health insurance needs a 17.2% gross margin to cover its operational and non-operational costs and a 1.1% margin before tax.