Colombia: Lower House Approves Healthcare System Reforms

Employer Action Code: Monitor

After initial resistance and intense discussion, the lower house of Congress (Chamber of Representatives) has approved the government's proposed major structural reform of the national healthcare system. Bill 339 of 2023 would dramatically shift control of healthcare funding from private companies to the government, with the aims of improving financial management, ensuring access to healthcare in rural areas and promoting preventive care. The bill is now with the Senate. If it passes into law, opponents of the reform have promised to challenge it in the Constitutional Court. Other ambitious reforms proposed by the government — to the national pension system (see this Global News Brief - Colombia: Proposed reforms to the national pension system) and the Labor Code (see this Global News Brief - Colombia: Substantial labor reform on the horizon) — remain stalled in the Chamber of Representatives.

Key details

Colombia has a universal healthcare system under which residents must sign up for coverage for themselves and their dependents with an approved private or public insurer (Entidad Promotora de Salud – EPS), which in turn contracts for services from identified healthcare practitioners and providers (Instituciones Prestadoras de Salud – IPSs). The EPSs are funded by employee and employee payroll contributions and government subsidies. Benefits include a variety of major and minor medical care, pharmaceuticals, maternity care and pediatric care. The healthcare reforms, if enacted, would mean that, among other things:

• EPS insurers would cease to function in their current role, taking on more of an administrative function as health managers.
• All healthcare funding and spending would be centralized under one public entity that would pay IPSs directly.
• Practice and primary care centers would be established, especially in rural locations, to guarantee that the entire population has access to system healthcare benefits as close as possible to their homes.

The proposals would not change the levels of employer and employee contributions or benefit coverage under the system.

Employer implications

Despite providing generally good levels of overall care (in terms of coverage and cost) and having among the lowest out-of-pocket patient spending on healthcare in the world, according to the Organization for Economic Cooperation and Development (OECD), Columbia has issues with waiting lists and the quality and availability of medical care. Total healthcare spending equaled 8.1% of GDP as of 2022 (OECD data), with public and mandatory spending accounting for 75% of all spending. Private medical insurance and out-of-pocket costs account for most private spending. Most employers (82%) surveyed by WTW offer supplemental coverage to provide better access to specialists and specialized treatments. The benefit is typically arranged through a system of voluntary prepaid health or insurance policies, while care is arranged with private networks of service providers. The creation of a single-payer public healthcare system would likely increase interest in private health insurance. Employers should monitor the progress of the legislation and consider potential effects on their employees and on their supplemental healthcare coverage.