The death of Petro's healthcare reform
The death of Petro's healthcare reform
Gustavo Petro's healthcare reform was defeated in the Senate, but Petro is determined to precipitate the 'explicit crisis' of the healthcare system to implement his reform through other means.
On April 3, by nine votes to five, the seventh commission of the Senate defeated and killed Petro’s healthcare reform. While it was a long time in the making, this is the biggest legislative defeat for Petro to date. However, Petro isn’t willing to give up the fight, and will try to force as much of his healthcare reform through as possible by decree and executive action, trying to precipitate the “explicit crisis” of the healthcare system.
A brutal defeat
The writing had been on the wall for three weeks, ever since eight of the commission’s fourteen members co-signed a ponencia de archivo (proposal to kill a bill). This came as a very nasty surprise to the government, which didn’t expect that the reform’s opponents would be able to get an absolute majority in the commission, and the death of the healthcare reform became a matter of when rather than if. The government, through various strategies, tried to delay the inevitable, and badly wanted to delay the vote in commission for as long as possible, in increasingly futile attempts to buy time. The reform’s opponents insisted that the vote be held as soon as possible, but the commission’s president, Pacto (MAIS) senator Martha Peralta, was unwilling.
On April 2, the opposition used an article of the opposition statute that allows opposition parties to set the order of business up to three times during a legislative year to schedule the debate and vote for the next day.
Debate and discussion lasted for several hours on April 3, with the reform’s opponents in a hurry to get to a vote and with the government and its caucus eager to delay the inevitable vote for as long as possible (in the hopes of running out of time). Following long speeches from several Pacto senators and representatives (many of them not members of the commission itself) and from the interior and health ministers, the ponencia de archivo was finally put to a vote. As expected, nine voted in favour, killing the bill, and five voted against. Only the Pacto (and Comunes), along with Green senator Fabián Díaz voted against. Senators from the CD, Conservatives, Liberals, Partido de la U, ASI and the Christian parties (MIRA and Colombia Justa Libres) voted for the negative ponencia.
A radical overhaul
The healthcare reform was first presented by then-health minister Carolina Corcho over a year ago, in February 2023. It laid out a total transformation of Colombia’s healthcare system, from the current mixed-market system to an essentially government-run single-payer public system. The radical overhaul of the system was controversial. The most contentious point throughout was the elimination of the EPS (entidades promotoras de salud), private and public insurance providers (similar to health maintenance organizations in the US), which would have been replaced by gestoras de salud y vida.
The left has long considered the EPS to be the biggest problem with the system and objected to their role as financial intermediaries managing public money. In a tweet in February, Petro depicted a “system of private intermediation of public resources to build a healthcare market” which destroyed public hospitals and left public resources as the “property of owners and/or administrators of EPS.” He said that his proposal of a preventive system with direct payments to hospitals was undoubtedly a solution, all while attacking “autistic political sectors that do not believe that the neoliberal model has come to an end.”
Indeed, EPS have often been the lightning rod for criticism because of their ineffectiveness at managing clinical and financial risks, but also because of their scandals, suspicious profits, spectacular rise and falls and financial crises. One of the left’s main arguments in favour of the reform was the enormous debts owed by EPS to healthcare providers (IPS). Petro has often cited a recent report from the Contraloría which revealed that EPS have a combined debt of 25 trillion pesos ($6.65 billion) and that 16 of 26 EPS have unsatisfactory solvency margin indicators and do not comply with some legal provisions to operate. EPS owe 11.3 trillion pesos to IPS. However, as explained here, these numbers come with caveats and don’t necessarily indicate, as Petro claims, money that has been ‘lost’ or stolen.
However, critics of the reform charged that eliminating EPS meant losing their accumulated experience in managing financial and clinical risk, rationalizing and auditing costs, as well as eliminating patient choice (under the new system, people would be registered with a local primary care centre, or CAPS, in their area). Moreover, many worried about a quick, haphazard transition to a single-payer system with less oversight and cost rationalization, without increasing the operational capacity, competence and experience of the system’s financial administrator (ADRES), could lead to costs spiraling out of control and collapsing the system.
Opponents of the reform complained that the reform was never properly costed. In late March 2024, the finance ministry presented what the government claimed was a fiscal endorsement of the reform, stating that the reform would require an additional 2.9 trillion pesos in 2025 and, therefore, budget cuts in other areas. There is broad agreement that the system is financially unsustainable as it stands, but disagreements as to the causes of this situation. EPS, for example, say that the capitation payment (UPC) they receive based on their number of enrollees is insufficient given rising medical costs, an aging population and other factors. In a critical op-ed, academic and journalist Hernando Gómez Buendía wrote “the healthcare system we have is unsustainable… and the one that Petro proposes is even more unsustainable.”
Doomed from the start?
From the very beginning, Petro chose to go with left-wing dogma rather than seek consensus. Even before it saw light of day, the proposal caused the first major ideological confrontation within the new cabinet, being internally criticized by the centrist liberal ministers, led by then-education minister Alejandro Gaviria (who had been health minister for six years under Santos) and then-finance minister José Antonio Ocampo. Petro sided with Corcho’s radical approach, which was closer to his heart and ideological beliefs. This led to Gaviria’s dismissal from cabinet in late February, followed two months later by a bigger shuffle which saw the remaining centrist liberal ministers, including Ocampo, dismissed.
The healthcare reform became the centerpiece of Petro’s ambitious agenda of socioeconomic reforms. With a maximalist attitude, Petro refused to seriously compromise and never seriously sought to build broader consensus. In March 2023, repeated attempts at reaching some sort of compromise with other parties (Liberals, Conservatives and La U) failed, as Petro refused to make major concessions on the essential points of the reform, including the quasi-elimination of EPS.
Assailed on all sides and controversial from the get-go, the healthcare reform faced enormous odds from the beginning. Perhaps it was doomed to fail from the start—that was always my personal feeling (my original post on the subject, in April 2023, was titled ‘Petro’s healthcare reform fiasco’). However, the reform became a point of honour for Petro and, in an uphill fight to save it, the government spent enormous amounts of time and political capital. To move his reform forward, Petro shuffled his cabinet twice, kicking out the centrist liberal ministers (he now says appointing them was his biggest mistake), broke his coalition in Congress and even sacrified Carolina Corcho. Corcho was replaced by Guillermo Alfonso Jaramillo, a doctor and experienced politician (his political career goes back to the 1970s) close to Petro, a man better suited to political negotiations than Corcho, who was more of an activist.
The collapse of the coalition in Congress (with the Liberals, Conservatives and La U), brought on by Petro’s growing frustration and impatience in negotiating his agenda with coalition parties’ leaderships, marked a major shift in Petro’s style of governance. It forever weakened his majorities in Congress, and Petro gradually become increasingly populist in his rhetoric and strategy.
In the lower house, the government played divide and win to get the reform approved in first debate in commission (in May 2023) and in second debate in the plenary (in December 2023). Circumventing party leaders, the government exploited the internal divisions in other parties, negotiating individually and informally with congressmen, often giving out patronage appointments or other benefits. In the House, where the government’s majorities are more solid, the reform ultimately survived but only at a huge cost to the government. The entire process took very long—second debate in the plenary lasted nearly six months, from July to early December, with the opposition repeatedly delaying debate by breaking quorum. In the end, the reform was approved with the support of the left, La U, most Liberals and half of the Greens. This left the reform with only a bit over four months to be approved in two debates in the Senate. However, Petro’s majorities in the Senate are much weaker or nonexistent and it was clear that the reform would face greater resistance.
Nevertheless, Petro remained unwilling to negotiate with other parties and obstinately defended his reform. Jaramillo, who had been brought on to help negotiate congressional support for the reform, ended up being more of a liability. In November 2023, he alienated the Greens, officially still part of the governing coalition, by publicly calling out the opposition of certain Green representatives all while enjoying bureaucratic ‘quotas’ in the government. Green representative Martha Alfonso Jurado, who had shouldered the reform in the House, complained of Jaramillo’s “frustrating lack of political and technical leadership” and blamed him for the reform’s difficulties.
From the beginning, Petro misread the public mood. He believed that people’s oft-repeated complaints about EPS meant that they would be enthused about their elimination. Instead, the reform was divisive and lacked real popular support. Polling showed that there was not much appetite for major structural changes, and that people were relatively happy with the healthcare system and the care they received. While a majority support changes to the system, Petro’s overhaul and all its uncertainties worried people. From February 2023, Petro sought to amp up social agitation and provoke a mass popular mobilization in favour of the reform, starting with an unprecedented balconazo (speech to an assembled crowd from the balcony of the presidential palace). These government-pushed demonstrations largely flopped, failing to galvanize popular support for the reform. With little popular support behind it, the reform was opposed by several experts, some patients’ associations, former health ministers and the influential gremios (sectoral associations/lobbies) of the healthcare industry.
As discussed above, the negative ponencia took the government by surprise and left it scrambling. Various desperate, last-minute attempts to salvage the reform failed. Petro’s explosive idea of a constituent assembly, indirectly a reaction to the negative ponencia, was the final nail in the coffin, ending any chances of a ‘miracle’ for the reform.
Precipitating the crisis
The death of the healthcare reform is undoubtedly the biggest legislative defeat for Petro yet. Time is running out for the other big items on the government’s legislative agenda, most notably the pension reform, which needs to be approved in three more debates by the end of June.
The death of the healthcare reform is obviously a blow to Petro, but at the same time it’s not necessarily to his complete displeasure. Petro revels in the role of tragic victim of the ‘oligarchic establishment’. The defeat of the reform in Congress allows him to play that role again. In the wake of the defeat, Petro tweeted that they had been defeated (‘for now’) by Keralty, the owner of EPS Sanitas (the second largest EPS). Days before the vote, Pacto senator Wilson Arias had denounced that five parties (CD, La U, Liberals, ASI and Conservative) had received money from Keralty in 2022, and claimed that it was illegal because all members of Keralty’s board are foreigners (the company is Spanish-owned). Petro said that they’d been defeated “by a few parliamentarians financed by foreigners” and a “flagrant violation of the constitution and the law.” In a later tweet, Petro moaned that it was humiliating for the nation that the lives of people were sacrified by “three or four congressmen financed by foreign money and by foreigners who had stolen tens of trillions of pesos.”
Gustavo Petro has repeatedly said that the EPS will collapse on their own because the model is unsustainable. He isn’t entirely wrong: over 100 EPS have been liquidated over the past 20 years, and there are 29 EPS in the country today. In 2022, then-minister Carolina Corcho said that there needed to be a “clear, explicit crisis” that’d make people realize that change is required.
Petro has also repeatedly implied that the healthcare reform would happen regardless of what happened in Congress, por las buenas o por las malas (the easy way or the hard way). In 2023, he tried to start a ‘pilot program’ of the reform in La Guajira through a state of emergency declared in that department, but the Constitutional Court later ruled that the state of emergency was unconstitutional and struck down the decrees made under of this state of emergency.
With the healthcare reform defeated in Congress, Petro now wants to precipitate the ‘explicit crisis’. In the previous months, according to some analysts, the government had sped up the crisis—by delaying some payments to EPS called presupuestos máximos (additional money to cover procedures and medications not covered by the basic health plan), the alleged insufficient increase in the value of the UPC in 2023 and 2024 which EPS claim isn’t enough to cover their costs. Petro has repeatedly denied that the UPC is insufficient. On April 5, before the Constitutional Court, Jaramillo said that the UPC needed to be ‘revised’ (his comment was widely misinterpreted as an admission that is was insufficient).
The explicit crisis
Nearly everyone, regardless of their politics, agrees that Colombia’s healthcare system is in crisis. There’s not as much agreement as to the causes of the crisis and the solutions to it. Petro and the government blame, almost exclusively, the EPS for the crisis, accusing them of bankrupting hospitals and blaming them for 340,000 avoidable deaths in the past decade. The opposition says that Petro has caused or worsened the current crisis and is trying to use a crisis of his own making to ram through, by executive action, his failed reform.
On April 2, just as the vote was scheduled in the commission, the Superintendence of Health (Supersalud), the regulator of the healthcare system, forcibly intervened EPS Sanitas, the second-largest EPS with 5.79 million enrollees, predominantly in the contributory regime. Administrative intervention means that Supersalud takes control of an entity and its assets and appoints an intervening agent to run it.
The superintendent of health, Luis Carlos Leal (a former left-wing Green councillor in Bogotá), justified the intervention for three reasons: the lack of technical reserves (financial savings that EPS must have), increased complaints from users and a large debt with healthcare providers (2 trillion pesos or $533.6 million). Sanitas does not comply with the liquidity and solvency indicators. Last year, Sanitas and other EPS had alerted the health minister to their financial difficulties.
In addition, Sanitas had been in Petro’s crosshairs in the last few weeks. As mentioned above, Pacto senator Wilson Arias had denounced that Keralty, the corporate group that owns Sanitas, had made (allegedly) illegal donations to political parties, and Petro said that if the “foreign company that owns an EPS is the main financier of political campaigns, they have broken the constitution.”
The move was sudden and extreme, because intervention is the most extreme step, short of liquidation, and the government skipped all steps that could come before. Sanitas’ deposed leadership protested the intervention as illegal, disproportionate and discriminatory, and said that the financial situation was largely the fault of the government itself. The Procuraduría has opened an investigation against Leal for possible irregularities in the intervention. Two lawsuits have been filed in the Council of State, by Duque’s former justice minister Wilson Ruiz and CR, seeking to nullify the intervention.
The next day, the government forcibly intervened Nueva EPS, the largest EPS in Colombia with 10.9 million enrollees in both the contributory and subsidized regimes. Supersalud said that Nueva EPS lacked the minimum capital and technical reserves, had accrued debts of 1.19 trillion pesos ($313 million) to IPS and that there had been an ‘alarming’ increase in complaints by users. Days before, Petro tweeted that they’d found false accounting in the EPS with 6 trillion pesos in public funds allegedly misappropriated. In March, Nueva EPS reported disastrous losses of 411 billion pesos in 2023.
Nueva EPS, created in 2008 on the ruins of the old Instituto de Seguros Sociales, is owned by family compensation funds and the national government. In November, the government strengthened its hold on Nueva EPS with a new board of directors aligned with its objectives, and in January, the board selected Aldo Cadena, a political operator and union boss close to Petro, as the new president. In the reform, the government envisioned for the Nueva EPS to play a key role in the transition to its new health system. In the absence of a reform, Nueva EPS was also seen as the government’s plan B: liquidate EPS that don’t meet legal requirements to operate (most of them), strengthen Nueva EPS by transferring enrollees to it to make it a big, public EPS. For the time being, an intervened EPS have limits on the enrollment of new members.
Adding to the crisis, on April 4, Compensar EPS asked to be voluntarily liquidated because of the “complex financial situation faced by the healthcare system.” Compensar had major losses in 2022 and 2023. The EPS’ manager said that its unsustainability was a structural problem and didn’t blame the government, which Petro said proved that he was right. Compensar EPS has 2.16 million enrollees.
On April 10, Supersalud intervened EPS SOS, a regional insurer with 750,000 enrollees in Valle del Cauca and the Eje Cafetero.
Following these administrative interventions, seven EPS with a total of 25.4 million enrollees are currently intervened by the government—just under half of the insured population (51.7 million). In addition, four EPS have been liquidated since Petro took office. As the government’s supporters have been quick to (correctly) point out, this is nothing new: 13 EPS with over 9 million enrollees were liquidated under Duque (18 were liquidated during Santos’ two terms). However, the timing and sheer weight of the EPS currently intervened by the government has precipitated or aggravated the crisis and created political debate.
Supersalud and the government have said that these interventions are meant to protect users’ rights and reassured anxious patients that services wouldn’t be interrupted. By tweet, Petro explained what would happen in intervened EPS: new boards with representatives of patients, clinics and hospitals; restoring patients’ right to choose their doctors; local authorities called upon to create regional networks of healthcare providers; fee schedules set by the ADRES with EPS invited to audit accounts and direct, anticipated payments to IPS. He added that “all EPS that meet the requirements to remain as insurers will continue as they are today.” Petro said that the government was assuming its constitutional role to “reorganize the healthcare system” to avoid “widespread bankruptcy and the abrupt liquidation of the system caused by the attitude of some congressmen who received money from EPS in their campaigns.” This healthcare reform by tweet-decree looks a lot like the healthcare reform that died in Congress—regional networks of providers, direct payments from the ADRES and EPS allowed to survive as auditors only if they meet technical requirements.
The government got fuel for its arguments in the form of an investigation by the Contraloría, revealed by Cambio, which claims that, from 2020 to 2021, 18 EPS misappropriated 9 trillion pesos in funds from the UPC, spending them on things other than what they’re supposed to, including irregular payments to clinics and hospitals owned by these EPS, paying fees and sanctions or buying infrastructure. The government and its supporters seized on this preliminary report to accuse the EPS of corruption.
On April 12, the health ministry said that six EPS have said they would be willing to become gestoras de salud y vida (as envisioned by the reform), including big ones like Salud Total and Coosalud. The ‘explicit crisis’ may be bearing fruit.
As part of his plan B, Petro wants to increase direct payments to clinics and hospitals. Direct payments to IPS already exist since 2011 in the subsidized regime and parts of the contributory regime. Petro’s national development plan (PND), in article 150, authorized the ADRES to make direct payments to healthcare providers, including presupuestos máximos, on behalf of all EPS, including in the contributory regime, except for those with sufficient assets. On April 8, Jaramillo announced a draft decree regulating direct payments, as well as several other decrees that would implement key elements of the reform, like fee schedules, territorialization and mobile health teams (promotores de salud).
The government’s actions indicate that it will try to impose as much of its failed reform as possible through executive actions and by decree. At the same time, there’s still room left for political dialogue. Clara Luz Roldán, former Valle governor and the new co-president of La U (and close ally of Dilian Francisca Toro, the party’s strongwoman), said that the party has had conversations with the interior and health ministers about presenting a new reform. The senators who voted down the reform are working on a new ‘concerted’ reform that they hope to present on July 20, the start of the new legislative year.
Though the healthcare reform may be legislatively dead, the crisis in the system and political firestorm around it has only just begun. Stuck in the middle, everyone else is left confused, anxious and uncertain.