HEALTH FINANCING PROFILE - BRAZIL 88344 Over the last three decades, Brazil has made significant investments in social programs, including a comprehensive healthcare system. Since returning to democracy in 1985 and with the 1988 Constitu- tion, quality healthcare has been explicitly identified as a right of citizenship and a responsibility of the government.1 The Unified Health System (SUS) that provides free universal care for all Brazilians was instituted following a sustained push from civil society organizations. With the subsequent declines in poverty that followed re-democratization, the country has also seen concomitant declines in under-five mortality and maternal mortality as well as increases in life expec- tancy.2 Coverage for vaccinations and pre-natal care is almost universal. Brazil’s Primary Care Strategy (which includes the Family Health Strategy) marks a meaningful shift from curative hospital-based care to preventive ambulatory care with a strong pro-poor focus.1 A highly decentralized system has led to complex patterns of funding and service provision with the Federal, State and Municipal governments involved. Before formation of the SUS, Brazil’s healthcare system was dominated by private organizations that received large government subsidies. Brazil’s system remains highly privatized with the private sector receiving substantial funds from all levels of government. Health Finance Snapshot Total Health Expenditures (THE) per capita have increased steadily since 2003 with increased investment in resource-intensive social programs aimed in part at improving Brazil’s primary health care system. Though Brazil has a free and universal public health system, general government expenditure on health remains below 50% of THE. The combination of out of pocket and private insurance spending, at over 50% of THE, is among the highest levels of private spending on health in Latin America. Table 1. Health Finance Indicators: Brazil 1995 2000 2003 2005 2007 2009 2011 Population (thousands) 161,848 174,425 181,633 185,987 189,798 193,247 196,655 Total health expenditure (THE, in million current US$) 51,153 46,189 38,806 72,060 115,775 141,824 220,363 THE as % of GDP 7 7 7 8 8 9 9 THE per capita (USD at official exchange rate) 316 265 214 387 610 734 1,121 General government expenditure on health (GGHE) as % of THE 43 40 44 40 42 44 46 Out of pocket expenditure as % of THE 39 38 35 38 34 32 31 Private insurance as % of THE 18 20 19 21 23 23 22 Source: WHO, Global Health Expenditure Database; National Health Accounts, Brazil 4 More than 1,500 private health insurance providers make Figure 1. THE per capita by type of expenditure, Brazil up the Supplementary Health System (SHS). The SHS serves close to one-quarter of Brazil’s population, mainly through corporate health plans that companies offer their employees.3 These beneficiaries often utilize free public Total Health Expenditures per capita facilities for complex tertiary care. (at nominal exchange rate) 4 Out of pocket spending (OOPS) as a share of THE fluctu- ates but has not varied substantially (Table 1, Figure 1): OOPS does not include private insurance premiums 4 OOPS as a percentage of income for households at the lower end of the income distribution remains lower than for wealthier households.4 4 Only 2.2% of households in Brazil incur catastrophic health expenditures (30% threshold), one of the lowest levels in Latin America and the Caribbean.1 Source: WHO, Global Health Expenditure Database; National Health Accounts, Brazil Health Status and the Figure 2. Demographic Indicators: Brazil Demographic Transition Brazil has experienced the epidemiological tran- sition so that non-communicable diseases have supplanted communicable diseases as a leading cause of morbidity and mortality. Though the total fertility rate (TFR) has fallen from 4.1 in 1980 to 1.8 in 2012, we find that younger cohorts are still well represented relative to older cohorts for the time being (figure 3). By 2020, the proportion of the population of age to enter the labor market is expected to be larger than ever in Brazil’s history.5 However, this favorable population structure is not expected to last for more than a decade in light of Brazil’s aging population and low fertility. Epidemiological transition Source: United Nations Statistics Division and the Instituto Brasileiro de Geografia e Estatística, Brazil. 4 Non-communicable (chronic) illnesses have far Table 2. International Comparisons, health indicators surpassed infectious diseases as major killers Upper Middle (Figures 4 and 5). Brazil Income Country % Difference Average GNI per capita (year 2000 US$) 3,593.3 1,899.0 89.2% Prenatal service coverage 98.2 93.8 4.7% Figure 4. Mortality by Cause, 2008 Contraceptive coverage 80.3 80.5 -0.3% Skilled birth coverage 97 98 -1% Sanitation 79 73 8.2% TB Success 72 86 -16.3% Infant Mortality Rate 17.3 16.5 4.8% <5 Mortality Rate 19.4% 19.6 -1.2% Maternal Mortality Rate 56.0 53.2 5.2% Life expectancy 73.1 72.8 1% THE % of GDP 9.0 6.1 47.4% GHE as % of THE 58.6 54.3 7.9% Source: WHO, Global Burden of Disease Death Estimates (2011) Physician Density 1.8 1.7 4.4% Hospital Bed Density 2.4 3.7 -34.5% Source: Couttolenc and Dmytraczenko. “Brazil’s Primary Care Strategy”, World Bank, UNICO Series No. 2, 2013. Figure 5. Non-Communicable Disease Mortality Figure 3. Population Pyramids of Brazil Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secreta- Source: WHO, Global Burden of Disease Death Estimates (2011) riat, World Population Prospects: The 2010 Revision. Health System Financing and Coverage Brazil’s 1988 constitution defined health as a right of citizen- legislated.1 The bias towards curative and hospital care is being ship. To this end, the Unified Health System (Sistema Único transformed into a strengthened primary care system with a de Saúde, SUS) was created with the aim of unifying the many new focus on public health. Universal access targets are being and fragmented systems that were in place before. Much of the supported by results-based financing (RBF) mechanisms pri- health system was decentralized with responsibility passed to marily in relation to transfers from the federal government to states and municipalities and minimum financial contributions municipalities. for health at all three levels of government were eventually Figure 6. Timeline of Brazil’s Unified Health System (SUS) Return to democracy and Ministry of Health (MOH) introduces the ‘Saúde Mobile Emergency Care (ambulances) introduced new Constitution adopted. da Família’ strategy (Family Health Strategy, Pact for Health established Unified Health System FHS) which relies upon health teams assigned ‘People’s Pharmacy Program’ created (SUS) created. to follow families in geographically-defined Indigenous Health Care included in SUS health areas. National Oral Health Policy created 1888 1991 1994 1996 2000 Creation of the Community Health Worker Results-based financing (RBF) mechanisms introduced Program (PACS) signaled a shift to a new Primary for transfers from federal to municipal governments to Care Strategy (PACS later enfolded into the Fami- strengthen management, efficiency and accountability ly Health Strategy) across levels of care Financing for the SUS comes from all three levels of government (Feder- Table 3. SUS Financing after year 2000 al, State and Municipal) with each making a mandatory minimum contri- % Contribution of bution of their tax revenues (table 3) and social contributions following gross tax revenues a 2000 constitutional amendment.1 Federal Government 6-7% State Governments 12% With the highly decentralized structure of Brazil’s health system comes highly complex financial flows from higher to lower levels of government Municipal Governments 15% and from all levels of government directly to both public and private health facilities (table 4). Table 4. SUS Decentralization and Funding Channels Level of Government Predominant Form of Level of Care Type of Service Responsible for Funding Source(s) Service Provision Provision - Federal transfers (Capitation system and results-based trans- General outpatient services Public outpatient (ambu- Primary Medical fers to municipalities) (preventive, diagnostic and Municipalities latory) facilities, often (Básica) - State transfers to municipalities curative) ‘Family Health Clinics’ - Municipality’s own funds - Private sector facilities - Federal transfers to states and municipalities - States and some larger Secondary Medical (Média Specialist outpatient and - MOH referral hospitals - States and larger municipalities (using federal and own funds) municipalities Complexidade) inpatient - Ministry of Education contract with private facilities - Federal Government (MoE) teaching hospitals -Federal funds go directly to MOH and MOE hospitals -Federal transfers to States - State funding of public facilities using Federal and State own Complex services: Organ funds transplants, HIV/AIDS treat- States Public hospitals Tertiary Medical - Research grants & other private sources ment, hemodialysis, etc. Federal Government and - MOE teaching hospitals (Alta Complexidade) - Federal financing for MOE hospitals Diagnostic: MRIs, CT scans, States - Private facilities - Federal transfers to States etc. -State contracts with private facilities (using Federal and state’s own funds) 4 Services under the public SUS system are available to all Brazilians without user fees, copayments or financial contributions, except for the People’s Pharmacy Program where copayments are necessary. 4 Approximately 67% of the Ministry of Health’s budget for “Public Health Services and Actions” goes towards SUS (20% for primary care actions and 47% for secondary and tertiary actions defined as being of ‘medium and high complexity’).6 4 The remaining 33% of the MOH budget goes towards Public Health Services such as health and epidemiological surveillance, assistance for nutritional deficiencies, human resources capacity within SUS, scientific and technological development of SUS institutions, production, procurement and distribution of pharmaceuticals, blood (and blood products), medical equip- ment, etc.6 Private financing for private provision (i.e. outside of SUS) The Federal Government is the largest funder of SUS. With accounts for a large share of total financing: (figure 7)1: decentralization, its contribution has been declining since the early 1980s, from around 70% to less than 50% now. States and Figure 7: Distribution of Care by Type and Subsystem municipalities now contribute over 25% each of total SUS financ- ing (figure 8). Figure 8: SUS financing as share of GDP by level of government Source: Ministry of Health, Brazil, Sistema de Informações sobre Orçamentos Públicos em Saúde - SIOPS Brazil’s Family Health Strategy has become the flagship program of the Primary Care Strategy (PCS). Family Health Teams (Equi- pes da Saúde) are considered key to PCS success.7 4Health Teams follow residents in an assigned geographic area (maximum of 4,000 inhabitants) and typically comprise a family physician, a nurse, a nurse’s assistant and 6 community health workers (PACS). 4FHS are responsible for outreach, preventive and curative services as well as health promotion and referrals. 4In some areas, only PACS are present and are considered a transitional team, helping to usher in the FHS in stages 4A 10% increase in coverage of the FHS program has been associated with a statistically significant 4.5% fall in infant mortality.8 Figure 9. FHS Expenditures and Coverage Emphasis has shifted away from curative care, towards primary care. The Primary Care Strategy (including the FHS) has had a pro-poor focus1: 2003-2009 4 The number of public clinics and health posts has more than doubled since 1990, while the number of hospitals has not changed significant- ly. 4FHS first deployed in rural areas and poor urban areas of the Northeast and Northern regions. 4Federal transfers to municipalities for primary care (Piso da Atenção Básica or PAB transfers) have a “fixed” portion (fixed payment given per municipal resident) and a “variable” portion. As of 2012, munici- palities with a higher percentage of their population either receiving Source: Ministry of Health, Brazil, department of Primary Health the Bolsa Familia or classified as ‘extremely poor’ (whichever is low- Since 1996, the FHS has been the focus of Brazil’s est) receive a higher fixed PAB (i.e. higher per capita transfer amounts efforts to increase efficiency and accountability for poorer municipalities)1. through results-based financing: 4The variable PAB transfer is now results-based, 4In 1999, the variable PAB transfer was amend- offering incentives for the implementation of ed to be based on the Family Health Strategy’s References priority programs (primarily the FHS). population coverage. FHS coverage quickly grew 1 Couttolenc, Bernard and Dmytraczen- after introduction of this financing mechanism. ko, Tania. “Brazil’s Primary Care Strategy”, World Bank, Universal Health Coverage Studies Series (UNICO), No. 2, 2013. Financial Sustainability1 2 World Health Organization. Global Health Observatory, Interagency estimates. 3 Ministry of Health, Brazil. “Private Health Plans”. Accessed at http://www.brasil.gov.br/ 4There are no explicit cost-containment approaches used for the sobre/health/service/private-health-plan PCS, apart from the availability of funds. 4 IBGE/ Household Budget Research - Pesquisa de Orçamentos Familiares (POF), 2002-2003 and 2008- 2009 4No systematic cost-effectiveness analyses are performed with 5 Paim, Jairnilson, and Travassos, Claudia et al., “The Brazilian health system: history, advances, and budgets often based on outdated estimates. challenges”, The Lancet, Health in Brazil Series, No. 1, 2011. 6 Ministry of Health, Brazil. Fundo Nacional de Saúde – FNS. 4SUS provides a full range of free services, not explicitly exclud- 7 Ministry of Health, Brazil, department of Primary Health. Accessed at: http://dab.saude.gov.br/ ing any service from coverage. atencaobasica.php 8 Macinko, James, Guanais, F. C. and Marinho de Souza, M. F. “Evaluation of the Impact of the Family 4Overall public health financing of the SUS is considered inade- Health Program on Infant Mortality in Brazil, 1990–2002.” Journal of Epidemiology & Community quate while legislators find it difficult to increase its financing. Health, 60: 13–19, 2006. 4The balance between public and private is challenging with con- This profile was prepared by A. Sunil Rajkumar, Eleonora Cavagnero, Dr. Deena Class and Katharina siderable funds flowing from public coffers to private providers. Ferl with inputs from Tania Dmytraczenko, Michele Gragnolati and Mukesh Chawla.