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The bumpy road to cheaper insurance in Brazil

Brazilian health insurance will inevitably get cheaper – it has to. Providers are already feeling the pressure to get their act together and improve service efficiencies, but how will this happen without the entire sector moving toward DRGs?

The problem starts and ends with overactivity. Brazil’s ‘ATM model’ of healthcare delivery – where providers get paid a fee-for-service – can lead to absurd scenarios of overtreatment. We’re told of patients going to the hospital with a common cold, and leaving two days and a multitude of tests later – a waste of time and resources for the patient and the system, but a lucrative stint for the provider. Expensive healthcare plans also lend themselves to potential fraud and overcharging. Anecdotally, we hear some providers are handing patients an aspirin for a headache, but charging the insurer for tests that never took place.

What can be done to keep insurance prices low, despite new treatments and advances in medical technology pushing medical inflation in the opposite direction?

Firstly, the verticalisation of the healthcare industry means insurers are gaining some control over medical costs. Insurers are acquiring providers – and providers are creating health plans. Cheaper options are being forced into existence as customers are priced out of the premium plan market, and may be directed to less expensive hospitals. Another interesting strategy is the use of family doctors as a way to halt overtreatment: the doctors act as gatekeepers to the healthcare system, much like the UK’s general practitioners (GPs), but have yet to become fully widespread.

For providers that aren’t themselves verticalised but are part of an insurer’s network, things are happening a little differently. Brazil’s largest hospital network Rede d’Or provides a good example of this – in April, a third of the group’s hospitals were de-accredited by insurer Amil which was concerned about spiralling costs. Rede d’Or has since bought a stake in insurance broker Qualicorp. Seen as a premium brand, the move will allow Rede d’Or to cut costs, lower its plan pricing and carve out a niche in the non-premium market to make up for any shortfall.

Brazil’s healthcare regulator, the ANS (Agência Nacional de Saúde), attempted to implement a sector-wide solution in the form of a co-payment – which would have involved the patient in cost control – but it was met with public disapproval. It is hard to see the sector moving away from both overcharging and overtreatment without it embracing a DRG payment model. Opinion is still divided though as to whether the ANS should enforce this, or whether it will be enough to let the private sector make its own way there.

We would welcome your thoughts on this story. Email your views to Anaïs Charles or call 0207 183 3779.