Confronting the College

The prospects for the success of President Lagos’s proposals did not appear great when, near the beginning of his term, his first act was to postpone the health reform legislation until 2002. The situation worsened from there. Upon sending the legislation to the Parliament, Lagos encountered intense opposition from the Isapres, conservative parties, and moderate elements of his own governing coalition because of the plan’s steep rise in taxes —an estimated US$230 million addition to the yearly health budget of US$4.3 billion. El Mercurio, Chile’s conservative newspaper, called the plan a “tax rise in sheep’s clothing.” Moreover, Lagos proposed to specifically tax tobacco, liquor, and diesel. This got three very powerful, influential industries involved.

The opposition of these groups, though, would pale in comparison to the intense efforts of the Medical College to defeat Lagos’s reforms. Doctors objected to the AUGE plan because it guaranteed protection for an explicit list of diseases, limiting their treasured autonomy to practice as they saw fit. To the Medical College, this was a first step toward US-style managed care.

Fighting what they perceived to be a win-or-lose struggle to preserve their occupational autonomy, doctors took to the streets. The health care sector was periodically paralyzed by strikes for much of Lagos’s term. When the entire plan was announced on May 21, 2002, it was met by 3,000 demonstrators and more than 100 arrests. On November 28, 2002, the hospital workers union said that 80,000 of its 90,000 members had stopped work. Minister of Health Osvaldo Artaza reported that it caused US$3 million in losses.

Frequently, it was difficult to assess the strength of the strikes. On May 21, 2004, for instance, unions claimed that 80 percent of their workers joined the strikes, while the Ministry of Health said that over 70 percent of health workers went to work that day. Regardless, it cannot be denied that the strikes had an effect. Interestingly, they were emblematic of pattern that could be seen across Latin America. In the year 2003 alone, public health workers held 37 national work stoppages in 12 Latin American countries, including Chile. The power of the unions to cause trouble in Chile became even clearer when two lawmakers were injured as Chilean police tried to break up a protest in 2002.

Chile’s Medical College has long wielded a powerful influence on the health sector, and Lagos quickly found out why. According to The Economist, “Even General Pinochet quailed at taking on medical unions.” Lagos, however, was not deterred. During a strike on December 19, 2003, Lagos told the Medical College that their efforts were “useless.” He was perhaps bolstered by polling numbers that showed that 74 percent of Chileans believe that medical professionals are more concerned about their own interests than in the interests of their patients. After one day of intense strikes and protest, Lagos remarked, “We have to get used to the idea that there is going to be debate. It does not bother me that people wave a billboard at me or oppose the plan.” He was determined to go on.

Political Problems

As Lagos struggled through strikes and interest group opposition, he encountered severe political problems as well. Primarily, members of his administration and allies in Congress were plagued by allegations of corruption. On November 5, 2002, Lagos dismissed Deputy Health Secretary Gonzalo Naverrete and three other high-ranking government officials in order to diffuse a growing bribery scandal. The government denied the allegations, saying the officials were dismissed for “doubts regarding their management.”

Less than one year later, in March 2003, Lagos was forced to reshuffle his cabinet to build Parliamentary support for a tax increase. His coalition’s majority in Parliament shrunk to just one vote after five congressmen were arrested the month before in a bribery investigation. In response, Lagos fired seven of his seventeen cabinet ministers, including the Minister of Health.

These political troubles only exacerbated the difficulties of an institutional system that makes health reform extremely difficult. A study by the non-governmental organization Corporación Representa found that, in Chile, bills related to the liberalization of markets take an average of only 3.5 months to make it through Parliament. Legislation relating to health equality or the expansion of social safety nets, however, requires an average of 46.9 months to pass Parliament. This fact, coupled with the very narrow coalition margin in Parliament, cast into doubt the prospects for Lagos’s plans.

Still, according to Deputy Patricio Melero of the Independent Democratic Union, the main right-wing party, Parliament is not the sole causal factor in retarding health legislation: “It is not fair to focus the criticism on Parliament, because it is the executive branch that determines the speed with which the bills move through, since it assigns the urgency level, as stipulated by the 1980 constitution.” Perhaps, then, with concerted effort, Lagos could still reach his objectives.

Reaching a Compromise

Despite the considerable obstacles it faced, the Lagos Administration never considered defeat a real possibility. Even when it looked as though Parliament might reject AUGE, the government instructed public health establishments to implement the reform and guarantee coverage of some illnesses, regardless of Parliament’s official position.

Ultimately, it was bipartisan cooperation that allowed Lagos to pass his most treasured reforms. Lagos demonstrated his willingness to compromise, and he soon realized that he would be able to pass only one of his two biggest reform proposals. AUGE and the Compensation Fund, which would have required the Isapres to redistribute some of their funds to the public sector, were the two most drastic and controversial reforms. Lagos decided to compromise away the Compensation Fund in order to get AUGE. With many observers noting his greater legislative cooperation with the rightist opposition, Lagos was able to get many of the rest of his reforms through Parliament.

Now, Lagos had passed the centerpiece proposal: a program that would incrementally extend public coverage for particular medical conditions. Implementation began in August 2002, when the government specified three health problems that the public sector would guarantee to cover: congenital heart diseases, chronic renal insufficiency, and infant cancer. The government added two more conditions in 2003. Now, the government has expanded the list to 17 conditions, or one third of the 56 priorities it hopes to eventually cover. This means that Chileans with the specified health problems are guaranteed to see a doctor in a short period of time, or they may seek legal recourse. Effectively, it amounts to a large expansion of the public sector. On August 15, 2004, the first heart transplant completely financed by plan AUGE was completed in a 15 year-old youth.