Equity in the financing of social security for health in Chile

Real public health spending has more than doubled since 1990, raising concerns about the targeting of public subsidies. This study examined the degree of equity in the financing of FONASA, the public insurer, which in 1995 covered 8.6 million beneficiaries, or 62% of the country's population. Study results, covering calendar year 1995, indicated that (1) government health subsidies were well-targeted, with about 90% reaching the indigent and 8% going to other, low-income beneficiaries; (2) only 2.5% of government subsidies leaked to higher-income, non-beneficiaries of FONASA (people covered by private insurers known as ISAPRES, otherwise covered, or without any coverage); (3) overall, FONASA's contributing beneficiaries (i.e. the indigent aside) self-financed their health benefits, although higher-income beneficiaries were providing significant cross-subsidies to low-income ones, making the internal financing of FONASA somewhat progressive; (4) the indigent received the highest amount of annual net benefits per capita, followed by low-income beneficiaries; and (5) the evasion of FONASA's payroll tax was pervasive, although public providers delivered care on an equal basis irrespective of the patients' contributions to FONASA. FONASA's finances would improve significantly if affiliation to health social security by both dependent and independent workers was made compulsory.