International Policy

Health Care Privatization In Argentina

After privatizing everything from railroads to power utilities, Latin American countries are eyeing their health-care systems. Privatization of health care is now a major cause in Argentina, which spends more on health per capita and as a percentage of gross domestic product than any other Latin American country.

Argentina's health bill last year was $23.5 billion -- equivalent to $675 per capita or 7.3 percent of GDP. The country has about 500 separate health insurance programs, half of which are run by labor unions.

  • Union health care is legacy of former dictator Juan Peron and his wife, Eva, who lavished benefits and subsidies on the unions.

  • Tax exemptions and barriers to competition were erected to protect union health systems, which led to years of corruption, mismanagement, inefficiencies and high costs -- but those protections are now falling away.

  • Privatization has attracted the attention of foreign health care firms, which are beginning to invest and locate Argentinean partners.

  • Faced with the need to compete, union bosses are suddenly looking to cut deals with foreign investors.

In the past two years, the government has progressively allowed more than 250 union health-care plans with a total of eight million members to compete against one another. Union employees can now take their monthly health care dues to any other union system.

Foreign analysts speculate that many of the union plans will not be able to compete, or even survive.

Source: Craig Torres, "In Its Crusade to Privatize, Argentina Catches the Eye of U.S. Health-Care," Wall Street Journal, August 6, 1998.

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