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Movements in health care privatisation in Spain

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Javier Rey del Castillo. Doctor in Medicine and Surgery from the Autonomous University of Madrid. Pedro Rey Biel. Doctor in Economics from the University College of London

The debate on privatisation of health care in Spain oscillates between two extremes: those who believe that any change in the form of management of public services to replace the "administrative" management hides an attempt to subject the private interest to them, and those who insist that no organizational or managerial change may be considered privatizing services while public funding is maintained.

The limitations of both approaches are evident when compared to the organization of health care in Spain since the introduction of the General Health Law (LGS) in 1986. To implement it, the Act constituted a public service that adopted the conditions called "National Health Service" to which, by virtue of their decentralising to the regional governments organisations, was given the name "National Health System" (NHS). These conditions, like those of other countries with similar health organisations, such as the UK, the Nordic countries and Canada, are essentially universal health care linked to the condition of Spanish citizenship, public financing through general taxation and provision of services through its own public media. If we understanding these basic terms, we can understand the extent of movement of health "privatisation" in Spain, too general a term in any case, whose forms, arrangements and sense we need to specify in any case.

The first manifestations of privatisation in the field of health care coverage

The first manifestation of the penetration of private interests in the Spanish healthcare system took place in the passing and implementation of the new law itself. The constitution of the NHS left to one side the public system to different groups who possessed specific health care systems or publicly funded public financial support, which generally grouped collective "privileged" workers of large public companies; Officials bodies grouped in the MUFACE and MUGEJU mutual funds; military, covered by ISFAS, journalist associations, bar associations, and others.

The law provided for the integration of these groups in the "universal" health system within a year and a half. However, some of them so particularly prominent such as the civil servants mutual, persist under the same conditions today, and allow about two million of their members access to private health care managed by various private insurance companies that the contract mutuals annually, with a differentiated public funding dependent on the Ministries of Finance and Justice outside NHS funding managed by the Ministry of Health.

Still maintaining those "privileged" conditions and in any case not being generalised, due to the additional cost to the NHS posed allowed private insurance companies to subsist in the long period during which the universal coverage health promoted by the LGS was established in Spain, and was the most powerful negative incentive for most citizens not to subscribe to private health insurance policies, a common experience to other countries with similar health system.

The existence of these exceptions fractures the economies of scale to be had from the unified management and purchasing power of a single, universal healthcare system. In addition, what has recently been highlighted is the ability of insurers to impose additional economic conditions to continue covering these groups of citizens, such as establishing mutual co-payments for access to more qualified health care provided by the private companies themselves.

The "privatisation" of health centres and services management

The first two-thirds of the decade of the nineties of the last century were the scene of the introduction of "new management" in the health services of the Autonomous Regions, who were receiving transfers of healthcare. This process, induced by the recommendations of the April Report (1991), and imitation of the conditions for its territory by the Law on Health of Catalonia (1990), had two main features:

? The establishment of Health Centres as public companies, foundations, health foundations of specific characteristics, and others, only affected newly created centres, with the exception of Catalonia, where existing centres of municipal property benefited from the establishment of "consortia" with the participation in the Catalan Health Service;

? Each Autonomous Region set up its own "way of managing" it, making it additional mechanism of differentiation to the regional identity. In addition, with a very controversial law, 15/1997, new forms of management in the NHS reinforced this process of differentiation, with no other limits set for themselves other than each had to encompass the forms of organization and management envisaged in the sphere of public law.

This had the undeniable effect of hindering consistent management and control, including financial control, of the whole of the NHS and health service of each Autonomous Region, since the mechanisms for management and control of old INSALUD's own centres remained outside any of these variations. Nevertheless, it cannot be said that none of these changes lead to the introduction of elements of genuine privatisation in the NHS.

In contrast, new formulas, known as PFI (Private Finance Initiative) and PPP (Public Private Partnerships), with which the construction of certain new centres were funded from 1997, starting with the Hospital of Alzira (today Hospital the Bank) were in themselves purely privatisation.

From the beginning, its implementation disregarded the limitation in Law 15/1997 that it dealt with forms of organization and management envisaged in the sphere of public law. However, this did not meant that there were objections to it by the Ministry of Health, then managed by the PP, or socialist or other opposition parties. This lack of opposition has allowed its extension without any hindrance, until to the lodging of appeals by trade union and professional forces in the case of the Community of Madrid, more related to procedural than substantive issues, that has paralyzed the expansion of the privatisation already carried out.

The origin of the application of these formulas, both here and abroad, especially in the UK (which has also been used to build schools and prisons), is in the financial failure to promote the publicly-funded construction of new health centres due to restrictions on public deficit and debt imposed by the European Union. However, the use of these formulas allows, sometimes with little reasonable justification, or for electoral reasons, the multiplying of the number of sites available to a system, thus calling into question its financial sustainability. An example of this is the construction of seven new centres in Madrid before the last regional elections, promoted by the PP in its election manifesto, to which no opposition party objected.

As compensation for financing the construction of Heath Centres, whose cost obviously does not count, so far, in the public debt of European countries. The consortia of companies that carry it out, among which typically a construction company is integrated, take on the task of managing the non-health centre services (in the case of PFI) but also health (in the case of PPP) on payment of an annual fee initially agreed to, during 20-30 years.

Several cross-country studies show that, in general, the use of these formulas in practice means a substantial increase in construction costs of the centres. Overcharging for its subsequent operation, which is justified in this case because any change centres to adapt to new uses (which in the health sector is very common because of growing use of innovative technological developments) requires additional funding, is also observed. Other concerns that have also been noted are the absence of a real transfer of risk to the managing bodies, high transaction costs generated by established contracts and opacity of management shareholding in the presence of very active secondary markets, allowing the replacement of shareholders leading to ownership of the centres by entities not interested in service management, only in its economic performance.

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