Identifier
Created
Classification
Origin
07SANTODOMINGO1396
2007-06-11 20:42:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Santo Domingo
Cable title:  

THE DOMINICAN REPUBLIC: ON THE VERGE OF SOCIALIZED

Tags:  AFSN AMGT ELAB DR SOCI PGOV 
pdf how-to read a cable
VZCZCXYZ0000
PP RUEHWEB

DE RUEHDG #1396/01 1622042
ZNR UUUUU ZZH
P 112042Z JUN 07
FM AMEMBASSY SANTO DOMINGO
TO RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 8484
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
UNCLAS SANTO DOMINGO 001396 

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: AFSN AMGT ELAB DR SOCI PGOV
SUBJECT: THE DOMINICAN REPUBLIC: ON THE VERGE OF SOCIALIZED
MEDICINE?

REF: SANTO DOMINGO 01292

UNCLAS SANTO DOMINGO 001396

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: AFSN AMGT ELAB DR SOCI PGOV
SUBJECT: THE DOMINICAN REPUBLIC: ON THE VERGE OF SOCIALIZED
MEDICINE?

REF: SANTO DOMINGO 01292


1. SUMMARY: The Dominican Republic is on the verge of
implementing a groundbreaking, tightly regulated new health
insurance system that could conceivably be called socialized
medicine. Under this system, known as the "Family Health
Plan" (SFS),all employees will be enrolled in the same
minimal health insurance plan whose terms will be set by the
government. Employers will be permitted to offer one of
several government-approved supplemental coverage plans to
their employees, who will have the option to decline the
additional coverage. Instead of a flat fee, the cost to
enroll in the basic plan shall be set at a flat percentage
(8.53%) of each worker's salary, of which employers must pay
70%. A government agency will collect all employee deductions
for health care insurance and disburse them to one of several
private insurance providers chosen by employers. The
Dominican Medical College (CMD),the largest physicians'
group in the country, objects to SFS's creation of a
committee that will elaborate fee schedules for all health
care service, public and private. They say they will not
honor the plan unless it guarantees doctors and clinics a
fair rate of return for their services; their opposition was
the major factor that forced President Fernandez to postpone
by 90 days the anticipated June 1 implementation date for
SFS. Other critics object to the fact that in its current
form, SFS will not pay for health expenses associated with
automobile accidents or serious medical conditions (such as
AIDS or cancer). Still others complain of the confusing and
non-transparent manner in which the program has been
developed. Despite opposition from key sectors of society and
a broad lack of public understanding, President Fernandez
declares it a national duty to implement the SFS system. END
SUMMARY.

BACKGROUND


2. In 2001 the administration of President Hipolito Mejia
implemented a far-reaching "Law on Social Security" that
entailed groundbreaking changes in setting up systems for
pensions, workers' compensation and health insurance. Among

other things, the law tasked the government's Office of the
Treasurer for Social Security (Tesoreria de la Seguridad
Social) with collecting and dispersing all salary deductions
relevant to these three systems for the benefit of all
Dominican citizen and permanent resident employees. The new
pension and workers' compensation systems were implemented
relatively quickly, but the Mejia administration was unable
to finalize the health insurance system, known as the "Family
Health Plan" (SFS),due to controversy with doctors' groups
and others.


3. Late last year President Fernandez made the
implementation of the SFS a priority of his own. Last
December his administration convened an assembly with
representatives from business groups, labor unions, and
powerful medical groups like the Dominican Medical College
(CMD),the largest association of physicians. Despite
disagreements, the participants were able to agree in
principle to a plan to implement the new SFS system by June

1. President Fernandez vowed that during the six-month
interim his administration would finalize the publication of
procedures and regulations intended to iron out any problems
and promote clarity and public understanding of the new
system.


4. As the June 1 scheduled implementation date approached,
it became increasingly clear that the Fernandez
administration had failed to produce the policies and
guidelines it had promised. Key employers' groups and labor
unions complained that their members had little understanding
of their rights and obligations under the new system.
Virtually everyone demanded that SFS's implementation be
postponed. Although some in the government resisted, they
had little choice but to comply after the CMD, the largest
physicians' group in the country, announced that it would
instruct its doctors not to honor the new system because they
were not satisfied it would guarantee them a fair return on
their services.


--------------
AN OVERVIEW OF THE SFS SYSTEM
--------------


5. The more one learns about the SFS system and the changes
it will have for the Dominican medical and health insurance
industries, the more justified the controversy surrounding
its implementation appears. In essence, one could argue that
SFS has the aim of achieving socialization of Dominican

medicine to a degree found in very few countries. Yet, for a
system that could involve such profound changes, some key
elements remain mired in confusion -- even for the
professionals charged with studying and implementing the
system. Following is a description of each of the main
components of the policy.


-- Membership


6. SFS will require all employers in the Dominican Republic
to purchase the same essentially government-established
"Basic Health Plan" for all of their employees, both
permanent residents and Dominican citizens. There are no
exceptions; all employees must be enrolled in the basic
health care plan. However, non-Dominican employees who do not
have permanent residence in the country will not be permitted
to enroll in a health insurance policy. This exclusion will
most keenly affect the hundreds of thousands of undocumented
persons of Haitian descent who live in the Dominican
Republic.


-- Health Insurance Providers


7. A small number of private, government-certified health
insurance providers, denominated "Health Risk Administrators"
(ARS) under the Social Security Law of 2001, will be
responsible for providing health insurance. Companies will be
given the freedom to select an ARS for their company's
employees.


-- Health Insurance Plans, basic and complementary


8. Even though the "Basic Health Plan" will be provided by
different, competing health insurance providers, the
principal elements of the plan, in which ALL Dominican
employees must be enrolled, are the same. The basic health
plan subsidizes the cost for patients of primary care and
some specialty care, if deemed appropriate and referred by
the patient's primary physician. However, the basic plan has
a cutoff for all services and costs -- that is to say, it
will pay only for a certain amount. For example, the basic
plan may cover only 500 pesos (US$16) per day of the cost of
a prescription drug regimen.


9. Employers who wish to offer additional coverage to their
employees may select one of several government-certified
"complementary plans." Employers will not be permitted to
select any plans that have not been approved and published by
the government. Again, coverage will be provided by private
health insurance providers. The decision by an employer to
offer one or several of the complementary plans does not
obligate the employee to accept it; the employee may continue
with basic coverage only, if he or she chooses to do so.
Complementary plans will theoretically offer beneficiaries
more options and a higher rate of quality. They will also
have higher cut-offs -- for example, instead of paying only
500 pesos (US$16) each day of the cost of a prescription drug
regimen, a complementary plan may cover up to 2000 pesos
(US$63) per day in pharmaceutical costs.


-- Plan contributions


10. One of the most groundbreaking changes incorporated in
the SFS system is that it charges employees based on a
percentage of their salary for enrollment in the "Basic
Health Plan." The cost of basic coverage is set in the SFS
system at 8.53 percent of a worker's salary; a worker's total
contribution would cap at a rate equivalent to 8.53 percent
of a monthly salary of 49,000 pesos (US$1,530).


11. Of a worker's 8.53 percent salary contribution for
enrollment in the basic plan, employers will be responsible
for paying 70 percent, whereas employees would be responsible
for paying the remaining 30 percent. Likewise, employers who
offer access to one of the complementary plans would be
responsible for paying 70 percent of the cost of these plans;
employees would responsible for paying the remaining 30
percent.


12. All salary deductions for health insurance purposes
shall be made directly to the Dominican Office of the
Treasurer for Social Security (Tesoreria de la Seguridad
Social). The treasurer will then pay a flat annual fee, set
last December at 4,737 pesos (USD 148) per person for the
minimal coverage plan, to the private insurance providers
based on the number of patients enrolled in their plans.



-- Procedures to Seek Care


13. Plan beneficiaries seeking medical attention will first
be required to visit a "Primary Attention Center," or
gatekeeper, that will be assigned to each patient based on
where he or she resides. If deemed necessary by doctors
there, a patient can be referred by the gatekeeper to a
specialized care provider covered under the plan.


-- Service Fees


14. Under the SFS system, a body known as the "Medical Fees
Committee" would be responsible for establishing a schedule
of approved fees for all medical services and consultations.
Neither public nor private medical care providers would be
permitted to charge fees that exceed those set by that
Committee. The Medical Fees Committee is a tripartite
committee involving representation from the business sector,
labor unions, and the Dominican government.


--------------
MAJOR CRITITICISMS OF SFS
--------------


15. The SFS system has its share of detractors. Although
doctors' groups figure most prominently among these, others,
including civic, business and labor organizations, have
voiced concerns. Among the major criticisms of the SFS system
are the following.

-- Fees for Medical Services


16. The issue of medical fees has been perhaps the most
controversial one throughout the process. The CMD, the
largest physicians' group in the Dominican Republic, objects
to the fact that the Medical Fees Committee involves no
participation from physicians and clinic owners. In a
conversation with poloff, Dr. Angel Veras, top legal advisor
in the CMD, indicated that his organization would not accede
to SFS until they are satisfied that the system guarantees
doctors a reasonable return for their services.


17. The most commonly cited example of the fee disputes
underway between the government and physicians' groups
involves the basic baseline cost of a medical consultation.
Doctors' groups say that their clients charge on average 500
pesos (USD 16) for basic consultations; there are rumors that
the Medical Fees Committee initially envisioned setting the
fee for consultations at only 175 pesos (USD 5.50). Although
President Fernandez and others have said that negotiations
have managed to bridge most of the divide over this issue,
Embassy is not aware that this or other fee disputes have
been resolved.


-- Limitations on Seeking Care


18. Echoing complaints heard in the United States about
health maintenance organizations (HMOs),some have objected
to the fact that the new system tells patients where they may
and may not seek care. Specifically, many patients object to
the fact that SFS forces them to visit a Primary Attention
Center, determined for them according to where they reside,
which will have final discretion on whether and where a
patient may seek additional care.


19. In announcing the 90-day suspension of SFS last week,
President Fernandez said that his administration would work
to ensure that all patients will have the right to "choose to
continue visiting the doctor(s) they currently visit at the
cost they are currently charged."


20. Critics have also objected to the fact that the SFS
system, at least initially, will not pay for medical costs
associated with serious pre-existing diseases and conditions
such as AIDS and cancer. It is unknown whether patients would
have to pay the full amount for these treatments under the
new system; President Fernandez did not mention this
criticism in his speech last week.


-- Lack of Clarity


21. A major complaint in the lead-up to the June 1
implementation date was that the government agencies charged
with elaborating policies and procedures had failed to do so.

For example, a fee structure has not yet been developed (in
part due to opposition from doctors' groups, as noted above),
nor have the lists of approved Primary Attention Centers been
published.


22. In his speech to the public last week, President
Fernandez promised that prior to the revised implementation
date of the SFS his administration would "develop and publish
the information necessary to clarify properly to citizenry
key issues such as the costs and the services that the plan
will entail."


-- Automobile Accidents


23. The 2001 Law on Social Security stated that medical
injuries from automobile accidents would not be covered by
the SFS system because such injuries were (theoretically) the
responsibility of automobile insurance companies. However, a
significant proportion (perhaps a majority) of Dominicans do
not purchase automobile insurance even though they are
legally obligated to do so. The working poor who are least
able to afford medical expenses are the most likely to be
uninsured.


24. After citizens' groups objected to the exclusion of
automobile accident injuries from the SFS system, the
government announced that it would study the creation of a
fund to cover these injuries. Although that fund, known as
"FONAMAT," has not yet been created, in his speech last week
President Fernandez promised that it would be up and running
prior to the implementation of the SFS system.


-- Financial Status of the Treasurer for Social Security


25. Many have questioned the financial soundness of the fund
managed by the Treasurer for Social Security. They wonder
whether, given the significant outlays the government has
invested in the Santo Domingo Metro, the fund is prepared to
handle the millions of social security payments it will be
obligated to make. Others have also expressed concerns that
the funds would not be managed responsibility and would
create opportunities for corruption and mismanagement.


26. In rebuffing these criticisms, President Fernandez
declared that his administration had done "that which none
other in the history of the Republic has managed to do --
devote 1.6 billion pesos (USD 50 million) to the
sustainability" of the fund for the SFS system.


-- Modifying the 2001 Law on Social Security


27. Finally, in response to those who have advocated legal
reform of the 2001 Law on Social Security (and the
complicated SFS system it created),President Fernandez has
responded with a resounding "NO." In his speech last week he
said, "We cannot reform a law that we haven't even begun to
implement."


28. COMMENT: President Fernandez's stubborn determination to
stay the course on the SFS system bears plenty of
similarities to his commitment to his beloved Santo Domingo
Metro. As in the SFS system, prior to the Metro's
construction a wide range of experts expressed serious
misgivings about the sustainability of the project in both
the short term and the long run. Fernandez ignored the
warnings and went ahead with construction, urging those
responsible to complete the work as quickly as possible.
Today, only two years after construction on the Metro began,
the project is seriously over budget and the doubts about its
sustainability appear to have been well justified: a few
months ago a cave-in left a gaping hole where once a major
thoroughfare had stood. Notoriously flexible Santo Domingo
drivers have taken in stride the vexations of construction,
and they have developed alternative routes to reach
destinations that once would have required the collapsed
thoroughfare. One cannot help but wonder, if and when
portions of the SFS system collapse, what alternative
arrangements patients and hospitals will make to ensure that
the country's medical system continues to function.
BULLEN