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08MONTEVIDEO65 2008-02-08 15:30:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Montevideo
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1) (U) Summary: The GOU fulfilled campaign promises to
reform healthcare with the launch of the National Integrated
Health System (SNIS) on January 1, 2008. The re-worked
health system is funded by mandatory income taxes between 3%
and 6% for most employees, replaced the standard 3% payroll
deduction in effect under the old regime. Employers will
continue to pay a 5% payroll tax. While the new system was
designed to increase access to coverage for Uruguay's poor
and working class, some members of the middle and
upper-classes who continue to use private contract healthcare
complain that they are forced to pay taxes for a services
they will not use. By the end of January, more than 800,000
Uruguayans (245,000 children and 4,700 senior citizens)
enrolled in the system. END SUMMARY.



2) (U) During the 2004 presidential elections, healthcare
reform was a centerpiece of the Frente Amplio (FA) platform.
Presidential candidate, Tabare Vazquez, a practicing
oncologist, was a natural to preside over one of the key
objectives in the FA's first opportunity at governance. His
and his party's efforts yielded the National Integrated
Health System (SNIS) that was launched in January 2008. The
governing Frente Amplio party considered the previous health
care model unfair and inequitable. Many middle-class
Uruguayans, ineligible for public health services, were
technically covered by health insurance but unable to afford
the associated co-payments. The government sought to develop
a new system that would serve a greater portion of the
population and expand coverage to a greater percentage of the
population, promote health and equity, and improve quality of
life. In a recent radio interview, Minister of Health Maria
Julia Munoz said "the government prefers a system where
sanitary regulation replaces market rules." Munoz said, "the
new plan will not include comfort elements such as individual
rooms, cable TV or Internet. It will provide all the
services according to the scientific and technological
advances available in or accessible to Uruguay to make the
system sustainable."



3) (U) Both public and private health care services are
available in Uruguay. Public hospitals and clinics provide
healthcare to Uruguay's poorest citizens. Many were built
over 30 years ago and have been poorly maintained, but offers
no cost, one-stop healthcare to those determined eligible by
the Ministry of Health (MOH). The MOH issues a "poverty
carnet," granting service, to those with a monthly salary
less than 4,438 pesos ($212 dollars), which includes the
unemployed, many who work in the informal sector, and many

4) (U) Private, but closely regulated, health care
providers, known as "mutualistas", function similar to HMOs
in the U.S. Under the previous model, employees paid a 3%
payroll tax to a healthcare distribution fund (DISSE) which
would enroll them in an HMO of their choice. Despite the
mandatory 3% deduction from their salaries lower and
middle-class employees often could not afford the additional
co-payments charged by HMOs for individual services. Those
employees were ineligible for public healthcare because their
salary was above the poverty line, leaving them without
affordable access to medical treatment.



5) (U) When the Frente Amplio government took office in
March 2005 MOH authorities described the "mutualista"
situation as critical, claimed that politicians had failed to
solve the problem and set about to build on existing
foundations to offer quality health care to all sectors of
the Uruguayan society while fostering regulated competition.

6) (U) In August 2007, DISSE became FONASA (Fondo Nacional
de Salud). FONASA is part of the newly-formed SNIS and
functions to collect payroll taxes and pay each health

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provider according to the number of affiliated patients it
covers and the services rendered to each. SNIS will regulate
the nature and timing of healthcare services offered by these
HMOs and how they can be reimbursed, effectively increasing
government control over healthcare decision, according to
many critics. HMOs will also receive a monthly allocation
for each registered patient that varies depending on the
patient's sex and age. Under the new system FONASA will
continue to collect 3% payroll tax from workers who earn less
than 4,438 pesos ($212 dollars) a month, while taxes for
those who earn more will increase to 4.5% or 6% (those
without and with dependents respectively). Employers will
also continue to be subject to a 5% payroll tax.

7) (U) Private medical providers not affiliated with SNIS
will continue to operate subject to general MOH oversight.
FONASA will pay them the monthly allocation per patient.
Those patients would then pay the rest of their healthcare
premium costs and co-payments directly to their chosen

8) (U) Supporters of the revised system argue that those who
participate will benefit from better services with fewer
co-payments and reduced co-payments for prescriptions.
Certain no-cost benefits are directed towards women and
children, expecting mothers and senior citizens, including:
pre- and post-natal care, early detection of breast and
cervical cancers, and at least three free consultations or
urgent care visits per month for many senior citizens.
Co-payments are expected to be substantially reduced for
people suffering from chronic conditions. The plan envisions
significant long-term savings due to an increased focus on
and attention to early diagnosis and intervention.



9) (U) While the plan and its associated tax increase were
launched in January, many of the details and actual costs and
services offered have yet to be determined. Promised
reductions of co-payments and other benefits have yet to
materialize. Some critics count the plan as a Leftist
attempt to shift the burden on the middle and upper-classes
while providing little or no new benefit to the population.
They argue that most of the benefits offered under the new
system were already in place and that the increase in taxes
really results in minimal increase in services. In addition,
some groups such as Parliamentary employees, have complained
that their privileged benefits were being degraded under the
new mandatory system and would result in a net loss of pay.

10) (SBU) Many others however, believe the new regime will
be a net benefit for Uruguay. The GOU has undertaken a
public awareness campaign to encourage workers to enroll in
HMOs and utilize services available. Meanwhile, a senior
leader in the Colorado Party told Ambassador he considered
healthcare reform would be successful and play well for the
Frente Amplio as it prepares for 2009 presidential elections.