Argentina: Price Caps and Controls on the Costs of Private Health Insurance Plans Were Eliminated, Leaving Prices to Rise By 40%

In this iPMI Global regional country guides article, international private medical insurance report author and market analyst Ian Youngman, takes a look at healthcare reform, price caps and controls in Argentina.

Healthcare reforms

• Price caps and controls on the costs of private health insurance plans were eliminated, leaving prices to rise by 40%.
• Piece caps on private healthcare were removed so price rose up to 150%.
• Caps removed on drug prices.

Government versus private healthcare

• Following an average 150% cumulative increase in payments for private healthcare users, the government announced a series of measures to force private healthcare companies to backtrack. 
• The Industry and Trade Secretariat and the National Commission for the Defense of Competition announced an investigation into the alleged cartelization of private healthcare companies.
• Depending on the company, increases were around 40% in January, 25%-30% in February, and around 20% in March.
• A resolution by the Secretariat also put a cap on increases for the next six months.
• April’s increases will be calculated based on December values and cannot surpass 90.2% — the cumulative inflation for that period.
• Future monthly increases will be limited to month-on-month inflation rates until September.
• The Health Superintendence is filing a precautionary measure to the judiciary to force the companies to refund users the amount they paid above inflation.

Health insurance for employees

• Employees in Argentina have healthcare benefits through private companies that are arranged by labour unions. Health benefits under these plans include medical and dental cover for the employee and all of their immediate family members.
• Health insurance is mandatory and is financed by the contributions of employees and employers. 
• Social security insurance, comprised of union-run health insurance entities and the National Institute of Social Services for Retirees and Pensioners cover all workers that are part of the formal economy, senior citizens, and their families, mainly through services contracted to private providers.
• Trade unions, professional associations and employers provide social insurance trusts called Obras Sociales.
• They cover employees and their families for full health care, although usually not dental care or psychiatric treatment.
• They are a pay as you go system funded by employers and employees via compulsory payroll deduction; employers pay 6% of wages, and employees pay 3%.
• There are 300 mutual or social plans.
• The mutual covers the cost of medical care and medicines in varying proportions; the patient pays differences between the fixed fee and the actual cost of treatment.
• 61% OD people have private plans.

2024 DNU

• The new government has decided that legislation is too slow so has done the equivalent of an executive degree.
• But just as in the USA, executive orders are on dangerous legal ground as they can be challenged in the courts and in parliament.
• President Javier Milei’s new administration issued a Decree of Necessity and Urgency (DNU) No. 70/2023, introducing sweeping reforms.
• Congress is reviewing whether the DNU changes are "necessary and urgent", a determination needed for them to be able to be enacted by presidential decree rather than being legislated by Congress.
• If Congress finds that changes were not urgent it can revoke some or all of the DNU’s provisions.
• The DNU was effective from March 1, 2024.
• The decree amends the legal framework for employee health benefits by enabling healthcare providers to join the regime for compulsory health entities (obras sociales).
• All new employees can change their healthcare provider from the start of employment.
• Prepaid Medicine Enterprises (Empresas de Medicina Prepaga– EMPs), which are private health providers offering voluntary prepaid insurance plans, may now join the obras socialesregime.
• In the event an EMP decides to do so, insured employees may designate that their compulsory employee and employer healthcare contributions are paid directly to the EMP.
• Premium amounts for private medical plans can now be freely established by EMPs and obras sociales.
• The government can no longer review or invalidate premium increases. 
• EMPs that choose to join the obras sociales regime and receive healthcare contributions directly must divert 20% of the compulsory employer and employee healthcare contributions to the Solidarity Redistribution Fund, which helps finance the healthcare system. 
• In the event of a contracted EMP joining the regime for obras sociales, employers must ensure that medical services and benefits covered by their private medical plans include all services and benefits currently covered by the obra social.
• So far it seems that employers and EMPs are not taking advantage of the new rules.

Milei plans

• To deregulate the economy.
• Make the US dollar the official currency.
• Close the central bank.
• Sack thousands of state employees.

Analysis

• Health insurers are struggling with the massive increase in healthcare costs.
• The potential battle between president and Congress may become a series of legal challenges.
• This battleground is where international health insurers are stuck in the middle.
• The need for expats to have IPMI that is not in these battles in more vital than ever.
• There are few global IPMI insurers actually in Argentina.
• Some overseas healthcare providers such as Fresenius have sold to local investors.
• It may seem contrary to logic but in caps there are opportunities for insurers and brokers to enter the local IPMI market.

About the Author

Ian Youngman is an independent writer and researcher specialising in insurance. He writes regularly for a variety of magazines, newsletters, and on-line services. He publishes a range of market reports, and undertakes research for companies. To read his latest report, International Health Insurance 2023, please click here, or visit the REPORTS section of iPMI Global.