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 
 
¶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