VZCZCXRO3389
PP RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHMN #0065/01 0391530
ZNR UUUUU ZZH
P 081530Z FEB 08
FM AMEMBASSY MONTEVIDEO
TO RUEHC/SECSTATE WASHDC PRIORITY 7941
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCNMER/MERCOSUR COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAUSA/DEPT OF HHS WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEHPH/CDC ATLANTA GA

UNCLAS SECTION 01 OF 02 MONTEVIDEO 000065 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: SOCI PGOV ECON UY
SUBJECT: FRENTE AMPLIO DELIVERS HEALTHCARE REFORM 
 
 
SUMMARY 
------- 
 
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. 
 
HEALTHCARE REFORM - THE CONCEPT 
------------------------------- 
 
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." 
 
 
THE HEALTHCARE SYSTEM - BEFORE 
------------------------------ 
 
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 
pensioners. 
 
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. 
 
THE FRENTE AMPLIO FIX 
--------------------- 
 
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 
 
MONTEVIDEO 00000065  002 OF 002 
 
 
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 
provider. 
 
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. 
 
MIXED REACTION 
-------------- 
 
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. 
 
Baxter