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For-Profit HMOs Invading Latin America with Help From World Bank

Aetna, CIGNA Expanding South of the Border, New England Journal Study Finds

Some of the nation's largest managed care companies have started looking south in search of greater profits, according to a study in this week's New England Journal of Medicine. Unfortunately, say the authors, they're bringing their problems with them -- like "cherry picking" healthy patients, increased bureaucracy, and reduced access to health care for vulnerable patients.

In contrast to the United States, most Latin American countries have social security systems that include health care benefits. They also have free public hospitals and clinics, and, while spending far less on health care per capita than the U.S., have achieved important successes, such as improving infant mortality and life expectancy.

"Two factors are leading to the rise of managed care in Latin America," according to Dr. Howard Waitzkin, co-author of The Exportation of Managed Care to Latin America and a Professor of Family and Community Medicine at the University of New Mexico.

"First, the World Bank is pressuring governments to turn health care -- and their multi-billion-dollar social security pension funds -- over to the private sector, regardless of the consequences. Secondly, there is growing economic inequality in the region. With an expanding upper-middle class eager for more services, but governments forced to cut back on public spending as a condition of new loans by the International Monetary Fund, managed care executives are seeing dollar signs."

The study focuses on the growth of managed care in four countries: Chile, Argentina, Brazil, and Ecuador. In Chile, for-profit HMOs started under Pinochet's dictatorship are now partially owned by Aetna. CIGNA is also involved in managed care in Chile, as well as Brazil, Argentina, and Ecuador.

HMOs in the region seem to be emulating the "bad" side of managed care over the "good" aspects, the article finds. By and large, the Latin American ventures are for-profit, physicians receive financial incentives to reduce services, and there is little emphasis on preventive health care. HMO co-payments and bureaucratic confusion have created barriers to care, increasing the strain on public hospitals and clinics. Administrative and promotional costs are rising, diverting funds from clinical services.

Chile has the longest history of for-profit, publicly-subsidized managed care in the region - and some big problems. Every year, about 24 percent of the patients in Chile's HMOs receive services in public clinics and hospitals because they cannot afford their HMO's co-payments.

"Like tobacco companies exporting cigarettes, the HMOs are rushing into Latin America now that their rate of profit is falling in the U.S.," said Dr. Waitzkin. "In the process, there's a real fear that Latin Americans will lose their constitutional right to health care."