Chapter 3. Reforming to foster healthier lives in Paraguay

Paraguay has set ambitious targets to improve the health of its citizens. The country faces a double burden. The weight of non-communicable diseases is growing, fuelled by longer lives but also less healthy lifestyles. At the same time, unresolved issues remain in communicable diseases, maternal, neonatal and nutritional diseases. The health system in Paraguay suffers from fragmentation and the weaknesses of its stewardship institutions. To measure up to the challenge, the country has undertaken a series of reforms, starting with a landmark law passed in 1996. The reforms have succeeded in setting the stage for a new approach to healthcare based on primary care. However, they have not altered significantly the foundations of the health system and its fragmentation into multiple subsystems. This chapter describes the health challenges that Paraguay faces and focuses on challenges in financing healthcare and in achieving universal health coverage.

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

Ensuring that all citizens have access to appropriate, pertinent and quality health services, without anyone being pushed to financial hardship because of health payments, is of critical importance in fostering citizen well-being. It is also a means of breaking the intergenerational transmission of poverty, as children with ill health have worse learning outcomes than healthy children. Adults in poor health have lower income generation potential than healthy adults. Universal healthcare access and coverage are therefore central tenets of a strategy to reduce poverty and inequality (PAHO/WHO, 2014).

Achieving its ambitious goals will require Paraguay to intensify efforts in the development of its national health system. This chapter begins by presenting the development objectives in the health sector that Paraguay has set and the progress achieved so far. It goes on to analyse the healthcare needs of the population, as they emerge from the burden of disease, and the progression of the demographic and epidemiological transitions in the country. It then describes the key features of the Paraguayan health system and offers avenues for pursuing ongoing reforms and options for intensifying the pace of reform, focusing first on financing functions and then on the need to expand health coverage along its three dimensions, namely population coverage (breadth), financial protection (height), and health service coverage (depth).

Paraguay has set ambitious targets to improve the health of its citizens

Paraguay has made ambitious commitments to improve the health of its citizens. The National Development Plan (PND) sets ambitious targets to increase life expectancy and to reduce maternal mortality, child mortality, undernutrition, obesity as well as deaths by non-communicable diseases. More broadly, the National Health Policy sets out to advance towards universal access to health and achieving universal health coverage by 2030 (MSPBS, 2015).

To deliver on this commitment and on the right to health enshrined in the Constitution, the country has undertaken major reforms of the governance and approach of the national health system. The adoption of law 1032 in 1996, which created the National Health System, is a major milestone in this reform process. However, it has only been partially successful. The system remains very fragmented and stewardship is challenging. However, significant progress has been achieved in terms of access to health, in the process of decentralisation of the health system, and in the adoption of an approach to universal health coverage based on primary healthcare.

Demographic trends are favourable but as the transformation of the health system will require time, it should start now. Paraguayans are young and live relatively long lives. Life expectancy at birth in Paraguay is 73.6 years (70.8 years for men and 76.5 years for women) according to the most recent projections (DGEEC, 2015). The Paraguayan population is eminently young. By 2017, 30% of the population was 15 years old or less, while only 6% were 65 years or older. The relatively large young population is a key advantage of the health system in Paraguay. It gives Paraguay a window of opportunity to reform the health system before demand for health increases significantly while offering the country some leeway for pre-paid contributions to finance the health system and social protection more generally (see Chapter 2). However, the demographic dividend will gradually decline over the coming decades. The structure of the population has become less expansionary in recent decades and is stationary in the under-20 age group. The population is currently growing at an annual rate of 1.3%, while women have 2.5 children on average. Projections suggest that the growth rate will stabilise with fertility falling to just below 2 children per woman by 2040.

In this context, performance on key health outcomes has been mixed. In terms of the Sustainable Development Goals (SDG), Paraguay has progressed in several indicators over the last decades, but progress has not always been at the pace needed to achieve the targets set by the SDGs or by the National Development Plan. SDG 3 gathers a series of indicators to ensure healthy lives and promote well-being for all, at all ages (Figure 3.1). Life expectancy has improved, but faster progress is needed in order to meet the target of 79 years by 2030, as set in the PND. The maternal mortality ratio has decreased by 17%, from 159 to 132 estimated deaths per 100 000 live births, between 2005 and 2015. Despite this positive trend, the rate of progress would be insufficient to achieve the SDG target of less than 70 per 100 000 live births by 2030. The national official target is even more ambitious with a set objective of 40 per 100 000 live births. On the other hand, rates of preventable deaths of newborns and children under 5 years of age are already well below the SDG target of respectively, 12 and 25 per 1 000 live births. But, they still fall well short of national objectives. In terms of the burden of specific diseases, HIV and tuberculosis has remained stable in recent years, and there have been no endemic cases of malaria since 2010. However, the prevalence and death rate of dengue and other tropical diseases have increased over the past decade. Rates of satisfaction of needs for family planning with modern methods are progressing but are not yet universal. Finally, the death rate associated to road injuries increased between 2005 and 2015, making the target of halving the number of deaths and injuries from road traffic accidents by 2020 unlikely to be reached. This trend is similar for the rate of premature mortality (YLL, i.e. years of life lost) due to alcohol and drug use.

Health and health care needs in Paraguay

Paraguay has been going through a marked demographic and epidemiological transition. Non-communicable diseases have risen sharply, whereas communicable, maternal, neonatal and nutritional diseases have not decreased as expected. The epidemiological transition has been accompanied by changes towards sedentary lifestyles and poor dietary habits among the population, deteriorating risk factors and the social determinants of health. Furthermore, disability and death rates associated to external injuries have been rising over the last decades, mostly due to traffic accidents and interpersonal violence (Figure 3.2).

The unresolved agenda of communicable, maternal, neonatal and nutritional diseases

Although communicable, maternal, neonatal and nutritional diseases (CMNN) tend to decrease alongside economic and social development, Paraguay still faces high rates of prevalence and associated deaths. Currently, CMNN represent around 11% of total deaths per year. Death rates have reduced by 37.6% over the last two decades, falling from 97.8 to 58.7 deaths per 100 000 people, between 1996 and 2006. Contrastingly, Latin America and the Caribbean region saw a faster reduction (46.6%) over the same period, falling from 125.4 to 66.9 deaths per 100 000 people. Despite the relatively slow progress, death rates due to CMNN are lower than in some neighbouring countries like Ecuador (63.6), Uruguay (68.9) and Brazil (69.21), but higher than in Panama (57.4), Chile (44.8) and Costa Rica (23.4). Among the major causes of death, pneumonia causes 20.5 deaths per 100 000 people (3.8% of total deaths) and neonatal disorders cause 15.1 deaths per 100 000 people (2.8% of total deaths). These two main causes of death are followed by HIV/AIDS and tuberculosis, nutritional deficiencies and diarrhoeal diseases (6.6, 4.8, and 3 deaths per 100 000 people respectively).

A high share of Paraguayan women still die from preventable causes related to pregnancy and childbirth. Estimations suggest that the maternal mortality ratio fell from 158 to 132 deaths per 100 000 live births between 2000 and 2015 (Figure 3.3 Panel A). Compared to the benchmark countries, Paraguay registered the highest maternal mortality ratio (Figure 3.3 Panel B). The leading causes were preeclampsia, haemorrhage and complications from abortions. An increased access to higher-quality health care during pregnancy and childbirth can prevent many of those maternal deaths, as well as improve pregnancy and childbirth, particularly for adolescent girls. By 2015, 77.4% of pregnant women had at least four prenatal check-ups and 97% of deliveries took place in health facilities (PAHO, 2017). The recent increase in the number of births attended by skilled health staff had a positive impact on the decrease in maternal mortality rates. In ten years, the number of births attended by skilled health staff increased from 87% to 95% in 2015. Moreover, 56.6 births were to adolescent mothers per each 1 000 women aged between 15 and 19 in 2017. Adolescent mothers face higher risks of eclampsia, puerperal endometritis, and systemic infections than adult mothers. Similarly, the babies born to adolescent mothers face higher risks (e.g. low birthweight, preterm delivery, and severe neonatal conditions) than those born to adult mothers (Ganchimeg, 2014).

Neonatal, infant and child mortality is highly associated with the lack of quality and skilled care of common diseases. By 2015, reported mortality in children under 1 and children under 5 was 14.2 and 16.4 deaths per 1 000 live births, respectively (MSPBS, 2016a). Compared to the benchmark countries on the basis of internationally comparable estimates, Paraguay still registers high child mortality rates, well above those registered in OECD countries (Figure 3.4 Panel B). The leading causes of death were pneumonia, influenza, and diarrheal diseases. On the other hand, by 2015, neonatal mortality reached 9.7 deaths per 1 000 live births; its leading causes were preterm birth complications, encephalopathy due to birth injuries, pneumonia, infections and sexually transmitted diseases. Skilled health care during pregnancy, childbirth and in the postnatal period prevents complications for both mother and newborn and problems can be detected in their early stages and treated accordingly.

Nutritional deficiencies are particularly high among children. Better nutrition is related to improved infant, child and maternal health, stronger immune systems, safer pregnancy and childbirth, lower risk of non-communicable diseases (such as diabetes and cardiovascular disease) and longevity (WHO, 2017). The overall prevalence of nutritional deficiencies in Paraguay was 20.1 cases per 100 000 people in 2016. Contrastingly, the prevalence among children under 5 was 37.8 cases per 100 000 people, out of which 33.5 were due to iron-deficiency anaemia and 4.2 due to vitamin A deficiency. Nutritional deficiencies produced 3.1% of total deaths among children under 5 in 2016, most of them being associated to protein-energy malnutrition (Global Burden of Disease Collaborative Network, 2016).

Infectious diseases mostly affect people who face social and economic vulnerability, including indigenous persons and children. Pneumonia and diarrheal diseases still list among the most common causes of death in Paraguay. By 2016, the former was the seventh biggest cause of death, leading to 3.8% of total deaths across all ages, while among children under 5, it lead to 7.4% of total deaths. The prevalence of tuberculosis was 21 272.7 cases per 100 000 people in 2016, with a mortality rate of 3.8 deaths per 100 000 people. The most vulnerable population to tuberculosis are the indigenous communities, inmates and people living with HIV. An estimated 17 564 people were living with the human immunodeficiency virus in 2015; more than half of them were between the ages of 20 and 34.

Although immunisation coverage has progressed and prevalence of infectious diseases has decreased, Paraguay has not yet attainted Universal Immunization Coverage. A strong investment was made to strengthen the vaccination program between 2009 and 2010, increasing the budget of the Expanded Immunization Program (PAI for its acronym in Spanish) by 56% over a two-year period. The new resources made it possible to guarantee operational resources and the introduction of new vaccines to the national vaccination schedule to prevent rotavirus, chickenpox, influenza, hepatitis A, whooping cough, pneumococcal infections, and the human papilloma virus (among others). The country has seen progress in the elimination of malaria, measles, congenital rubella syndrome, and other communicable diseases over the last years. Vaccination coverage reached 80% for the pentavalent vaccine (DPT-3) and 91% for the measles, mumps, and rubella vaccine by 2016. However, immunisation coverage for the BCG vaccine is 10 percentage points lower in Paraguay than in the southern cone, 8 percentage points lower for the polio virus vaccine and 11 percentage points lower for the DTP3 vaccine (WHO, 2017).

A fast-growing burden of non-communicable diseases

The concomitant presence of communicable, maternal, neonatal and nutritional diseases is aggravated by the growing burden of non-communicable diseases (NCD). Late epidemiological transition in Paraguay has resulted in a sharp increase in cases of non-communicable diseases. NCD are the main cause of death in the country and have been increasing, strikingly so, over the last few decades, rising from 65.2% of total deaths in 1996 to 77.5% in 2016. Most common conditions were cardiovascular diseases (31.1% of total deaths); neoplasms (tumours) (17.5% of total deaths); diabetes, urogenital, blood, and endocrine diseases (13% of total deaths); and neurological disorders (5.6% of total deaths). Among the top 10 causes of death in 2016, seven were associated to non-communicable diseases (Figure 3.5). In order to advance towards achievement of the SDG, Paraguay should aim to reduce by one-third premature mortality from non-communicable diseases by 2030 through prevention and treatment, as well as through the promotion of mental health and well-being.

Diabetes and chronic kidney diseases impose a large death burden in Paraguay. Diabetes mellitus is the most common within this disease family, producing a prevalence of 5 011 cases per 100 000 people and 38 deaths per 100 000 people; around 0.76% of diabetes patients die in Paraguay. Although Latin America and the Caribbean region has on average a higher prevalence of diabetes (5 214.4 cases per 100 000 people), death rates are lower than in Paraguay (31.4 deaths per 100 000 people). Accordingly, a diabetes patient is more likely to die in Paraguay than in the average LAC country. In the same way, while around 0.94% of patients suffering from chronic kidney disease eventually die from it in Paraguay, 0.64% of patients die on average in Latin America and the Caribbean (Global Burden of Disease Collaborative Network, 2016).

Table 3.1. Comparison of Paraguay’s top 10 causes of premature death in 2016
Age-standardised premature death rates (Years of Life Lost) per 100 000 people
	Ischemic heart disease	Cerebrovascular disease	Road injuries	Diabetes mellitus	Chronic kidney disease	Interpersonal violence	Lower respiratory infections	Neonatal preterm birth complications	Congenital birth defects	Alzheimer disease and other dementias
Paraguay	2 255	1 400	1 177	1 038	745	696	695	694	681	459
Benchmark countries’ average	1 432	768	610	410	375	401	542	332	425	337
Argentina	1 802	786	646	362	374	300	936	503	541	251
Australia	905	351	289	159	118	62	129	109	194	286
Brazil	1 811	1 068	1 049	564	363	1 446	862	487	653	520
Canada	1 084	335	336	193	117	79	174	203	255	258
Chile	938	699	497	250	290	213	311	303	511	252
Colombia	1 560	539	629	308	360	1 677	453	500	571	365
Costa Rica	1 186	353	620	149	463	372	228	416	619	362
Indonesia	3 299	2 556	742	1 118	479	89	784	837	505	463
Israel	858	348	309	338	292	108	223	94	212	347
Mexico	1 604	547	742	1 272	1 313	791	559	442	666	380
Peru	944	459	581	298	411	163	1 427	356	473	259
Poland	2 333	876	448	194	128	71	312	232	285	269
Portugal	856	741	378	231	163	61	351	77	167	351
Thailand	1 050	919	1 195	441	524	324	872	171	229	429
Uruguay	1 243	941	691	270	231	259	503	248	486	257
Note: YLL refers to the years of life lost due to premature mortality. Age-standardization involves a statistical technique used to compare populations with different age structures, in which the characteristics of the populations are statistically transformed to match those of a reference population.
Source: Global Burden of Disease Study (database) (Global Burden of Disease Collaborative Network, 2016).

Half of the main premature causes of death are due to non-communicable diseases. Rates of premature death are higher in Paraguay than in most of the benchmark countries. After adjusting for different age structures, Paraguay loses 1 038 years of life (YLL) due to diabetes per 100 000 people, whereas benchmark countries lose around 410 years of life on average due to the same cause (Table 3.1). Similarly, premature death rates due to cerebrovascular and chronic kidney diseases are close to doubling the average of those in benchmark countries. Regarding external causes, road injuries and interpersonal violence produce very high premature death rates compared with other countries. Lastly, among the main communicable, maternal, neonatal and nutritional diseases, the main causes of premature death in Paraguay are pneumonia (lower respiratory infections), neonatal preterm birth complications and congenital birth defects.

Risk factors are on the rise partly driven by social determinants of health

Non-communicable diseases are strongly associated with risk factors related to lifestyle. Most of them are generally preventable through interventions on the key risk factors related with people’s lifestyle and habits. Such interventions might not only reduce morbidity but also reduce the high socio-economic costs for both people and the health system. The Ministry of Health implemented the First National Survey on Risk Factors of Non-Communicable Diseases in 2011. It analysed the main risk factors in the country, such as tobacco and alcohol consumption, dietary habits, physical activity, overweight and obesity, high blood pressure and glucose and cholesterol, among others.

Metabolic and behavioural risks lead the causes that contribute to disability and deaths in Paraguay. In particular, risks associated with high fasting plasma glucose, high blood pressure, high blood body mass index, dietary risk and malnutrition are among the top 10 main contributors to premature deaths. Most of the deaths associated with these risks could be prevented by encouraging people to adopt better habits (Figure 3.6).

Metabolic and behavioural risks are the main contributors to cases of non-communicable diseases in Paraguay. Among metabolic risks, the main contributors are high fasting plasma glucose, high blood pressure and high mass index. In 2016, these risks factors were associated to 20.17%, 17.16% and 13.03% of total deaths respectively. Similarly, among behavioural risks, the main contributors are dietary risks, malnutrition, alcohol and drug use and tobacco. More than half of adult males (51.5%) and of adult women (51.3%) were overweight or obese in 2014, while 24.6% of adults did not get enough physical activity in 2010. Contrastingly, 39% of adults in the world aged 18 years and older were overweight and 13% were obese in 2016 (WHO, 2017). Furthermore, 28.3% of male adults and 7.9% of female adults in Paraguay smoked tobacco in 2015.

Environmental and occupational risks significantly contribute to prevalence of non-communicable diseases. Air pollution and occupational risks are among the main risks that contribute to increasing the incidence of these conditions. Deforestation in Paraguay continues with severe implications for climate regulation (Da Ponte et al., 2017). The rapid expansion of the agricultural frontier and deforestation caused the loss of around 90% of the original1 forest cover between 1945 and 2007, in the eastern region of the country, where the Atlantic Forest is located (Fleytas, 2007). In 2016, more than 3 000 deaths were associated to air pollution, which represents around 8.47% of total deaths in the country. Furthermore, Paraguayans are very vulnerable to the impact of major natural disasters and the consequences of environmental degradation. The worst natural disasters have been related to floods and droughts, especially due to El Niño, in some areas of the Paraguayan Chaco.

Universal access to sexual and reproductive healthcare services has a crosscutting positive impact on health. Services include family planning, information and education, and the integration of reproductive health into national strategies and programmes. Around 15% of women who do not want to become pregnant are not using contraception. Likewise, only 68% of women of reproductive age (aged 15-49 years) use modern methods to meet their needs in terms of family planning. In 2016, around 588 deaths were associated with unsafe sex (Global Burden of Disease Collaborative Network, 2016).

Poverty restricts access to basic services such as sewage treatment, garbage collection, medical services and education. In Paraguay, 98% of households had access to clean drinking water but only 12.3% had access to sewer systems in 2015. Moreover, 42.8% of homes had a septic tank and drainage well, 26.7% had a pour-flush pit latrine, and 18% had some other latrine system. In 2016, almost 200 deaths were associated with unsafe water, sanitation and handwashing. Nearly 52% of households have refuse collection services, 76% in urban areas and 16.3% in rural areas, while 15% of urban municipalities have an authorised dump (PAHO, 2017).

A first and fundamental way of achieving sustainable Universal Health Coverage is investing more in health promotion and disease prevention. Investments in public health can improve health outcomes at a relatively low cost (OECD, 2016d). Within the context of primary health care, health promotion is critical for improving outcomes in the prevention and control of both chronic and communicable diseases, and for meeting the health-related Sustainable Development Goals, particularly among poor and marginalised groups (WHO, 2017). In Paraguay, health promotion and disease prevention actions are undertaken mostly by community agents within the Family Healthcare Units (USF). The country had 801 such units as of 2017 but there is still a significant unmet need. Between 2014 and 2016, only 46 new USFs were incorporated into the system (MSPBS, 2017a) whilst estimates of need suggest 1400 USFs would be needed (Ríos, 2014). This shows that health promotion and disease prevention needs to be strengthened and receive more attention and resources.

Tackling strategic risk factors is a challenging but worthwhile investment and is often more cost-effective than waiting to treat people in poor health. Paraguay needs to invest more in health campaigns and programmes to address effectively the most harmful risk factors. To this end, the country needs to reinforce the capacity of its health promotion and disease prevention mechanisms. Some of the key actions include discouraging tobacco smoking and the consumption of harmful substances (including alcohol), encouraging physical activity and more healthy diets, and improving the provision of clean water and sanitation services. Additionally, there are strong economic incentives for the country to address the risk factors associated to mental diseases, harmful environments and road safety (OECD, 2016d).

Among prevention measures, a package of fiscal, regulatory measures and primary care interventions can reduce the entire burden of disease associated with harmful alcohol use. Such strategies would yield yearly savings in health expenditures of between USD PPP 4 and 8 per person (OECD, 2015). Effective policies against harmful drinking include minimum pricing laws and taxation, advertising restrictions including regulations on the labelling of alcohol products, laws restricting driving under the influence, regulations restricting access to alcohol (minimum age, regulation on outlets), pharmacological and psychosocial treatments for alcohol dependence,, education policies on the dangers of harmful drinking, and public-private collaborations to discourage harmful drinking practices.

Box 3.1. Preventive health care: The case of Mexico

Mexico is at the leading edge of what OECD countries are doing in terms of health promotion and public health activities. Its vast array of public health campaigns, advertising restrictions, food labelling and changes to school nutrition programmes are unparalleled and provide a model for other OECD countries to follow. Indeed, Mexico is widely heralded for its ambitious and comprehensive approach to tackling diabetes, high blood pressure and other chronic diseases through public health programmes and public policy. Initiatives have all captured international interest including the Acuerdo Nacional por la Salud Alimentaria, the Consejo Nacional para las Enfermedades Crónicas, the Estrategia Nacional para la Prevención y el Control del Sobrepeso, la Obesidad y la Diabetes (including its most well-known campaign, Chécate Mídete Muévete) as well as constitutional reforms prohibiting unhealthy foods in schools alongside other norms and regulations, clear food labelling and most recently restrictions on advertising unhealthy foods during children’s typical television and cinema viewing times.

Source: OECD Reviews of Health Systems: Mexico (OECD, 2016c).

External injuries produce unusually high death rates

Road injuries create a large social and economic burden in Paraguay. Paraguay has the second highest death rate due to traffic accidents in the Americas. This cause has gone from being the third cause of death producing more premature causalities in 2005 to be the second one by 2016, with an increase of 5.8 deaths per 100 000 over that period. By 2016, Paraguay had 24.6 deaths per 100 000 people due to road injuries, while neighbouring countries like Peru and Chile had 13 and 12.7 deaths per 100 000 people, respectively. More than half of the deaths associated to road injuries were due to motorcycle accidents (53.6%), followed by car accidents (24.2%), (MSPBS, 2018).

Although prevalence of road injuries is in line with the average of the region, Paraguay has a higher death rate due to this cause. In particular, in 2016 prevalence of road injuries reached 1 813 cases per 100 000 people and produced 24.6 deaths per 100 000 people. Latin America and the Caribbean region had a quite similar prevalence of 1 825 cases on average per 100 000 people; but road injuries only produced 19.08 deaths per 100 000 people. This suggests that, although there is a similar prevalence of road injuries, people are more likely to die due to this cause in Paraguay than in the average LAC country.

Interpersonal violence also causes a large number of causalities in Paraguay. It ranks as the ninth main cause of death in the country. Interpersonal violence produced 14.11 deaths per 100 000 people in Paraguay in 2016. This is 8.63 deaths per 100 000 people higher than the average of its neighbouring countries, Argentina, Chile and Uruguay (5.48). Gender violence and in particular domestic violence, remains a challenge in Paraguay. While 4.12% of intentional homicides of men were perpetrated by the victim's partner in 2014, 46.37% of intentional homicides of women were perpetrated by the victim's partner (ONU Mujeres/Ministerio de la Mujer, 2016; Ministerio del Interior, 2015).

The health system in Paraguay is segmented and suffers from weak stewardship

Paraguayan law establishes the right to health. The Paraguayan Constitution of 1992 enshrines the right to health. It states that “no one shall be deprived of public assistance to prevent or treat illness, pests or plagues” (Art. 68) and calls for the establishment of a National Health System (Art. 69). This constitutional provision has real effects. Indeed, court orders are regularly sought and often obtained to force specific health service providers to provide care. The national health policy (MSPBS, 2015) sets the objective of advancing towards universal access to health and achieving universal health coverage at the highest possible level to reduce inequalities in health and improve the quality of life of the population in the framework of sustainable human development”.

The health system consists of the public subsystem, the social security subsystem and the private subsystem. The three subsystems are largely vertically integrated, that is they raise revenue, pool funds and deliver service independently. The public subsystem comprises the Ministry of Health (MSPBS, Ministerio de Salud Pública y Bienestar Social), occupational schemes for the Armed Forces and the Police, the Hospital de Clínicas (the teaching hospital of Asunción National University, UNA), and health service provision by local governments, with the MSPBS covering a much larger share of the population than the other providers. Each of these segments of the public subsystem is largely independent of the others. The social security system comprises health insurance and service provision by the social security institute (IPS). Although IPS is a public institution, its governance, funding and coverage are different from that of the public subsystem, which is why it is considered as a separate subsystem. The private subsystem comprises private providers, private insurance companies and private pre-paid medicine firms, most of which deliver care in their own facilities. The various subsystems cover different population groups, mainly based on their employment status and ability to pay. The set of services they provide is not the same and each population segment receives different benefits and quality standards.

Provision of health services has improved in recent years, driven by the increase in public health expenditure. Past governments have made a great effort to increase progressively the allocated public budget to health, with funds to government programmes (excluding social security) going from 1% to 2.7% of the GDP between 2002 and 2015 (WHO, 2018a). New resources have been invested mainly in more hospital infrastructure, equipment and human resources. New vaccines have been incorporated into the basic plan and several programmes have been implemented to improve maternal and neonatal health, improve nutritional outcomes, and intensive therapies (Giménez Caballero, 2013).

There are not enough health facilities to meet the needs of the population. Despite the increased public expenditure in health, the provision of some essential health facilities remains relatively limited, as in the case of hospital beds in the public subsystem. In 2002, the MSPBS had 0.8 hospital beds per 1 000 people. By 2015, this figure remained unchanged (MSPBS, 2016b). Currently, the public subsystem has 5 569 available hospital beds in the country in establishments of the MSPBS, 822 in the teaching hospital of the UNA and 284 in the hospitals of the armed forces and the police, while the IPS and the private subsystem sum 2 076 and 1 914 respectively. The national aggregate is equivalent to a rate of 1.582 hospital beds per 1 000 inhabitants. This is lower than the regional average of two beds per 1 000 inhabitants (Casalí, Cetrángolo and Goldschmit, 2017).

There are significant asymmetries across regions in the range of services that are available to meet the health needs of the population. While in Asunción there were 2.1 hospital beds per 1 000 people in 2015, regions such as Alto Paraná or Canindeyú had only 0.3 hospital beds per 1 000 inhabitants. Around 43.8% of the total hospital beds from the private subsystem are located in Asunción, 13.58% are in the Central region, 12.9% in Alto Paraná and 8.6% in Boquerón (Figure 3.8).

The health system is segmented and uncoordinated

The social security system provides health insurance to just under 20% of the population.2 The Social Security Institute (IPS) is a public yet financially autonomous institution in charge of covering active formal workers and their dependants. The IPS is financed through employee and employer contributions. It provides medical attention, as well as recovery and rehabilitation services (Casalí, Cetrángolo and Goldschmit, 2017). Additionally, it is responsible for supplying medicines and prostheses to its beneficiaries and paying social security subsidies related to health (i.e. due to work leaves and accidents). Most contributors to IPS are also covered by IPS for old age and disability. Around 18.46% of the population respond that they rely primarily on the coverage of IPS as their main health services provider when asked in the main national household survey (DGEEC, 2017). IPS faces some uncertainty regarding its actual coverage due to dependants not being systematically enrolled and enrolling only when requesting services. Nevertheless, in practice only around 13% of the population resorts3 to medical attention provided by the IPS (Figure 3.9).

The private subsector offers health insurance to wealthier households but private services are also used by the middle class. In the private subsector, there are medical insurance companies and health services providers that deliver mostly services related to recovery and rehabilitation (Casalí, Cetrángolo and Goldschmit, 2017). The private subsystem is made up of for-profit entities and non-profit entities. The latter include the Red Cross, which receives financial support from the Ministry of Health, as well as cooperatives, which operate hospitals in the Chaco region and the department of San Pedro. Among the for-profit entities, there are pre-paid medical insurance companies, clinics, institutes and private laboratories that provide health services and independent professionals. For-profit entities comprise more than 150 institutions that provide health services (medical centres, sanatoriums, hospitals) and more than 70 health provision units from pre-paid medicine companies (Oficina Comercial de Chile en Paraguay – ProChile, 2017; Superintendencia de Salud, 2017). Around 6.1% of the population rely on private health insurance. Beneficiaries of the private subsector are mainly formal and informal workers who pay for health insurance, including employees of the state, who cannot be covered by IPS. In practice, around 15% of the population resorts to private medical attention. Although the better off are more likely to rely on private medical care, there are users of the private subsystem across the entire income distribution (Figure 3.9).

The public subsystem is the largest health service provider in the country. The public subsystem is in charge of two different population segments. Firstly, the hospitals and other service provision units of the Ministry of Public Health and Social Welfare and the hospital of the National University of Asunción are in charge of covering the general population, homeless, some informal workers, unemployed people, and their dependants. Secondly, the hospitals of the Public Forces (Military, and Police Hospitals) are in charge of covering military and police workers and their dependants. Around 74% of the population is not covered by any health insurance and therefore rely entirely on the services provided by the public subsystem. Public health services institutions not only provide recovery and rehabilitation services but also most of the actions towards health promotion and protection in the health system (Casalí, Cetrángolo and Goldschmit, 2017). In practice, around 66.77% of the population resorts³ to medical attention provided by the public subsystem.

The public subsystem also covers procedures and conditions not covered by other subsystems. In Paraguay, all citizens have the right to medical attention. The public subsystem must provide services without any type of discrimination, and based on the principles of equity, quality, efficiency and social participation. This means that the public subsystem must provide services to any person, including individuals covered primarily by other subsystems. For this reason, the public subsector incurs additional residual expenditures for providing medical procedures not covered by private insurance, which are generally related to pre-existing and congenital conditions, psychiatric diseases, accidents and sexually transmitted infections, among other coverage exemptions (Figure 3.10). In practice the public subsystem also provides care to people insured by IPS (Figure 3.10). The two institutions have agreements at the local level for joint provision of care in certain localities.

A series of reforms failed to usher in a meaningful transformation of the health system

The adoption of Law 1032 in 1996 was a landmark in the formation of the health system in Paraguay. Law 1032 stipulated that the health sector would be organised as a National Health System and provided the legal basis for a series of governance institutions to ensure health service delivery. According to the law primary healthcare programmes and strategies are the foundation for extending coverage. The law also establishes decentralisation as a key principle, and calls for the implementation of total quality control throughout the system.

According to the law, the governance of the health system rests on the shoulders of the National Health Council. The National Health Council (Consejo Nacional de Salud) is a consultation and co-ordination body with representatives from across the sector and is responsible for promoting the national health system, design health programmes, participate in policymaking in the health domain and monitor the implementation of health policy. It is assisted by a smaller Executive Committee that is responsible for managing the national health system and its budget. The Executive Committee is supported by a Medical Directorate responsible for regulation of services, a national health fund responsible for financing policy and a Health Superintendence responsible for accreditation, certification and quality control. Law 1032 also set the basis for the creation of regional and local councils mirroring the national council to take on systemic functions at the local level.

The implementation of the reform has been partial even to this day. The National Health Council has not met in ordinary sessions since its creation. The technical and financial bodies to support the national council were never created, nor was the National Health Fund established in practice (Giménez Caballero, 2013). Indeed, the law creating FONACIDE allocates 10% of FONACIDE resources to the national health fund. However, it also redefines the purpose of the fund, giving it much narrower scope than the original law and establishing project finance logic, whilst the original intent was to create a central financing fund for the national health system4.

Law 1032 and subsequent reforms have achieved greater decentralisation of the health system. By 2008, fewer than 10% of municipalities had local health councils (Giménez Caballero, 2013). A reform of Law 1032 and of financial administration legislation carried out in 2006 granted regional and local health councils the ability to administer funds to fulfil their function and simplified the procedures for financial control. This reform, and the decentralisation of a small share of the budget of the Ministry of Health, which is distributed through an “equity fund” to local authorities incentivised the creation of local and regional health councils in the great majority of municipalities and regions. According to MSPBS authorities, there were 250 local health councils at year-end 2017 out of 260 municipalities. This decentralisation process has opened space for social participation in the health system and for co-ordination at the local level.

The full implementation of the reforms undertaken since 1996 requires a broad agreement on a future vision for the health sector in Paraguay. Although there has been progress in setting up integrated health networks in certain areas, a number of key governance provisions in the 1996 reform and subsequent reforms face strong opposition. The fact that the Paraguayan health system is a mixture of models, with different values and with significant vested interests makes reform difficult without a national consensus on the way forward. More recently, the emphasis on primary healthcare and the integration at the local level have garnered support and could serve as the basis for a national dialogue on the future of health.

Stewardship and quality control remain weak

The stewardship of the health authority in Paraguay needs to be reinforced. The stewardship role fall to the Ministry of Public Health and Social Welfare (MSPBS). However, its stewardship role is weak in practice. The fragmentation of the health system, with different modalities for financing, regulation, enrolment, and service delivery makes stewardship particularly challenging. For example, the framework for the oversight of the market for pharmaceutical products is relatively well developed (MSPBS/OPS/WHO, 2014). Centralised purchasing allows the MSPBS to obtain medicines at just under double the international reference price, but citizens pay 13 times the international reference price despite the existence of price controls (MSPBS/PAHO/WHO, 2015). Another example is the regulatory framework for pricing medical services in the private and pre-paid sector, which is outdated and has de facto been taken over by associations of medical practitioners.

The organisation and functions of the MSPBS are very broad, which can contribute to diluting its leadership. The MSPBS’s primary function is as steward of the national health policy. However, it also has functions in social welfare and citizen’s environment. These stem from a holistic view of public health, but in practice result in the MSPBS undertaking functions that overlap with other institutions or that could be located elsewhere in the executive, allowing the MSPBS to concentrate on the difficult task of managing a fragmented system with very many actors. For example, the Ministry is tasked with implementing a national social services system for the most vulnerable segments of the population, an area where multiple institutions act and where stewardship and co-ordination are also weak (see Chapter 2). The Ministry also oversees the sanitation agency (SENASA), and its relatively large investment budget. In practice, while the organisation of the ministry (Decree 21376 of 1998) contemplates a vice-minister overseeing co-ordination and administrative tasks, while the Minister is tasked with the political direction role, most administrative units (human resources, administration and finance) report directly to the minister while the programmatic elements are under the vice-ministry.

The regulatory framework and bodies are weak. The Superintendence of Health is in charge of verifying that the entities providing health services are duly registered and authorised by the MSPBS and that they adequately grant the health and healthcare services regulated by the legislation in force. Furthermore, it is in charge of establishing preventive and systematic monitoring to verify the conditions under which health entities manage their benefits and ensure compliance. In practice, the Superintendence of Health has scarce economic and human resources and little autonomy to undertake its role. As a consequence, regulation on private and public services providers is weak, resulting in asymmetries in the quality across providers and arbitrary clauses of coverage (Giménez Caballero, 2013). There is no regulation specifying, for example, the standard or minimum levels of coverage for private plans or for pre-paid plans provided to state employees, which increases the variability in offers and makes procurement processes more difficult.

Weak stewardship has limited Paraguay’s potential in terms of healthcare access and quality. According to the Healthcare Access and Quality Index, the Paraguayan health system scored 60.4 in a scale from 0 (lowest) to 100 (highest) in 2015. However, considering the resources and development status of the country, Paraguay has an untapped potential of 13.6 points in this index for improving personal healthcare access and quality, i.e. the country’s target should be 74 (Figure 3.11). This gap has widened in recent decades (8.7 in 1990 to 13.6 in 2015). Overall, Paraguay ranks among the lowest versus benchmark countries. Other international studies also suggest that the population is unhappy with the quality of health services. Fewer than half of Paraguayans (43%) reported being satisfied with the health system, a figure that is below what could be expected given the country’s level of economic development. In addition, this satisfaction index has hardly budged relative to its value ten years ago (48% – OECD, 2018). Increasing the profile of quality of care in the institutional framework will be critical to address this growing gap.

A lengthy transition towards an integrated health network based on Primary Healthcare

Integrated health services delivery networks aim to tackle the major challenges posed by the fragmentation of Paraguayan health services. Fragmentation is a major cause of poor performance of health services and systems, since it has a rash of consequences: limited access to services, delivery of services of poor technical quality, irrational and inefficient use of available resources, unnecessary increases in production costs, and low user satisfaction with services received (PAHO, 2010). Furthermore, fragmentation in the financing schemes often lead to insufficient financing that impedes the effective delivery of health services. In this regard, the concept of ‘integrated health services delivery networks’ intends to reshape health systems to ensure the provision of equitable, comprehensive, integrated, and continuous health services to the entire population. This concept seeks to promote, preserve and/or restore the health of individuals and the community as a whole (PAHO, 2010).

Paraguay has undertaken reforms to shift from a pyramidal structure to a network model based on primary healthcare, but the change has not yet fully materialised. Past legal reforms have introduced new norms to gradually reshape the system towards an integrated health services network based on primary healthcare. In a network model, vertical relationships based on technological densities or levels of care are replaced by horizontal polycentric networks (Vilaça Mendes, 2011). This adjustment implies that, despite the different levels of healthcare and of technological complexity amongst actors in the health system, each one plays an essential role in providing adequate healthcare. Consequently, the size of the allocated budget in a network model is not necessarily proportional to the level of complexity of the services offered by each healthcare institution. Quite the opposite, primary healthcare plays a central role in the network since it is the gateway to the health system and manages the continuity of care (i.e. co-ordinating health service bodies that provide more complex care). In practice, the new legal framework in Paraguay has not managed to effectively transform the health system.

The role of primary healthcare is essential for ensuring the continuity of care throughout the system. The role of primary healthcare units within the network includes creating the links and transfers with specialised, emergency and hospital healthcare, depending on the complexity required. In a nutshell, the different actors within the healthcare network in Paraguay are primary healthcare (family health units); specialised healthcare (specialist outpatient centres); hospital healthcare (basic, general and specialised hospitals); complementary services (pharmaceutical assistance, health surveillance, rehabilitation and diagnostic support); and the subsystem of medical regulation, communication and transportation (Sistema de Emergencias Médicas Extrahospitalarias, SEME) (Instituto Suramericano de Gobierno en Salud, 2012). SEME is responsible both for emergency response and for the referral of patients to higher levels of care. The latter enables in practice the interaction of all actors in the network. Health facilities offering high complexity care are mostly concentrated in Asunción and the Central Department, while primary healthcare units are intended to be located across the entire national territory and cover all Paraguayans.

Paraguay has made efforts to strengthen primary healthcare provision through the creation of Family Health Units. Primary healthcare in Paraguay is mostly provided through the Family Health Units (USF) and through health centres of the IPS. USFs are intended to be the entry point to the health system and rely on a community-based approach. They are responsible for providing services to address and resolve most health problems in their assigned social territory (covering 3 500 to 5 000 people). The system thus provides free access to health services to a larger share of the population (Instituto Suramericano de Gobierno en Salud, 2012).

The development of USFs has led to a significant increase in access to health and better integration of health service delivery within the public sector. The establishment of USFs was originally guided by geographical targeting of the most underserved areas. This resulted in a significant increase in access to health. The establishment of USFs also led to a more integrated approach to care, instead of a vertical approach where different staff members are in charge of specific programmes (vaccination, reproductive health, specific diseases, etc.). This integration has been found by evaluations of the USF programme to be more difficult where USFs are larger (Monroy Peralta et al., 2011).

The process of reorganising the health system around primary care is still ongoing and should be accelerated. Between 2008 and 2016, the Ministry of Public Health and Social Wellbeing built around 800 new Family Health Units (USF) under the primary healthcare strategy (MSPBS, 2017a). However, estimations suggest that Paraguay needs around 1 400 Family Health Units (Ríos, 2014), which points to the sizeable gap that needs to be addressed in the upcoming years. In terms of financial resources, the share of the health budget distributed to regions for primary healthcare has remained stagnant, from 26% of the total budget of the MSPBS in 2006 to 27% in 2014 (MH, 2018). However, the primary healthcare strategy relies on a network approach and therefore budgetary information by area may understate actual resources available for primary care. For example, significant resources channelled through programmes rather than functions are also devoted to primary care. However, the lack of political leadership, as well as the lack of tools and institutional mechanisms for the decided implementation of the reorganisation of the health system has resulted in the stagnation of this overhaul.

Inefficient information management limits the available evidence base and continuity of care

A thorough record of the country’s vital statistics is essential for identifying health needs and outlining assertive policies. A well-functioning civil registration and vital statistics (CRVS) system should register all births and deaths, issue birth and death certificates, and compile and disseminate vital statistics, including cause of death information. Ideally, it should also contain breakdown information of data by sex, age, place of residence, ethnic origin, and other relevant variables. This information is an essential tool for governments to respond to the healthcare needs of the population.

Although under-registration has been addressed over the last decade, it remains high. In 1991, the Ministry of Health created a database containing vital statistics and information on provision of services. The vital statistics system is the most developed, as it covers the entire health system. This system has been going through a modernization process that aims to provide a computerized system based on internet networks (Dullak et al., 2011). In particular, the Biostatistics Department has worked in co-ordination with the Civil Registry and the Directorate General of Statistics, Surveys and Censuses (DGEEC) to reduce under-registration of deaths and births as part of the redesign of vital statistics (Mancuello and Cabral de Bejarano, 2011). A specific effort to identify maternal deaths has also contributed to reducing under-registration of both maternal deaths and live births. As a result, under-registration of births has fallen remarkably (from 44.2% to 23.1% between 2001 and 2016). In addition, under-registration of deaths fell significantly over the same period (Figure 3.12). Nevertheless, both indicators reflect that around one fifth of births and deaths are not documented in Paraguay. In contrast, countries such as Argentina, Brazil and Chile register 99.5%, 95.9% and 99.4% of births respectively (WHO, 2018).

Most statistical information systems in health are scattered and segmented. In the Ministry of Health, information is collected separately by different programmes, which leads to duplication and increases the administrative burden on health professionals. According to officials from the Ministry of Health, doctors in USFs spend as much as a quarter of their working time filling out reporting forms. While an electronic recording system exists, limited connectivity makes online access to databases impractical and often counterproductive. Increasing the connectivity of health facilities by purchasing internet services through public tender would help alleviate this problem. In the short term, methods that allow for offline information provision would be more adapted to the current circumstances. In the private sector, the Superintendence of Health receives a significant amount of information from private providers but lacks the capacity to produce statistics on the basis of that information.

An efficient management of health information is necessary to ensure continuity in healthcare. Medical records form an essential tool for the continuity of patients’ care, as they contain key information about their health and treatment. Moreover, medical records can potentially be used in the management and planning of healthcare facilities and services, for medical research and the production of healthcare statistics. In Paraguay, the management of patient information is undertaken independently by each health service provider using mostly non-electronic procedures. Within the ministry of health, records are not systematically shared between primary and other levels of care. These mechanisms hinder the transfer of patients’ information between one institution and another. This is mainly reflected in the hundreds of transfers made from primary healthcare institutions to institutions that offer greater healthcare complexity.

Box 3.2. Taking stock of the evidence – from data use to health system improvement

There is a very large and growing body of evidence of the importance of the collection, analysis, linkage and reporting of results from personal health data assets for health care quality monitoring and improvement, population health policy, and health system performance measurement and evaluation. Many countries are benefiting from the linkage of personal health data to follow the pathway of care and understand health outcomes of care in order to evaluate the quality and effectiveness of health care treatments.

The PERFECT study in Finland monitors the content, quality and cost-effectiveness of treatment episodes in specialised medical care and thus contributes to monitoring health system performance. The methodology developed for PERFECT is now having an impact on monitoring among other countries throughout Europe.

Korea’s quality assessment of medical services includes assessment of the clinical appropriateness and cost effectiveness of health care by reporting on quality and inducing service providers to make improvements in response to the evidence. It aims to identify underuse, overuse and misuse of therapies and to reduce variation in care practices through the regular reporting of quality indicators.

There are also quality and efficiency assessments of clinical care guidelines in Sweden. For areas of care subject to national guidelines, such as cardiac and stroke care, care for selected cancers, dental care, diabetes care and mental health care, data linkages are undertaken to develop indicators in order to evaluate the effectiveness of recommended therapies. The evidence contributes to revisions of care guidelines.

To monitor and study health care consumption and expenditures, Belgium has developed a permanent sample of socially insured persons via the linkage of health care reimbursement invoice data to create longitudinal histories of health care encounters. Results inform policy decisions to manage health care expenditures.

Source: Strengthening Health Information Infrastructure for Health Care Quality Governance: Good Practices, New Opportunities and Data Privacy Protection Challenges (OECD, 2013).

Funding for health has increased but significant challenges remain

Financial resources for health insurance and provision in Paraguay come from multiple sources. Financial flows largely mirror the fragmentation of the health service provision system. Revenues for the care of different population groups are raised through separate systems, including public funding, social security contributions, pre-paid health plans and out-of-pocket expenditure. Funds are held in separate pools, with little or no potential for pooling risk and cross-subsidies across segments. Despite ongoing efforts to increase public spending on health, funding remains insufficient and inequitable. Furthermore, given that out-of-pocket expenditure represents a primary source of funding, a significant portion of the population in Paraguay is at risk of catastrophic health expenditure.

Despite a remarkable increase in public funding, challenges for financing health remain sizeable

Spending on health in Paraguay is relatively high as a share of GDP. Total health expenditure in Paraguay stood at 7.8% of GDP in 2015 (WHO, 2018a). This is lower than the OECD average of 8.9% of GDP but markedly higher than health expenditure in more developed countries in the Latin America region. Health expenditure per capita in 2015 was USD 724 PPP. While this is much smaller than the OECD average of USD 3 851 PPP, it is higher than expenditure in richer countries, like Peru or Thailand (Figure 3.13).

Health expenditure has increased considerably in the past 15 years, driven by the increase in public health expenditure. Expenditure on government health programmes grew from 1% to 2.7% between 2002 and 2015 (WHO, 2018a). This period coincides with the strengthening of primary care within the MSPBS and with the elimination of co-payments and user fees in the MSPBS’ provision of services. In spite of this, out-of-pocket payments’ growth rate is on par with that of GDP (Figure 3.14).

Prepayment schemes are sizeable in Paraguay due in part to the reliance of civil servants on private health provision. Indeed, according to its charter, the IPS cannot cover civil servants.5 Instead, the budget reserves a subsidy of PYG 300 000 (EUR 44.19) per month for each civil servant and employee of the state to finance a private prepaid plan (National Government of Paraguay, 2018). Public bodies can instead pool these funds and offer their staff a pre-agreed plan selected through public tender. This system fosters demand in a sizeable market for private prepaid health insurance. Considering public employees in the central administration alone and excluding those for whom special regimes allow coverage by IPS, potential demand stemming from public institutions and their employees would be as high as PYG 450 billion or about EUR 67 million per year.6 On the basis of procurement information, the Ministry of Finance estimates the value of health insurance contracts for civil servants and employees of the state to be just over PYG 400 billion for the Central Administration and a further PYG 70 billion for other entities, to which can be added PYG 126 billion in individual subsidy payments.7

The evolution of government expenditure in health will not be sustainable without a significant change in the composition of expenditure. Current health expenditure as a share of GDP increased by 2.8 percentage points between 2002 and 2015, led by the increase in government-funded schemes (largely health service provision by the MSPBS) for which expenditure grew by 1.5 percentage points of GDP. During the same period, tax revenues excluding social security contributions as a share of GDP grew from 10.8% to 13.2% (OECD/CIAT/IDB/ECLAC, 2018). Therefore, a continuation in the uptick in health expenditure would imply a significant increase in the share of public expenditure and in the share of public expenditure devoted to health.

Income from the binational dams earmarked for health contributes to finance public health expenditure. The National Fund for Public Investment and Development (FONACIDE) earmarks 10% of the income generated from operating the Itaipú dam for a National Health Fund. In practice, these funds are managed by the Ministry of Health in their entirety. The Ministry of Health also receives funds from FONACIDE directly, which finance both health and sanitation expenditure. The resources channelled through FONACIDE are a relatively small fraction of the Ministry of Health’s budget (7.2% in 2016, up from 2.4% in 2015 [Ministerio de Hacienda, 2018]). Moreover, their use is limited to a series of objectives. However, these include purchasing medicines and strengthening facilities. In practice, FONACIDE’s funds constitute a significant proportion of the funds devoted to capital expenditure by the Ministry of Health (56% in 2016).

Diversifying the sources of funding for health would help ensure the sustainability of health financing. The diversification in sources of financing is particularly important in contexts where existing sources are likely to decrease, which is certainly the case in ageing societies (OECD, 2016d). However, it is also relevant in the case of Paraguay where the rate of growth of existing sources of finance is likely to be limited. Increasing social security coverage by formalising the economy and by creating avenues for the incorporation of independent workers to the IPS is one way to increase pre-paid financing of health. However, as formalisation typically progresses slowly, raising funds from general taxation for health financing should also be contemplated. Possibilities to be considered in the case of Paraguay also include increasing taxes on goods that generate risks or costs for public health, including tobacco and alcohol, and earmarking part of revenues from these taxes for health financing. Indeed, taxes on tobacco are low in Paraguay compared to the region, representing 18 to 22% of the final price (Giménez Caballero, 2013). In all OECD countries (except the United States), the tax burden on tobacco products is above 50% of the retail price and it is above 80% in ten countries (OECD, 2016a). A recent reform has increased the tax burden on tobacco albeit to levels that remain well below those prevalent in OECD countries. Taxation of alcoholic beverages is also relatively low in Paraguay. They are subject to an 8% to 10% excise tax. In this case, an increase could be contemplated, possibly reflective of alcohol content, and bearing in mind fiscal practices in commercial partners, especially within Mercosur.

Health financing relies heavily on out-of-pocket expenditure

Funding for health expenditure in Paraguay comes in large part from private sources. Expenditure relies substantially on out-of-pocket expenditure. According to WHO data, out-of-pocket expenditure represented 2.9% of GDP in 2015, accounting for 36% of total health expenditure. Compulsory contributory schemes represented 19% of total health financing. In Paraguay, the bulk of contributory health financing is represented by the IPS, which relies almost exclusively on employee and employer social security contributions.8 Of these, 9% of declared wages are committed to the Health Fund, which covers health expenditure, maternity and sick leave (Figure 3.15).

The large share of out-of-pocket expenditure further tilts the health system towards wealthier individuals. In Paraguay, the poorest decile of the population pays around 7% of the total out-of-pocket expenditure in the system, while the richest quintile spends 15% of total out-of-pocket expenditure (Figure 3.16 Panel A). Although most out-of-pocket expenditures are paid by people not covered by any health insurance (60.8% of total OOP expenditure), significant fractions are paid by people insured by the IPS (21.1%) and by people holding private insurance (17.2%) (Figure 3.16 Panel B). In this regard, the National Development Plan 2030 establishes the reduction of out-of-pocket payments in health as a strategy to combat social exclusion and poverty, by integrating the public and private subsectors to advance towards Universal Health Coverage (National Government of Paraguay, 2014).

The inability of the contributory social security system to raise funds for health provision reflects the employment structure in Paraguay. As many as 64% of Paraguayan workers have informal jobs. A highly informal employment structure results in a high share of the population being excluded de facto from the contributory health system. IPS offers a voluntary insurance regime for the self-employed and a special regime for domestic workers. The former has not had much success in generating demand and covered 504 people at the end of 2016. The latter covered 19 161 domestic workers as of end-2016, or about 7% of domestic workers in the country. Evasion of social security contributions is estimated to stand at 70% (Giménez Caballero, 2013). IPS estimates that it covers 38.6% of the target population. In this regard, encouraging formalisation and tackling evasion may bring important financing flows to the system.

Paraguay should consider ways of channelling out-of-pocket expenditure to mandatory pre-payment regimes. This step is critical in sustaining health financing and in moving towards Universal Health Coverage in a way that is fairer and more efficient. In OECD countries, this is achieved by the use of significant publicly-funded, pre-payment pools: 6.5% of GDP on average (OECD, 2016d). Indeed, the high level of out-of-pocket expenditure implies limited and inequitable financial protection (see next section). It also implies imbalanced finance and limitations in the degree to which larger expenditures can be planned in advance. Voluntary enrolment leads to self-selection and, as exemplified in Paraguay, is ultimately ineffective. Making enrolment mandatory is a critical step, but must be accompanied by the design of a contribution system that ensures contributions are paid from the public purse for those unable to pay and appropriate means are available for those with the ability to pay to contribute.

Fragmented pooling contributes to systemic inefficiency and inequity

Financial flows reflect the fragmentation of the health system. The public health subsystem, social security and the private subsystem have largely separate revenue raising, pooling and purchasing functions. The public subsystem is financed by the general budget (including earmarked transfers from non-tax income originating from the binational dams) and user fees. Its financing sources coming from the internal public funds (government schemes) are estimated to account for around 34.3% of total health financing. The Social Security Institute (IPS) is entirely financed by social security contributions, mostly made by formal workers. They are estimated to be 19.3% of total health financing. The private subsector is financed by voluntary contributions and co-payments to insurance companies and users’ direct payment of specific services. These include pre-paid plans for employees of the state, whether purchased directly by employees, or purchased through public procurement and provided to all staff of a state institution. Voluntary healthcare payments in Paraguay are estimated to account for 9.9% of the total health financing sources. Finally, and crosscutting to all subsystems, out-of-pocket expenditure is estimated to account for around 36.5% of the total financing sources of health in Paraguay (Table 3.2).

The fragmentation of finance pools leads to unequal financing of health needs. The private health insurance subsystem, which covers 6.9% of the population through pre-paid plans, raises 15.5% of prepaid revenues. Social security covers 19.7% of the population but raises 30% of prepaid revenues. Finally, the public subsystem, which covers personnel insured through occupational schemes (policy and military in particular) and those without other coverage, covers the remaining 74% of the population which is uninsured, but only obtains 54% of total prepaid revenues (Table 3.2). Out-of-pocket payments made by the groups covered by the different parts of the health system do not balance finances. In Table 3.2, out-of-pocket payments are calculated as a share of total finance for each group by health coverage. In practice, out-of-pocket payments go largely to the private system, given the elimination of user fees in the Ministry of Health’s facilities.

Finance and risk pools are further segmented within systems. Within the public subsystem, the budget for the Ministry of Health is centralised, with a small fraction devolved to departmental and municipal health councils. However, these financing flows are in separate budgets from the military and police systems and from the teaching hospital of the University of Asunción (Hospital de Clínicas). IPS pools funds from its beneficiaries (contributing members, their dependants and retirees). The private system is dominated by a few players that own their health provision facilities and which pool pre-payment funds across each firm’s client base.

The segmentation of finance leads to unequal, installed capacity to manage health provision. According to available data for 2015, the occupation rate for hospital beds in the public subsystem was 66% across specialised hospitals and 45% in other facilities. The largest facilities of the Ministry of Health and the IPS (respectively the Hospital Nacional and Hospital Central) had occupation rates of 88% and 85% respectively. In practice, this means certain services were operating at full capacity. For example, the general internal medicine service, the neonatology service and the urology service were operating at full capacity through 2014 in the IPS Central Hospital (DGEEC, 2015). In contrast, the occupation rate in the Armed Forces Hospital was 26%, and that of the Police Hospital was 46%. This imbalance is also visible in intensive care units, where private health facilities have 241 beds while the Ministry of Health had 307 beds at end-2016 even though to the latter provides services to about ten times as many people (MSPBS, 2017b).

The imbalance in funding also reinforces territorial inequality in health service provision. All parts of the health system have a significant proportion of their installed capacity in Asunción and the surrounding Central department, and in Ciudad del Este, the country’s second largest city. However, this concentration is even higher for IPS and the private subsystem than for the Ministry of Health.

Table 3.2. Sources of health financing, 2015
Millions of PYG (share of total health financing in parenthesis)
	Segment of population		Prepaid revenues		Out-of-pocket payments
Public subsystem	People without health insurance	72.6%	Government financing schemes (public funds)	3 812 610 (34.3%)	2 465 854 (22.2 %)
Public subsystem	Beneficiaries of military and police health service	1.4%	Government financing schemes (public funds)	3 812 610 (34.3%)	33 809 (0.3%)
Social security subsystem	People insured by the social security health scheme	19.7%	Compulsory contributory health insurance schemes	2 143 121 (19.3%)	856 143 (7.7%)
Private subsystem	People insured by private health insurance	6.3%	Voluntary health care payment schemes	1 097 122 (9.9%)	697 286 (6.3%)
		100%		7 052 853 (63.5%)	4 051 509 (36.5%)
Total health financing				11 104 362 (100%)
Note: The out-of-pocket payments presented in the right column correspond to any payment to health service providers made by the population segment identified in the column to the left (most of these payments are made to private health service providers). Distributions of population and aggregate out-of-pocket expenditure have been calculated based on the individually-declared main health service provider in 2014 (DGEEC, 2017).
Source: Global Health Expenditure Database (WHO, 2018a) and Paraguay Permanent Household Survey 2014 (DGEEC, 2017).

Risk pooling ensures equity and protects individuals from the financial risk associated with their healthcare needs. By pooling risk the high-cost, infrequent health expenditures can be funded and the cost of high frequency, low cost events can be spread across individuals. It therefore has two key roles: spreading the financial burden between high-risk and low-risk individuals and between high-income and low-income individuals (Gottret and Schieber, 2006). In Paraguay, there are no cross-subsidies among subsystems and pools since the revenues for the healthcare of different population groups are held in separate pools. In practice, coverage by one system or another is largely determined by income levels, with the wealthy opting for pre-paid private insurance, the IPS covering some of them and a fraction of the middle class, while the others are left to the residual coverage of the Ministry of Health.

Shifting health insurance for civil servants and employees of the state to IPS would contribute to consolidating service and finance. At present, IPS can only cover civil servants under special regimes, which exist for teachers in the Ministry of Education and Culture and for personnel of the Office of the Public Prosecutor. The capacity of IPS to provide service to a significantly larger fraction of the population would have to be considered. To that end, the transition could be gradual and be of course accompanied by the relevant contribution transfers.

In the long run, Paraguay should consider options to merge risk pools or create a system that allows for transfers across risk pools. The current system in Paraguay presents characteristics of several models. Health financing models can be broadly classified into national health services, social insurance and private insurance (Gottret and Schieber, 2006). In practice, each of the three main subsystems in Paraguay follows one of these models. Countries with success in advancing universal health coverage have used one of these models as the basis for reform, as the examples of Colombia, Costa Rica, Korea or Thailand show.

In the short run, Paraguay can establish financing mechanisms to cover key contingencies. Certain contingencies are insufficiently covered by existing insurance pools and could benefit from a pooling system that allows the separation of funds’ pooling and purchasing functions. The coverage of high complexity treatment, for example, is limited to certain pre-paid private plans. Moreover, pre-paid private health insurance typically does not cover pre-existing conditions and in some cases does not provide continuous coverage for chronic conditions (e.g. dialysis). In 2016, IPS established a system to exclude new affiliates with pre-existing conditions in an attempt to curb the enrolment of individuals with costly conditions under fictitious employment contracts. Coverage for treatment and rehabilitation of victims of road accidents could also be financed by a pooled fund. In both cases, such a fund would receive contributions from both the general budget (to cover those individuals who are unable to pay) and contributions channelled through their insurance (for those individuals covered by IPS or private insurance).

A fund for high-complexity care was created on paper but never implemented. The National Fund of Solidarity Resources for Health (FONARESS, Fondo Nacional de Recursos Solidarios para la Salud) was created by law 4392 in 2011. It established a fund to finance treatments for high-complexity conditions (renal insufficiency, transplants, heart disease and cancer) for those without “the necessary cover from a private, public or mixed insurance scheme”. The fund is to be financed by a transfer from the firms that manage the two binational dams (Yacyretá and Itaipú), an annual contribution from the general budget, a share of taxes on alcoholic beverages and tobacco products and a share of unclaimed lottery winnings. The regulations for the fund created a number of bodies to oversee its implementation in particular an Executive Committee for the Fund, but the fund was never implemented.

The implementation of FONARESS with a diversified revenue source could establish a pooled fund for high-complexity care. The current wording of the law is open to interpretation as to who would benefit from financing, and the resources for the fund are all from the public purse. In practice, private insurers and IPS could act as revenue collectors and feed the fund, while adjusting their financial provisions as cover for the specific set of conditions would be financed through FONARESS, however that would require a legislative reform.

Ultimately, adequate financing for health will require Paraguay to establish financing mechanisms with broader service coverage, which could be achieved by reforming FONARESS if it is implemented. In order to fund a well-defined, comprehensive benefit package, FONARESS could be reformed or replaced by a fund that also covers primary and secondary care. As it currently stands, the implementation of FONARESS risks maintaining and even reinforcing segmentation in risk pools, as FONARESS does not allow pooling of the most common risks. Indeed, the analysis of health expenditures in the next section shows that hospitalisation and high-complexity treatment are not the main cause of financial hardship linked to health.

Purchasing should be separated from service provision to open pathways for greater efficiency

Service provision largely follows financing lines with a few exceptions. The majority of health services are provided within the various segments of the health system. The Ministry of Health and the UNA teaching hospital rely on public funds and provide service in their own facilities. Likewise, IPS delivers service primarily in its own health provision units. All large players in the private health insurance market also provide service in their own facilities or through doctors in their networks. This is in contrast with health systems where institutions raising revenue or pooling funds purchase health services for their beneficiaries, possibly from their own health provision units, but also from other private or public providers in the health system.

Institutional agreements between IPS and the Ministry of Health for the purchase of services from each other contribute to lowering fragmentation. One such agreement concerns the exchange of medicines and medical supplies whereby each institution provides medicines or supplies to the other on the basis of need, and the balance is cleared periodically. The amounts exchanged are relatively small: according to an audit by the Comptroller General’s Office, in 2010, the exchanges amounted to about 0.1% of the IPS’s budget for medical supplies (Contraloría General de la República, 2010). IPS and the Ministry of Health also have agreements for the provision of services in specific geographical areas. IPS lists 39 such agreements, most of which are for primary care and two for hospital care (IPS, 2016). One such case is the municipality of Ayolas, in the Misiones region. Services there are provided in a joint facility (owned by IPS). In practice, personnel from each institution is assigned to the facility and the director is employed by both institutions. Each institution maintains their own pharmaceutical stock and delivers drugs separately.

Both IPS and the Ministry of Health purchase services from the private sector. IPS outsources care through contracts with the private sector in certain areas, in particular in the Chaco and the department of Caaguazú. IPS and the Ministry of Health also use private providers for certain services, including dialysis, medical imaging and the referral of patients for emergency or intensive care when there are no available beds in the relevant area.

Differences in cost models are an obstacle to further integration at the point of delivery. Without a clear schedule of costs for compensation between institutions, interinstitutional agreements set compensation on an ad hoc basis, for example setting the compensation value at the price established before the elimination of co-payments in the Ministry of Health (see e.g. MSPBS/IPS [2013]). In practice these cost schedules are likely to be outdated, as user fees were eliminated in 2008, which would dissuade actors from cooperating. Costs for provision in the private sector are bound by a minimum per act set by law, which the Ministry of Health has the responsibility to update. The law sets minima in “medical units”, but the price of a unit has not been updated since 1974 (República de Paraguay, 1974). In practice therefore, fees are set by specialists’ associations in the medical profession, with private health providers effectively competing on the quality of their management and the diversification of the services offered.

Within the public sector, differences in the benefit package also limit integration at the point of delivery. For example, since IPS and the Ministry of Health use different lists of essential drugs that are provided free of cost, they manage separate stocks even when service provision is unified through interinstitutional agreements. Integrating service will require unifying benefit packages, possibly by identifying a common core package that can be extended over time or for certain categories.

Institutional agreements between IPS and the MSPBS need to be reviewed and a general framework established. On top of differences in cost management models, interinstitutional agreements also present practical problems linked to the difference in benefit schedules and the management of resources. These result in low levels of enforcement for these agreements in particular in terms of compensatory financial flows. Given that the list of medicines covered by IPS and the MSPBS are not identical and that procurement is done through separate channels, they typically have two pharmacies even in shared facilities. Human resource management is also an issue. Medical personnel in Paraguay often have multiple employers and in some cases it has been documented that personnel in shared facilities were being paid by both institutions, which raises issues of fairness and control.

Budgeting and purchasing do not provide incentives to increase efficiency, quality or value for money. In the largest providers of healthcare, namely the public and the social security subsystem, budgeting is established year on year on the basis of past commitments. As it is not linked explicitly to existing capacity, population coverage, costs or outputs, it does not provide incentives for cost-containment. In the Ministry of Health, in practice, a significant proportion of the budget for care provision (31%) is channelled through programmatic instruments rather than as a budget for specific units or health regions. Of these, 50% or PYG 376 million correspond to medicines and other inputs, which are purchased centrally.

In the short to medium term, generalising the use of interinstitutional agreements and introducing new methods of provider payment would help limit fragmentation at the point of delivery and rationalise the use of resources. A more intensive use of interinstitutional agreements would enhance prioritisation of capital expenditure in the expansion of service provision, by rationalising supply. This means that the providers of health services to the public from the public sector (IPS, Ministry of Health, Hospital de Clínicas) must agree on framework conditions for such agreements. In practice, better cost management within each of the service providers would help set reasonable compensation levels, whether they are fee for service, capitation payments for certain types of attention (e.g. primary care) or other mechanisms.

Box 3.3. Overcoming fragmentation: The case of Colombia

Overcoming fragmentation is a key challenge to increase health expenditure efficiency. Colombia has made important efforts to have a more integrated health system where all sectors of the population can have equal access to a common basket of health services.

Health insurance and health care services in Colombia were historically provided by a fragmented, poorly regulated set of social security institutes and private enterprises, which has largely benefited wealthier Colombians. By 1993, health coverage only extended to 24% of the population and was highly unequal: while 47% of the richest quintile had health insurance, only 4.3% in the poorest quintile enjoyed financial protection from excessive health expenditure.

In 1993, Law 100 brought about far-reaching reforms by creating the Sistema General de Seguridad Social en Salud (SGSSS, or General System of Social Security in Health). This was a big-bang reform that created a national health system by making health insurance mandatory for all those who could afford it, creating a single national pool for insurance contributions, splitting the purchaser and provider functions, and encouraging competition by allowing individuals to choose their insurer, and allowing insurers to selectively contract with providers. Responsibility for managing the financing and operation of health services was devolved locally, whilst steering and regulatory functions were retained and strengthened centrally, through the creation of new institutions. Crucially, under Law 100 healthcare became a legally enshrined right of citizens, rather than a service dependent on charitable supply.

Individuals become affiliated with the SGSSS through three regimes, namely the contributory regime (CR) for individuals in formal employment, the subsidised regime (SR) for individuals not in formal employment (which historically offered a less generous basket of services than the CR), and the much smaller Special Benefit Regime, which includes the armed forces, teachers, and a state-owned petroleum company. Risk equalisation and cross-subsidy exists both within and across the CR and SR, supporting efficiency and social solidarity. In the CR, employees pay 4% of their income and the employer 8.5% to a fund called the Fondo de Seguridad y Garantía (FOSYGA). Private insurance covers approximately one million individuals and has not increased significantly in the last five years.

Source: OECD Reviews of Health Systems: Colombia (OECD, 2016b).

The mechanisms for purchasing service from the private sector can be made fairer and more responsive. Currently, there is no specific channel for public procurement of medical supplies or services. In practice, this generates a number of problems in the processes. Procurement processes for medical supplies and drugs can take up to six months, which increases difficulties in the management of stocks. One of the reasons for the decentralisation of finance from the Ministry of Health to Local Health Councils is that the latter are not subject to public procurement legislation, which makes them able to purchase services (e.g. maintenance) more quickly. From the supplier side, actors in the private sector consider that the lack of regulation in terms of the benefit package can lead to differences in the quality of offers that are not properly accounted for in the awarding of contracts.

In the long run, the separation of purchasing and service provision can help establish a system in which there is more pooling of funds and risk and better accountability. This reform would imply that when a unit provides service to an individual, it receives payment from the relevant system, be it from the public system if the individual is uninsured or from the relevant social or private insurer if the act is covered by insurance. This payment system would also work within institutions, creating tools and incentives for cost control and management. Reforms to achieve universal health coverage in Colombia (Box 3.3) or Thailand, for example, separated purchasing and service provision functions to create incentives for service provision for all. In Thailand, for example, service delivery units from the public sector receive payments from the contracting authority – based on a closed end capitation payment for outpatient care and diagnostic-related group payment for inpatient care. The split of purchasing and provision helped increase accountability in the system (Tangcharoensathien et al., 2018).

Towards universal health coverage

Universal health coverage (UHC) strives to ensure that all individuals and communities in a country receive the health services they need without suffering financial hardship. Despite recent advancements, Paraguay faces major challenges to achieve UHC.9 Population coverage (breadth of the coverage) is still very limited, especially in the poorest deciles of the population, in which only a tiny minority is covered by any health insurance at all. Financial risk protection (height of the coverage) leaves many people to face catastrophic health expenditures and exposes them to other financial risks. Lastly, health service provision (depth of the coverage) is very limited and strongly linked with people’s ability to pay.

Access to healthcare has progressed in recent years, but current pace of progress is too slow to meet the country’s ambitions

Paraguay has been increasing healthcare access based on primary healthcare units, but it has a large gap to cover the total population. Primary healthcare is the first level of multidisciplinary care that covers the entire population and serves as a gateway to the system. It should integrate and co-ordinate health services in the country, in addition to meeting most of the population’s health needs. In terms of healthcare access, the progress has been significant. The share of sick or injured people who received skilled healthcare increased from 52.3% to 75.5% between 2003 and 2016. However, in terms of operating primary healthcare units, progress has slowed down. Between 2008 and 2011, 707 new primary healthcare units were established (176.7 per year on average). However, between 2012 and 2016, only 92 new units were put in place (18.4 per year on average). By 2016, Paraguay had 800 units in total, even though it would need have approximately 1 400 units to cover its entire population (Ríos, 2014).

The share of people covered by health insurance has increased slowly and remains low. While healthcare access has seen a remarkable increase of more than 23 percentage points between 2003 and 2016, health insurance coverage has increased by less than 7 percentage points over the same period, from 19% to 26% (Figure 3.18 Panel A). Around 99% of people do not have any health insurance in the poorest decile. Even in the richest decile, around 39.4% do not have health insurance. The social security scheme covers less than 1% of the population in the poorest decile and only around 34% of the population in the richest decile (Figure 3.17).

Access and coverage asymmetries are large across departments and municipalities, although the urban-rural gap has been narrowing over the last decade. The asymmetry in the supply of health services across departments and municipalities is substantial. In urban areas, access reaches more than 78%, while in rural areas it is below 73%. Similarly, while 34.3% of the population in urban areas is covered by some form of health insurance in rural areas only 12.67% of the population has coverage. Still, the urban-rural gap in access to healthcare has been narrowing in recent decades, from 18.1 percentage points in 2003 to 5.8 percentage points in 2016 (Figure 3.18 Panel B).

Although access has improved, primary healthcare quality is low, due in part to the difficulties in staffing primary care units. In terms of human resources, there is a gap of more than 20% of the required health professionals in the country. In theory, all primary healthcare units should be equipped with a team of health professionals (Family Health Team) that includes a doctor, a nurse or obstetrician, a nursing assistant and between 3 to 5 community health agents (Ríos, 2014). In practice, a big share of primary healthcare units does not have a complete team of health professionals (Table 3.3). The country had 754 such units in 2014. However, the sum of community agents in all the country was only 414. Considering that Paraguay had a gap of around 646 missing USFs by 2014, there was a gap of around 5 186 community agents in Paraguay (Ríos, 2014) (See Table 3.3). Human resources tend to be more unstable and insufficient in remote and disadvantaged areas due mainly to the lack of economic incentives for health professionals to stay in these locations. In terms of physical resources, most USFs lack appropriate infrastructure; facilities are often in disrepair or too small. They also lack essential health equipment and the provision of medicines is insufficient to keep up with demand. In terms of their integration capacity within the whole health network, their communication and transportation systems are just in the development stage, which hinders the co-ordination for transferring patients to other health establishments (Ríos, 2014).

Table 3.3. Human resources gap in primary healthcare, 2014
Human resources	Operating primary healthcare: 754 units (USF)	Lacking primary healthcare: 646 units (USF)
Doctors	638	762
Nurses and/or obstetricians	742	658
Dentists	33	247
Nursing assistants	727	673
Community agents	414	5 186
Indigenous health promoters	40	380
Total	2 594	7906
Note: For every two Family Health Teams, there should be one Dental Team, made up of a Dentist and an assistant (Ríos, 2014). Primary healthcare figures above correspond to the Family Healthcare Units (USF) of the Ministry of Public Health and Social Welfare (MSPBS).
Source: Mapping of Primary Healthcare in Paraguay (Ríos, 2014).

Box 3.4. Primary healthcare: The case of Costa Rica

Over recent decades, Costa Rica has had a clear national consensus on the role of the healthcare system. In particular, efforts towards increasing access to primary care were accelerated in the early 1990s, when Costa Rica opened up community clinics called Basic Comprehensive Health Care Teams (Equipos Básicos de Atención Integral de Salud, EBAIS). By 1995, there were 232 EBAIS in Costa Rica, mostly among underserved communities, which greatly improved rural access to primary care. Today over 1 000 EBAIS are present throughout the country; in effect, they constitute the basis of the national health care system. With at least one medical doctor, one nurse or nursing assistant and one health care assistant, EBAIS serve around 1 000 households each. Other personnel may include social workers, dentists, laboratory technicians, pharmacists and nutritionists, who may work across more than one EBAIS in clusters called Áreas de Salud, or health zones. Services include outpatient services, family planning and community medical services, health promotion and disease prevention, and management of (non-complex) chronic disease. When required, the EBAIS also refer patients to higher levels of healthcare.

Recently, Costa Rica’s ambitious and innovative model of primary care has been further developed with the establishment of three Centres for Integrated Health Care (Centros de Atención Integral en Salud, CAIS). These centres constitute an extended network for the primary care system, offering maternity services, intermediate care beds (to avoid hospital admission or expedite early discharge), ambulatory surgery, rehabilitation, speciality clinics (such as pain management), and diagnostics such as x-rays. The CAIS also hold workshops in order to support typical local EBAIS by comparing and discussing their performance indicators, offering telemedicine and home-visits, and by keeping a focus on preventive care. In 2015, one of the CAIS established a local commission on domestic violence and most of its 15 000 home visits were for health promotion and preventive care. Upward integration with secondary care providers are established by the CAIS through the development of protocols and patients pathways for service networks in psychiatry, paediatrics, elderly care and other specialities. The Costa Rican primary healthcare model is thus of significant interest for OECD health systems looking to strengthen people-centred, integrated care.

Source: OECD Reviews of Health Systems: Costa Rica (OECD, 2017).

Although financial risks and barriers have been reduced, a share of Paraguayans incur in catastrophic health expenditures

User fees for the provision of basic health services by the MSPBS have been progressively eliminated. Avoiding direct payments and reducing out-of-pocket expenses is essential for increasing financial protection and preventing more people from falling into poverty. In this regard, recent OECD estimates show that cost-sharing (in the form of co-payments) leads to higher health spending in the long term, notably because it leads to a lower use of needed medical care with adverse consequences for health status (De la Maisonneuve, Moreno-Serra and Murtin, 2016). The government has made an effort to reduce rates charged for basic health services in Paraguay. In particular, colposcopy, cervical biopsy, Pap test, tubal ligation and provision of IUD have been free of charge since 2001. Basic supplies for childbirth and diagnosis of tuberculosis have been free of charge since 2005. Lastly and most importantly, the Ministry of Health eliminated all remaining charges for the use of basic services in 2008, as part of the gratuity policy to eliminate financial barriers for health in the country (Giménez Caballero, 2013).

The poorest people face a high risk of incurring catastrophic health expenditures (CHE). CHE occur when out-of-pocket payments for health services consume such a large portion of a household's available income that the household may be pushed into poverty as a result. Overall, there is a risk of falling into poverty if out-of-pocket expenditures in health exceed 30% of total income. In Paraguay, the households in the poorest decile of the population spend on average more than 12% of their total income to cover health expenditures, while households of the richest decile spend less than 1% (Figure 3.19 Panel A). Around 2% of households in Paraguay, and 7% in the poorest decile, incur catastrophic health expenditures (Figure 3.19 Panel B). Although no comparable figures exist for the region, catastrophic health expenditure is a problem common to most Latin American countries. However, countries such as Costa Rica have managed to keep the percentage of the population facing CHE quite low (0.4%), while in others, it is still very high, such as in Guatemala where 11.2% of households are concerned (Knaul et al., 2011).10

Most out-of-pocket health expenditures are due to medications, laboratory tests and transportation. Despite the policy to provide medicine free of charge, medication, rather than costly acute care, is the main source of out-of-pocket expenditure. Household expenditures for medication account on average for 62% of the total out-of-pocket expenditure, followed by transportation (17.7%) and medical tests (e.g. x-rays or laboratory tests – 8.4%). When it comes to catastrophic health expenditures, 50.7% are due to medications, 17.8% are due to laboratory tests, 10.5% are due to transportation and 6.5% are due to hospitalisation. The negative impact of medication expenditures is stronger among the poorest deciles of income. Contrastingly, catastrophic expenses due to hospitalisation cover a bigger share among the richest deciles of the population, reflecting the relatively low prevalence of health insurance even among the better off (Figure 3.20).

Ensuring adequate financial protection in Paraguay requires action to insure against expensive events that occur infrequently. This can be granted through the public sector or through a combination of free provision for those unable to pay and compulsory insurance in a regulated market for those able to pay – including in the social security and the private sector. The FONARESS fund intended to finance coverage for those without appropriate insurance for a number of such conditions, but was never implemented. Likewise, the Secretaria Tecnica de Planificacion and the Ministry of Health are piloting a scheme to guarantee a benefit package. The scheme, called Support service to child and maternal health (Servicio de apoyo a la salud materno-infantil), covers women of childbearing age and boys and girls under 18 years old (see Box 3.5). It relies on service provision by the Ministry of Health but constitutes a contingency fund to finance referral to the private sector in cases where the Ministry is unable to provide service. The project is being piloted with 150 000 households since October 2017. At of the end of 2017, the contingency fund had not disbursed any funds. By establishing a mechanism for service purchase for the Ministry of Health to fulfil the right to healthcare, the pilot contributes to setting the seeds for the necessary reform of purchasing in the health sector.

Ensuring adequate financial protection also implies a significant effort to improve the availability and accessibility of medicines. The insufficiency of stocks of medicines was a recurring conclusion of evaluations of USFs (Monroy Peralta et al., 2011). Improving on the availability of medicines in public health services is key, but the affordability of drugs in the private sector should also be monitored. Moreover, control over pharmaceutical use and sale should be strengthened to avoid misuse, which is likely to increase the cost of treatment. For example, the National Medicine Policy notes that 3 out of 10 prescription drugs are obtained without prescription and notes that most cases of diarrhoea are treated with rehydration salts combined with other, possibly unnecessary, treatments (MSPBS/PAHO/WHO, 2015).

Moving towards a guaranteed health plan that is better defined

Most of the population is not guaranteed access to a comprehensive health service package. Although the public subsystem provides free inpatient and outpatient services, there is no specific benefit package. In Paraguay, only those who are insured by the Social Security Institute (IPS) or have private insurance are entitled to a specific and guaranteed set of benefits. They represent only 22.7% of the total population in Paraguay. The remaining majority is not insured and depends on the provision of services by the public subsystem. Such provision of services depends on the effective availability of services and resources at a given time, meaning that access to services often depends on people’s ability to pay. This includes, for example, medicines that may not be available from the public subsystem. Moreover, private insurance and prepaid plans are subject to a number of exclusions.

A recently piloted programme has made progress in the definition of a guaranteed package of services and established a mechanism for financing the guarantee. The Support service to child and maternal health (Box 3.5) defined a package of services for beneficiary children and women of childbearing age and set up a contingency fund to finance the provision of intensive care in the private sector in cases when public sector facilities are not available. The definition of an explicit package of services contributes to empower citizens with respects to their rights to healthcare, and to make the cost of healthcare provision explicit. The package of services currently includes services defined by procedures or types of care and explicit inclusions based on pathologies or health problems (for example, pregnancy-related medical acts for women of childbearing age).To make the package of services more easily scalable, the criteria for inclusion in the package could be better defined. Initially, as in the case of Chile’s Explicit Health Guarantees, it is desirable to base the inclusion of services upon a list of pathologies or health problems, possibly including areas of preventive care.

A reform to establish and finance a guaranteed package will require broad reach and financing. The contingency fund of the Support service to child and maternal health was not utilised during the 3-month implementation period. Project data have not been analysed yet, so the pattern of care of beneficiaries is not known. The protocol for the use of the contingency fund was limited to high complexity treatment. Moreover, the package did not specify waiting times as part of the guarantee (as is the case, for example in Chile [Bitrán, 2013]) so that the requirements of non-availability in the public subsystem may not have been met. Together these two elements may explain the lack of spending from the fund. Going forward, efforts to guarantee healthcare provision should include all necessary inputs and medicines for the treatment of health problems considered according to clinical guidelines, and include financing mechanisms for these as well as related diagnostics tests. Indeed, most catastrophic health expenditures among the poor stem from purchase of medicines and tests, rather than payments for hospitalisation (Figure 3.20). Finance will be all the more necessary given that a guarantee scheme can be expected to increase healthcare use by beneficiaries.11 The randomisation elements in the pilot and the monitoring data collected should provide information on the impact of the guarantee on patterns of health service use and therefore potential financing needs. Depending on the quality of monitoring data available for non-beneficiaries in the catchment areas of the project, follow-up pilots should consider the establishment of a baseline.

Box 3.5. Piloting non-contributory insurance: the Support service to child and maternal health

The Support service to child and maternal health (Servicio de apoyo a la salud materno-infantil) was piloted between October and December 2017 with over 150 000 households. The programme was designed in the framework of the umbrella anti-poverty programme Sembrando Oportunidades.

The programme defines a schedule of guaranteed services for the beneficiaries. The beneficiaries are young men and women, and women of childbearing age. The schedule of services includes a broad range of services for children under 5, adolescents between 10 and 18, and of pregnancy-related services for women.

Programme participants receive a card that facilitates monitoring and provides a telephone number for complaints. The programme also set up a contingency fund of USD 1.5 million to guarantee service provision. In cases where the Ministry of Health is unable to provide service, the programme includes a protocol for service to be provided in the private system and financed through the fund; this protocol is linked to the Ministry of Health’s referral system. The inter-institutional agreement governing the programme (MSBPS/STP, 2017) and its amendment specify such a protocol for the provision of intensive care. The fund was set up with Itaipú and managed by the United Nations Population Fund (UNFPA).

The STP and the MSPBS implemented the pilot in catchment areas of USFs with a full complement and levels of poverty above 20%. In those with poverty rates over 30%, all households were included, in those with poverty between 20% and 30%, half of household were randomly selected for inclusion.

Over the three months of the pilot, the contingency fund was not used. The project was implemented in a decentralised fashion which led to delays in the delivery of cards to some beneficiaries.

Source: MSPBS/STP (2017).

As private provision of health services is fairly limited, other subsystems incur residual expenditures to assume uncovered procedures. Health plans offered by private insurance companies usually do not cover protection against epidemics, congenital diseases, psychiatric illnesses, surgical treatment of sexually-transmitted infections and some accidents. Furthermore, they often do not include costly long-term treatments, such as chemotherapy and haemodialysis, and the provision of medications and other supplies is very limited (Mancuello and Cabral de Bejarano, 2011). When faced with those exclusions, patients opt to return to the public subsystem or take legal action to enforce their right to health and force private or public services to provide such care.

Many middle-income countries that guarantee citizens’ right to health face difficulties in securing resources to deliver services. For example, Brazil, Colombia and Mexico guarantee a citizen’s right to health but face difficulties in securing human resources and medical supplies. In Brazil, despite universal coverage of the public sector, 25% of the population resorts to private insurance to obtain timely diagnoses and consultations. In countries like Korea or Colombia, pharmaceuticals are not covered as well as hospital care and doctor’s visits (OECD, 2016d).

Establishing appropriate breadth of cover is essential to ensure adequate financial protection for the whole population. It is important to clearly state which health services are covered and which are not in order to ensure that essential, cost-effective care is provided without financial barriers and that, on the other hand, cost-ineffective services and health services of questionable clinical benefit are excluded (OECD, 2016d). The determination of what services to cover needs to be based on critical assessment by agencies responsible for health technology assessment. This role could be played by the National Medical Directorate established by law 1032 in Paraguay, but it would have to be provided sufficient autonomy and resources.

Policy recommendations

To increase its chances of achieving Universal Health Coverage, Paraguay’s health system requires systemic reform and a future vision. Maintaining the pace of growth in health financing, while increasing the equity and efficiency is a major challenge. The fragmentation of the health system into pre-paid private, general budget-based public and insurance-based social security systems is a significant hurdle to ensure effective stewardship and efficient allocation in the system. A national dialogue could determine what model the country chooses, in particular in terms of its financing – whether an insurance-based model in which coverage for those unable to pay is subsidised, preferably explicitly, by the public purse, or a national health service model in which a basic package of health services is provided for free to all citizens. In both cases, it is possible for the various segments that make up the system today to co-exist, but in a much more integrated fashion.

In the short-to-medium term, much can be done in order to increase the degree of integration and co-ordination in the national health system. This includes setting framework conditions that allow for inter-institutional agreements and the unification of care provision at the point of delivery, building on experience in the ground. Independently of the model chosen for the future, Paraguay should strengthen the shift towards integrated health provision networks based on primary care as a cost effective path to universal health coverage, and ensure sustainable health finance by diversifying sources of funds and shifting out-of-pocket payments towards pre-paid flows, be they in the form of taxation, social security contributions, or insurance premia.

Box 3.6. Main recommendations to reform the health sector

1. Establish a vision for the health system able to guarantee Universal Health Coverage with equity
2. Establish framework conditions favouring the integration of health service delivery across the public and potentially the private system
1. a. Review existing inter-institutional agreements between public sector entities.
2. b. Establish a framework to generalise the use of inter-institutional agreements for the provision of service across public sector entities
3. c. Consider a reform to make public procurement of health services and supplies more responsive.
4. d. Consider including civil servants and employees of the state under the social security health service.
5. e. In the long run, separate purchasing and service provision functions across the health system.
3. Improve the governance of the national health system
1. a. Strengthen the stewardship role of the Ministry of Health and Social Welfare by providing oversight institutions with the necessary autonomy, financial and human resources
2. b. Pursue the implementation of the legal framework for the governance of the national health system
3. c. Consolidate and streamline the legal and regulatory bodies pertaining to the health sector to:
  - Ensure regulation applies to all relevant actors
  - Remove inconsistencies
  - Update or revoke outdated legislation
4. d. Further invest in the development of information systems in health to deliver better statistical information and support continuity of care
  - Continue efforts to improve the accuracy of vital statistics
  - Unify systems within institutions and, where relevant, across the public, private and mixed subsystems
  - Increase capacity among stewardship bodies to generate health statistics for the entire health system, with the support of the National Statistical Office
  - Develop the system for recording medical records and accessing them in order to ensure continuity of care
4. Ensure sustainable funding for health to support Universal Health Coverage
1. a. Diversify sources of finance for health
  - Consider increasing taxes on consumption of goods harmful to health (e.g. tobacco, alcoholic beverages) and earmark part of revenues to health finance
2. b. Channel out-of-pocket expenditure towards pre-payment schemes
  - Make enrolment in health insurance mandatory
  - Reform contributory systems for independent workers to better adapt them to their circumstances
  - Offer partly or fully subsidised health insurance for those unable to pay (through a means-tested subsidy)
3. c. Establish a pooled fund to cover key contingencies
  - Implement FONARESS to cover high-complexity treatment for all Paraguayans, and include private and IPS funding in the pool of funds
  - Reform FONARESS to cover a basic comprehensive care package, beyond high-complexity care, as a basis for pooled funding
  - Consider the inclusion of other contingencies (e.g. traffic accidents)
4. d. Reform the provider payment system – in line with the separation of purchasing and service provision – ensuring that the new payment system provides incentives for quality service, cost control, and appropriate referral.
5. Deliver on Universal Health Coverage by expanding health services and insurance coverage, increasing financial protection, and ensuring the delivery of a well-defined benefit package
1. a. Expand the coverage of Family Health Units (USF)
2. b. Ensure adequate financial protection including through:
  - Universal coverage for high-cost conditions and treatments
  - Improving on the availability and affordability of medicines
3. c. Define a set of guaranteed services and/or pathologies that can be provided to the population effectively and deliver on that guarantee.
4. d. Build upon the pilot to guarantee a package of services for children and women of childbearing age.
6. Strengthen the orientation of the national health system towards integrated networks based on primary healthcare
1. a. Strengthen Family Health Units (USF) by providing them with adequate human and financial resources
2. b. Increase the pace of expansion of USFs to deliver on the objectives of universal coverage
7. Invest in health promotion and disease prevention
1. a. A first and fundamental way of achieving a sustainable UHC is to invest more in health promotion and disease prevention
2. b. Mitigating specific behavioural risk factors is potentially more cost-effective than waiting to treat poor health associated with these behaviours

References

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Notes

← 1. Original refers to the time when the area was mostly covered by pristine native forest vegetation. That time roughly corresponds to the late 15th and early 16th centuries, coinciding with the arrival of the first European immigrants and the beginning of the rapid process of transformation of the forest into agricultural land. Prior to this time, native people likely impacted the ecoregion as a whole to a relatively small or medium degree (Di Bitetti, Placci and Dietz, 2003).

← 2. IPS coverage amounted to 1.37 million Paraguayans at the end of 2016 including dependants, special regimes and non-contributive regimes (ex-combatants and successors). On the basis of DGEEC projections for 2016, this corresponds to 19.93% of the population.

← 3. Based on the individually-declared last health provider that attended the illness or injury in the past 90 days (DGEEC, 2017).

← 4. In practice, the allocation of FONACIDE funds to the national health fund allows the Ministry of Health to tap a source of funds that is readily available and constitutes about 7% of the Ministry’s total budget.

← 5. Two special regimes are exceptions to this rule: civil servants and personnel under contract from the Office of the Attorney General (Ministerio Público) who can contribute to IPS and teachers in the public subsystem who can contribute to a special regime that covers health risks only (but not pensions).

← 6. The number results from assigning a monthly allocation of PYG 300 000 to civil servants and employees of the Central Administration and financial entities of the state excluding the Ministry of Education and the Attorney General’s office, as there are special regimes for teachers in the public subsystem and civil servants and employees in the Attorney General’s office. This is therefore a conservative estimate.

← 7. The figures provided based on procurement data do not necessarily correspond to actual payments as they are based on the capitation payment and the estimated number of beneficiaries.

← 8. The Charter of IPS establishes a contribution from the general budget of 1.5% of the base (IPS, 2013). This contribution has never been paid, and the distribution of those funds according to the IPS charter itself is not feasible (as it plans in articles 23 and 34 a distribution that totals over 100% across funds).

← 9. Health coverage can be measured based on the share of the population having access to health facilities (breadth of the coverage), based on the share of the total cost that is covered through pre-financing mechanisms (financial protection or height of the coverage) and based on the range of services that are available to meet the health needs of the population (depth of the coverage).

← 10. Although the analysis of Knaul et al. (2011) provides a useful overview of catastrophic health expenditure in Latin America, shares have been calculated based on total household expenditures net of food spending, which makes values not entirely comparable with figures presented for Paraguay in this chapter.

← 11. For example, in Chile, in 2009, four years after the implementation of the AUGE guarantees in 2005, the number of breast biopsies had doubled, surgical treatments for scoliosis had tripled and laparoscopic cholangiographies had quadrupled (Bitrán, 2013).

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