President Gustavo Petro’s plans to overhaul the Colombian welfare state are facing their first big test as his supporters take to the streets to pressure lawmakers debating his controversial health care bill.
(Bloomberg) — President Gustavo Petro’s plans to overhaul the Colombian welfare state are facing their first big test as his supporters take to the streets to pressure lawmakers debating his controversial health care bill.
The proposals sent to congress on Monday seek to slash the role of private health insurers and make the government the main manager of the $15 billion-a-year health system.
If Petro can pass the bill, it will smooth the passage of his proposals for Colombia’s pension system and labor laws, which have alarmed some investors. A defeat, on the other hand, would seriously weaken the leftist leader’s six-month-old government, undermining its chances of getting the other reforms through.
“Petro is trying to get a show of force on the streets to legitimize some of his very broad and radical reform points,” said Sergio Guzman, director of Colombia Risk Analysis. “The government badly needs a congressional win because a lot of the agenda it is trying to promote in congress is quite ambitious.”
After facing significant pushback for his health plan even from within his own cabinet, Petro has called for mass street demonstrations Tuesday to back the changes. The government aims to get health, pension and labor reforms passed in the first half of the year ahead of regional elections in October.
Test of Strength
The bill’s passage will help investors to gauge the government’s ability to pass its pension bill, according to Felipe Campos, chief economist at Bogota-based brokerage Alianza Valores.
The administration’s pension reform proposal would represent a large increase in the role of the government, by diverting inflows to a public system instead of to private pension fund managers. Investors worry this would undermine demand for the nation’s stocks and bonds by cutting the role of some of the biggest market players.
“The support the health bill receives will be an indicator of the political capital and the strength in the legislature that the new administration has,” said Campos.
Private Insurers
In Colombia, private health insurers, known as EPS, get money from the government, in a system partly financed by workers’ and employers’ mandatory contributions. They act as an intermediary between patients, hospitals, and health professionals.
Members of the opposition have called for anti-government protests Wednesday.
Virtually all Colombians have health coverage under the current system, which was created three decades ago. Subsidiaries of Grupo de Inversiones Suramericana SA and Chile’s Banmedica SA along with health group Keralty SAS are among the largest private health insurers in the country.
Instead, the government would create a public fund that would pay physicians, nurses, and hospitals directly. It also seeks to build thousands of healthcare centers across the country, including in remote rural areas, and place a lot of the focus on preventive medicine by having family doctors visit households on a regular basis.
Putting healthcare workers on the public payroll could cost the treasury an additional $700 million per year, the government estimates.
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