On December 10, 2023, Argentina experienced a political sea change with the inauguration of President Javier Milei. Though the full extent of his policy changes is still in flux, there will certainly be impacts — both positive and negative — for the healthcare sector and the businesses that serve it.
Unlike Argentina’s previous leadership, Milei is a libertarian president who ran on a platform of reduced government spending and free market ideals. On December 20, only 10 days after taking office, he announced a package of measures aimed at deregulating the economy and reducing government spending in line with these policies.
The state of Argentinian healthcare
Argentina’s current healthcare system is a hybrid system that offers a blend of public and private care:
- Public care. The public sector is open and free to the entire population, including non-Argentinians. It’s used by those in Argentina without social security benefits, which corresponds to roughly 39% of the population (about 17.7 million people).
- Social security. The social security system is made up of National Social Welfare (OSN), the Comprehensive Medical Care Program (PAMI) for retirees and pensioners, Provincial Social Welfare (OSP), and Other Social Welfare (OOS). Altogether, these programs cover 62% of the population and provide coverage for 28.6 million people. The social welfare funds are managed by unions. Membership in these funds, as well as in unions, is compulsory and mandatory for all registered employees. This will be one of the parts of the healthcare system that the new government may seek to modify.
- Private care. Private and Prepaid Medical Companies (EMPP) have as their direct affiliates about 5% of the total population (roughly 2.4 million people). However, if you add in the workers who “deregulate” their social welfare contributions and transfer them to this type of insurance, which provides a higher quality of care and is more expensive, it reaches 14% of the population, or about 6.3 million people.
How Milei’s policies may impact healthcare
Not surprisingly, experts are anticipating that Milei’s small-government, free-market views will have an impact on Argentina’s healthcare system — which should be noted is far from perfect. In recent years, factors such as the pandemic, inflation, the dollar exchange rate, and government barriers to imports have led to multiple concerns. In 2023, several medical associations in Argentina denounced the lack of supplies and the degradation of the quality of medicine.
Here are just a few of the ways that healthcare might change under Milei’s presidency:
- Less government oversight. Prepaid medicine, also known as private health insurance companies [1], have long demanded freedom to increase their values to inflation-adjusted prices. However, restrictions imposed by the government prevent them from doing so. Milei seeks to unblock all these barriers.
- More pricing control for insurance companies. In the case of prepaid companies and social welfare funds [2] (known as “obra social” in Spanish), the first major change is that these companies will have more freedom to adjust their pricing. Up to now, the prepaid companies increased their members’ premiums when stipulated by the Ministry of Health or the Superintendency of Health Services, with a cap on increases. The new measures give them the freedom to increase the price of their services without any type of restriction or control.
- More individual freedom to choose your own insurance company. Another policy change that Milei is pursuing is the ability for workers to directly transfer their social security contributions to a prepaid health insurance company. This differs from the current model, which makes it much more difficult for workers to transfer funds from social security to private insurance. This last measure, which reduces the economic power of the social welfare funds, is expected to receive pushback since the national government intends to make them compete with the prepaid health insurance companies. This could potentially cause the social welfare fund to lose members to private insurance companies, which tend to provide better quality services. However, this may not end up being the case if private insurance premiums increase considerably due to these policy changes.
How businesses can react to these changes
For companies that provide equipment or other services to the healthcare sector, some of Milei’s proposed changes could potentially lead to good news in the years ahead. It could reduce government regulations on sales, as well as government restrictions on pricing.
On the other hand, some of the uncertainty that change inevitably brings could also lead to economic fluctuations in the meantime. As always, it’s best to proceed with caution:
- Prepare for fewer government regulations. Milei’s proposed policies are clearly aimed at reducing the government’s control over the economy, and those changes would undoubtedly apply to the healthcare sector, as well. For businesses that provide equipment, supplies, or other services to the healthcare industry, this could potentially mean less red tape or government regulations to deal with when working with hospitals or other healthcare providers.
- Anticipate more price freedom. With Argentina’s public health care system, pricing for insurance plans, medications, and treatment is closely regulated. In fact, many insurance plans cannot increase pricing without government approval. This could potentially change under Milei. One aspect of healthcare in Argentina, pharmaceutical sales, is already beginning to change. Through DNU number 70/2023, the government authorized the commercialization of over-the-counter drugs in stores other than pharmacies. It also permitted medical and dental centers in pharmaceutical premises and allowed the simultaneous practice of the professions of dentist, doctor, and pharmacist, while biochemists can also be the directors of laboratories and pharmacies. The Argentine Pharmaceutical Confederation (COFA) has expressed its opposition to this measure.
- Look for potential expansion in private care. As mentioned previously, Milei intends to make it easier for individuals to use their social security funds for prepaid health insurance. This could ultimately result in more people taking advantage of private care, which may result in an expansion of private hospitals, medical centers, and providers across Argentina.
- Embrace innovation. Since Milei favors a more market-oriented approach to the economy, as well as healthcare, this may in turn foster innovation and the integration of more technology in the healthcare sector. Milei’s administration could prioritize policies that encourage private-sector investments in medical research, technology adoption, and digital health solutions. This may lead to advancements in patient care, diagnostics, and overall healthcare efficiency.?
Fast facts about investing in Argentina
- Argentina is the third largest economy in Latin America, with a GDP of US$445 billion, and is the third largest recipient of foreign investment in Latin America.
- With a population of 45 million people, 60% of whom are under 35 years of age, it has preferential access to the main South American markets, which together have around 295 million inhabitants.
- It is the eighth largest country in the world in terms of surface area. More than 50% of its territory is cultivable farmland.
- It has the second-largest unconventional gas reservoir and the fourth-largest unconventional oil reservoir, in addition to a vast maritime platform of more than 1.78 million km that is rich in energy and fishing resources.
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[1] Private companies that offer private health coverage. Unlike a social welfare fund, prepaid companies provide more benefits to their clients, which entails higher costs.
[2] Refers to union-run medical insurance funds.
