Brazil's Public Option

What Obama can learn from Lula about universal health care.

Brazil's place as one of the "BRIC" emerging powers has never been in question since the term came into use in 2001. Under the leadership of President Luiz Inácio Lula da Silva, the country has emerged as a diplomatic power and the region's clear economic leader. It also happens to be one of the few countries in the Western Hemisphere with universal health care. As U.S. President Barack Obama strives to pass health-care reform in the coming weeks, he would do well to examine the praiseworthy successes -- and the worrying failures -- of a decades-old universal system in the region's second-largest democracy, one that has brought real improvements in access for the poor, tempered by financial shortfalls, declining infrastructure, government inefficiency, and new, unanticipated forms of health-care inequality. Brazil's case illustrates that if you go public, you'd better be committed to maintaining your creation.

Brazil passed its reforms more than 20 years ago during an economic phase surprisingly similar to the United States' today: fiscal deficits, recession, inequality in access to health care, and loud demands for change. If recent town-hall bickerings across the United States look bad, look back at the unrest surrounding Brazil's implementation of universal health care in the early 1980s. Massive civic protests demanded an end to health-care inequality -- an ambition that dovetailed nicely with the broader democratization movement.

Like the United States today, Brazil also had a pre-existing health-care system that linked coverage to employment. A 1923 Brazilian law granted access to government-paid health care only to workers and those government officials contributing to the social security system. Informal or agricultural workers were left to pick at whatever services they could find from city officials and charities. The gaps left more than 90 percent of Brazilians without coverage by 1930.

The universal health-care system begun in 1988 was meant to change all this, enshrining access to care as a human right. The plan has two components: one public and one private, much like the plan that the Obama administration started out pushing for. Government-funded services are dished out through the decentralized Sistema Único de Saúde (Unified Health System, known as SUS), which relies on financing and management from federal, state, and municipal governments. SUS funds everything from annual checkups and free drugs to complex surgeries and health prevention education. On top of this government protection, businesses and individuals can purchase health care through private insurers, regulated by the Agência Nacional de Saúde Suplementar (National Supplementary Health Agency). Those who opt in to such a system receive a tax rebate for these expenses, though they do still contribute to SUS through their income taxes. And of course, anyone is still welcome to pay out of pocket at hospitals and clinics for service.

Financing for the public plan has always been a concern, in the same way it is in the United States. Brazil's federal, state, and local governments all raise revenue to help pay for health care. Taxes on such things as individual income, property, goods and services, banking transactions, and social security (at the federal level) help fill the pot. Yet even as Brazil has secured multiple sources of funding (something that will be very difficult to achieve under Obama), the cost of universal health care is quickly outpacing the revenue needed to sustain it. The World Health Organization estimates that health expenditures in Brazil have risen from 6.7 percent of GDP in 1995 to 7.5 percent in 2006. Although these figures are still far lower than the 15.3 percent of U.S. GDP that Americans spent on health care in 2006, Brazil's costs are growing faster. Lula does not seem committed to increasing the SUS budget because this could starve his other anti-poverty programs and make international creditors nervous about Brazil's economic stability. They are right to worry: Brazil will either have to spend more itself or end up borrowing from those same creditors to keep the program funded. As a core aspect of the 1988 democratic Constitution, SUS is unlikely to be shut down, no matter the cost.

Funding concerns aside, putting coverage policies in place has proven even harder. SUS does do an excellent job of providing primary care through its Programa de Saúde da Família (Family Health Program), staffed by about 28,300 teams of well-paid health-care workers who venture into poor and remote areas. But beyond the basics, there are alarming gaps. Brazil simply does not have the capacity to offer high-quality care to all. Hospitals lack basic infrastructure and personnel. Corruption peppers the local bureaucracy, and funds are often poorly allocated; politicians often fill budgetary committees with their friends, who neither know nor care much about public health. The mismanagement goes unpenalized because municipal health departments operate without federal oversight.

As a result of missing funding and poor management, the overall quality of Brazil's health-care system has gradually declined. So it's no surprise that those who can afford it opt for the private sector. The percentage of subscribers to private insurance saw an increase of about 38 percent between 1987 and 1995. By 2009, more than a fifth of the population had purchased private health insurance. The middle and upper classes are beginning to rely more on private insurers, while the poor rely more on the public sector.

Of course, the irony here is clear: Brazil's perceived solution to inequality in access to health care has bred even more inequality. The private sector has better infrastructure and technology, and treatment is immediate -- an appealing quality for those hoping to escape the long waiting lists for services in the public sector. What's more, those who have private care can still, at any time, sign up for public services, such as complex, costly surgeries or medicines that private insurance does not cover. Obviously, the poor cannot afford to stick their hands in both cookie jars.

Brazil's case spells out a clear message for the United States and the Obama administration: Halfway is no way at all. Without the money and institutional capacity to keep a public option working at the level of the private options, universal health care can simply create even more inequalities. And you'll be back to square one.



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