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OPINION AND ANALYSIS | 19-06-2021 09:51

Grabbing the wealth of health by stealth

Replacing Argentina’s fragmented system with a comprehensive public health system is highly rational in principle and there are some positive examples abroad – but what are the chances of these being emulated under the current government?

History repeats itself, but whether as tragedy or farce is not as easy to define as Karl Marx would have us believe over 170 years ago. In the face of the coronavirus pandemic the cure may be worse than the disease at more than one level – a health system riddled with costly overlaps both between and within its three sectors of public hospitals, the union-run obras sociales healthcare schemes and private prepaid medicine is clearly not optimal for confronting the deadliest plague in Argentine history but the national health alternative floated by Vice-President Cristina Fernández de Kirchner at least twice in the last six months does not find its state sector vehicle in the hands of a government commanding the necessary confidence.

Yet optimising the efficiency of the health system may not be the main motive beyond this drive to pool all its spheres into “el estado (omni)presente.” Health spending in Argentina totals almost 10 percent of the economy, of which almost 40 percent accrues to the obras sociales who cover or have covered around half the population (even if the five million retired workers are now in the hands of the state-funded PAMI healthcare scheme for pensioners) – the obras thus rival the government health budget given that the private prepaid schemes covering over four million people account for a further 13 to 15 percent of the total. In short, billions of pesos (and even dollars) for the taking, even if they cannot totally vanish with quite the same ease as some public works allocations in the past, given the urgency and the spiralling costs of countering the pandemic.

There is more than one similarity between this drive to place the health system in state hands and the 2008 nationalisation of the AFJP private pension funds to trigger memories of the latter, both being accompanied by economic collapse worldwide (even if 2020 rates as far worse than the subprime crisis of 2008-2009 which was more financial than economic and more Euro-American than worldwide, whereas last year saw a contraction averaging almost five percent virtually across the planet) and in tandem with an offensive against the farming sector at home – the beef export ban now and the sliding scale for grain export duties in 2008 (indeed the confiscation of the pension funds only three months later was widely seen as compensating fiscally for that failure).

As an AFJP contributor myself over 15 years paying monthly towards a personal nest-egg eventually totalling around US$40,000, it naturally felt like daylight robbery when this was snatched away from one day to the next by a voracious state but this knee-jerk reaction does not tell the whole story even for my subjective experience, quite apart from the collective implications. I have been collecting a pension for some years now and a few more might well see me recovering that US$40,000 and several more the interest as well.

Private pension funds have existed in Chile for over four decades now, thus offering a far broader basis for comparative analysis than the truncated Argentine experience. On the plus side these funds have contributed heavily towards capital markets being 17 percent of the Chilean economy as against a mere two percent in Argentina. That has been the chief benefit of the system in the eyes of most recipients even if a monthly pension averaging of US$260 to US$270 does not look too bad on the other side of the Andes – but dissatisfaction has mounted over the years and now the right to withdraw almost a third of savings to meet pandemic urgencies is virtually dismantling the system.

Not content with expropriating pension contributions, the CFK presidency then virtually doubled the number of pensioners in 2014 by extending retirement benefits to those who had not contributed, thus making the system the biggest hole in the budget (over a third of last year’s deficit). This populist move hardly serves to encourage the payment of pension contributions but on the other hand, something had to be done for the millions facing old age with nothing in the bank, usually through no fault of their own – for every artful dodger there are thousands of unpaid housewives or workers denied formal employment by the deterrents of some of the most deadweight labour legislation in the world. An ideology which grabbed pension funds in 2008 out of sheer greed as a cash cow to make up for export duties and which in the past year has removed index-linking to inflation from the updating system has considerable cheek in posing as champions of the retired but the issue is not so simple.

Anyway 13 years later it would seem that CFK is at it again. With the difference that while the pension fund confiscation came with a bang, state annexation of the health system seems to be coming not so much with a whimper as by stealth. Or by default (in the non-debt sense of the word) in the form of allowing the chronically insolvent obras sociales to go slowly broke while denying the prepaid the fee increases to cover the spiralling costs of fighting Covid-19.

Replacing Argentina’s current fragmented system with a comprehensive public health system is highly rational in principle and there are some positive examples abroad – Britain’s National Health Service (maintained since 1948, even during all the Margaret Thatcher years) and Canada’s Medicare although it seems that the masterminds of the local version are more inspired by Cuba. But what are the chances of these splendid models being emulated under the current government, with the track record of its vaccination campaign this year? Furthermore, we do not have to go very far back in time to find examples of the ruling political dynasty contradicting their rhetoric in favour of public hospitals – just in the past month we have successively seen Máximo Kirchner checking into the Italian Hospital in La Plata for his kidney stones, followed more recently by his sister Florencia entering the Sanatorio Otamendi in this city over an “infectious process.”

But national health is anything but a done deal in Argentina with the trade unions and the governors (with health a provincial responsibility in Argentina for the past three decades) spearheading resistance within the government, quite apart from the opposition. An issue as unpredictable as the coronavirus pandemic itself.

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Michael Soltys

Michael Soltys

Michael Soltys, who first entered the Buenos Aires Herald in 1983, held various editorial posts at the newspaper from 1990 and was the lead writer of the publication’s editorials from 1987 until 2017.

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