The constitution of 1988 and the Organic Health Law (Lei Orgânica de Saúde) of 1990 universalized access to medical care, unified the public health system supported by the Ministry of Health and the National Institute for Medical Assistance and Social Security (Instituto Nacional de Assistência Médica da Previdência Social--INAMPS), and decentralized the management and organization of health services from the federal to the state and, especially, municipal level. Between 1985 and 1990, for example, the proportion of program funds managed by municipalities increased from 10 to 15 percent and by states from 23 to 33 percent. The sweeping health reforms that were initiated in the 1980s attempted to extend coverage to those outside the social security system.

The constitution grants all Brazilian citizens the right to procure free medical assistance from public as well as private providers reimbursed by the government. While the public domain oversees basic and preventive health care, the private nonprofit and for-profit health care sector delivers the bulk of medical services, including government-subsidized inpatient care (that is, private facilities owned 71 percent of hospital beds designated for government-funded health care in 1993). This publicly financed, privately provided health system continues to intensify its focus on high-cost curative care, driving hospital costs up by 70 percent during the 1980s.

Therapeutic treatment in hospitals tends to dominate funding at the expense of health promotion and disease prevention programs. Hospital-based assistance expanded from 44 percent (1985) to 77 percent (1990) of municipal health spending, while expenses for primary care decreased from 35 to 3 percent. Not only have basic and preventive health services for the entire population diminished, but the public health system also subsidizes expensive, high-technology medical procedures that consume 30 to 40 percent of health resources and often end up being used to attend affluent segments of the population. Despite an augmentation in hospital coverage, discrepancies in access and quality of health care among the five regions characterize the Single Health System (Sistema Único de Saúde--SUS); medical consultations average 1.3 per capita in the Northeast versus 2.3 in the Southeast.

Although states and municipalities rapidly acquired more responsibility in administering health funds and facilities, the federal government retained the role of financing public health outlays. As stipulated by the 1988 constitution, government subsidies for health services are derived from the social security budget, which is predominantly based on earmarked taxes and contributions from employee payroll and business profits. The federal government consistently underwrote over three-quarters of all public spending on health in the 1980s, a sizable portion of which remunerated private medical charges. The percentage of total central government spending on health in 1990 was 6.7. Public health expenditures as a share of gross domestic product (GDP--see Glossary) in 1990 ranged from 2.1 to 3.1 percent, close to half of the total health expenditures of 5.8 percent.

Private sources finance the other half of total health expenditures. Perceptions of inefficiency in the government reimbursement schedule and deterioration in service quality of the public health system spurred a rapid growth in the private financing of health care during the 1980s, particularly in well-developed cities of the Southeast. The private sector covers 32 million citizens (roughly 20 percent of the Brazilian population) and consists of several hundred firms offering four principal types of medical plans: private health insurance, prepaid group practice, medical cooperatives, and company health plans. The group medical plans rank Brazil as the largest health maintenance organization (HMO) provider in Latin America; HMOs both finance and provide health care, but limit coverage to low-cost procedures and drive the burden of treating high-risk individuals to the publicly funded health system.

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Source: U.S. Library of Congress