After a period of considerable losses during the years in which the spending cap was in force, Brazil's Public Health System (SUS, in Portuguese) begins 2024 with an objective expectation to resume investments. Despite this, it’s needed to seek a new financing model that detaches the sector from the economy's ups and downs.
In an interview with Brasil de Fato, Francisco Funcia, the president of the Brazilian Association of Health Economics and professor of the Municipal University of São Caetano do Sul, stated that the way is open to building a new proposal to recover from losses. He highlights, however, that the process is only possible with dialog between different areas of government and social control.
“After six years – particularly the last four years – in which the government structure and policies for the social sector were abandoned, we now have to walk. The only possible way is through dialog between the government economic sector, the health sector and the so-called social control, which is expressed and represented by the National Health Council.”
Funcia also assessed the challenges faced in 2023, when Brazil's health sector was on the verge of having its worst budget in history. The fall predicted in the budget planning left by the government of Jair Bolsonaro (Liberal Party) could expand the sector’s depletion, which had already been a reality since Former President Michel Temer (MDB) instituted the spending cap in 2016. The Amendment to the Constitution n° 95 (EC 95, in Portuguese) froze social investments for twenty years.
Although the risk isn’t so intense for 2024, the professor assesses that it is still needed to establish mechanisms that bring stability to health investments and a new spending floor. “In addition to replacing losses, we have to look for a new financing formula detached from economic dynamics. We have to have factors that take into account what the legislation defines. Financing must cover the population's care and health needs.”
Read the main topics of the interview or listen to the full interview in the audio player below the title of this article.
Getting out of a difficult situation
“Regarding health financing, the current government started the new administration even before taking office. In December 2022, when Congress was still voting on the budget bill for 2023, there was this very serious situation of a 150 billion reais budget defined by the previous government for the health sector. It was a calculation of the spending floor rule of Constitutional Amendment 95, known as the spending cap. If this proposal were not changed, it would mean a brutal financial strangulation in the financing of health in several municipalities and states.
SUS actions are decentralized by definition. Brazil’s Constitution says that financing is tripartite and actions take place at the municipal and state levels. SUS lost 70 billion reais between 2018 and 2022 because of the EC 95 rule. This amount would result in an increase of another 20 billion reais in losses if nothing was done and the original proposal of the previous government was maintained.
Before taking office, the Luiz Inácio Lula da Silva government made political articulations with the National Congress. Among the important measures to curb the defunding of SUS, the articulation decided to raise the Ministry of Health budget for 2023 to 170 billion reais, instead of the 150 billion reais previously proposed.
The addition of 20 billion reais to the Ministry of Health's budget got close to the value of the rule suspended by EC 95, which was 15% of net current revenue. The combination of this measure with the Transition Proposed Constitutional Amendment [“PEC da Transição”, in Portuguese] created conditions for EC 95 revocation, which froze SUS in the same amount seen in 2017. This meant a major advance in SUS financing, rescuing what was applied until 2016, close to 15 % of the net current revenue.
The revoking of EC 95 was fundamental because it did not allow fiscal policies to be implemented and, through public spending, finance the country's growth. The country stagnated because the state was deprived of the ability to invest in social issues and infrastructure. The “PEC da Transição” allowed the repeal of EC 95, which occurred from August or September 2023."
The need to go further
“We must consider two things. First, 15% of the net current revenue isn't what health economy experts, progressive people in SUS and health reform advocated for. In 2013, the Health National Council presented a popular initiative bill known as PL 321/2000 with the support of 2,2 million people who signed the proposal that suggested the spending floor to be 10% of gross current revenue, around 19.4% of net current revenue. In other words, 30% above the 15% value.
At the historical moment when Brazil regained democracy with President Lula's victory, re-establishing 15% of net current revenue in December was fundamental. It was the first step towards resuming the discussion on more resources for SUS from 2023 onwards. An increase of 20 billion reais would already be guaranteed, corresponding to 172 billion reais if the revenue remained within the values estimated in the budget.
But that wasn't the goal. The historic struggle is to reduce the gap between public and private spending. The National Health Council and the 2017 Health Conference proposed that public spending on health should be around 6% of the country’s GDP, with at least 3% of GDP coming from the federal government – half of the total. Also, they suggested that public spending should correspond to at least 60% of total spending on health, similar to developed countries.
Brazil's public spending on health is far below that of developed countries, where public spending is higher than private spending. In Brazil, private spending on health is higher than public spending, and this needs to be taken into account to serve more than 200 million people.
Regarding 2023, another topic was that the correlation of political forces is still disadvantageous to the current government. There is intense pressure from the so-called market. It is understood that public spending is bad and that fiscal adjustment, by reducing spending, needs to continue.
Therefore – and unfortunately – the tax reform, which was approved by Law n° 200, was a step forward in allowing public spending to grow again and not be frozen as it was in EC 95 and, at the same time, the margin for growth in public spending has become very low. The maximum it can grow is 2.5% per year, apart from a few exceptions, and unfortunately, these exceptions include neither health nor education. Coupled with zero primary deficit targets and surplus primary deficit targets over the next few years, the primary deficit can be brought to zero, and a surplus can also be generated.
A contradiction arose from that: while public spending has grown, the correlation of conservative political forces, with a conservative predominance, imposed restrictions on the financing of social policies in general and health policy, with growth limited to 2.5% per year.
Government technicians have even said in interviews that it is necessary to review the constitutional floor for health and education investments, and that this could harm compliance with fiscal targets. So, contradictorily, towards the end of the year, there is a certain risk about how to guarantee adequate funding for health in the coming years."
New ways
"The [health] budget for 2024 is 218 billion reais, a 48 billion increase. It's right, and there's no doubt about it. No one is arguing that it's 15% of net current revenue at the moment from what is actually collected in 2024.
The concern we have for 2024 regards these statements made in the second half of the year by some members of the government's technical area and the government's economic area, in which they point to the need to rediscuss the spending floor.
There is no way of establishing a spending floor based on revenue. At ABES, we even have a document proposing a new rule for the spending floor, so that it is not conditioned on these economic dynamics. Because when revenue grows, it's because the economy is growing; when revenue falls, it's when the economy is in crisis.
When the economy is in crisis, the demand for health services increases. It doesn't make sense to invest less in SUS. We have a proposal for a new funding rule for SUS so that we can stabilize these amounts, so as not to be held hostage to economic dynamics. There is still a lot of discussion about a contractionary fiscal policy – a fiscal policy of retraction – which hinders economic growth.
What makes us a little less worried is that President Lula remains consistent with what he said during the election campaign and after he took office, that health is not an expense, health is an investment. In the second half of last year, he also made comments that made it clear that a fiscal target cannot prevent the population's needs from being met. The president's speech makes us a little more confident that we won't go backwards."
Talks and popular participation
"The 2024 budget must be celebrated in the context it is, which is still a changing process. After six years – particularly the last four years – in which the government structure and policies for the social sector were abandoned - we now have to walk. The only possible way is through dialog between the government's economic sector, the health sector and the so-called social control, which is expressed and represented by the National Health Council.
Why do I say that? The National Health Council represents managers, SUS workers and patients. Law n° 8142 created health councils and conferences as an expression of community participation in the SUS, which is a constitutional guideline. In this sense, the way is open to building a plan to recover from the losses SUS suffered.
In addition to replacing losses, we have to look for a new financing formula detached from economic dynamics. We have to have factors that take into account what the legislation defines. Financing must cover the population's care and health needs. We have international benchmarks for this.”
In the proposal presented by the Brazilian Association of Health Economics, we would reach at least BRL 1,100 per capita for the federal health spending floor. There are various possibilities for reaching a per capita figure that can be adjusted over time by factors that take into account not only updating but also what we call the population's health needs.
For example, the elderly population is growing at a much faster rate than average population growth. We already have studies showing that the cost of treatment and health care for the elderly population is higher than for other age groups. Therefore, we need to have a factor that takes into account this change in demographic profile."
Resumption and advancement
"All technological progress in terms of equipment and medicines, which is very much related to the industrial economic complex of health, also requires investment. Brazil has been lagging behind for many years. We saw what happened in the pandemic with the vaccines: we had no option but to import them.
We need to recover our production capacity. The economic-industrial health complex is also a means of guaranteeing health sovereignty in the face of scenarios that health experts are already saying we will have again, such as epidemics and pandemics. Let's be prepared and not rush out to pay for the fire after the house burns down. Let's organize and be prepared.
We have to invest more in primary care. We must strengthen and increase the number of family health teams to improve the population's health conditions. We have to improve all the equipment and hospital back-up. We have a series of things that require resources.
That's why health is not an expense, that’s why health is an investment. A healthy population learns more, produces more and contributes decisively to economic growth."
Edited by: Thalita Pires
