1963-2013 - 50 years of Research for Social Change

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Back | Project: Ageing, Development and Social Protection

Case Study by Nélida Redondo

  • Project from: 2001 to 2003



Since the late 19th century and until well into the 20th, Temperate South America - comprising of Chile, Argentina, and Uruguay - has been characterized by a socio-economic evolution similar to that of the world's most advanced countries. As a result of the demographic transition that accompanied the social and economic development of that period, those three nations, to which Cuba joined later, had the only ageing societies in Latin America.

Starting in mid-20th century, the population ageing process in Argentina advanced in tandem with the creation and expansion of "welfare-state" institutions specifically designed to cover the risks of ageing, illness, and disability among the workforce, as well as the health of people who have withdrawn from the workforce.

However, the impact of Argentina's economic disaster from July 2001 to the present has affected all forms of funding for elderly people: a) retirement benefits and pensions have been reduced by 13%; b) savings in bank accounts were blocked and devalued through the so-called corralito [a government decree] that denies free access to deposits; c) high levels of unemployment (over 22% of the economically active population) have hindered adequate family-support benefits. Elderly middle-class people are the hardest hit by those measures that caused abrupt impoverishment among broad sectors. The collapse of the health service institution, the National Institute of Social Services for Retired People and Pensioners (INSSJP), has further aggravated the situation of elderly people.

In that context, this work presents a brief review of the creation and evolution of social security agencies specifically designed to cover the needs of elderly people. The purpose of this review is to analyze the political and institutional structuring that gave rise to those agencies, and significant events in their development, focusing on aspects that seem to loom as causes of the current crisis.

The analysis is focused on social and health services provided by the INSSJP. The Institute is the largest social security agency in Latin America, both in number of affiliates and budget. The INSSJP - best know as PAMI after the Spanish acronym for its Integral Health Care Plan - and US Medicare are the only examples in the world of social security agencies with the specific goal of providing health services to retired seniors and pensioners. For this reason, the analysis includes a comparative approach to both institutions, in order to set parameters for illustrating and explaining Argentine peculiarities.

The main purpose of this work is to study PAMI's service provision, relating it to the elderly population's health needs. For this reason, budget data (composition of expenditures in 2000 and 2001 fiscal years), socio-demographic information on affiliates, and characteristics of service-delivery policies were compared to information derived from reprocessing the Social Development - Social Service Utilization Survey, and to surveys of PAMI users' level of satisfaction (2000). The former survey was carried out by the government agencies SIEMPRO and INDEC (Argentina, 1999). Questionnaire No. 8 of that survey was used in a random sample representing persons over 65 across the country.

Comparative analysis of selected characteristics with US Medicare brings out significant differences which help to explain Argentine deficiencies in elderly people's health coverage. In 2000, 64% of the country's population over 65 were registered with PAMI, while Medicare covered about 97% of the US population in the same age group. Likewise, the composition of expenditures for the two agencies shows disparities in their respective service-delivery policies: in 2001, 84.6% of Medicare's executed budget was spent in hospitalization and clinic services, while PAMI's spending in the same areas reached only 40% of its total budget. In addition, PAMI's administrative expenses are over 15% of total budget, which in itself indicates some degree of operational inefficiency. This becomes even more obvious, if one takes into account that Medicare spends only 3.3% of its budget on administration.

The information presented in this work reinforces the hypothesis that PAMI's service-delivery policy is focused more on meeting corporatist and clientelist demands from politicians, service providers, unions, and employees than on satisfying the health needs of the elderly population. This orientation results in institutional dynamics characterized by operational inefficiency and administrative corruption. In addition, the agency suffers the consequences of repeated macroeconomic crises, which have affected both the size of the population entitled to coverage, and the agency's financial income, leading to budgetary deficits, interruptions, and cutbacks in benefits and services.

The work closes by suggesting several criteria for PAMI's institutional reconstruction, based on the perspective of the elderly population's needs. It indicates services that should be strengthened and others that should be discontinued, as well as possible mechanisms for expanding coverage among elderly people in Argentina. Likewise, it warns against certain opportunistic proposals for privatization and federalization, taking into account the failed experience of privatizing the Integrated Retirement and Pension System in 1994, as well as the deterioration of the public health system since its decentralization in the 1960s.