As first and oldest, the experience in Chile has had the greatest impact in the continent. For neoliberal economists it is an example to follow, and they promoted it enthusiastically. Reticently, they tend to omit that it began in 1981, at the height of military dictatorship and after seven years of drastic cuts in expenses (particularly investment expenditure), within one of the oldest and most prestigious public health care systems in America. This investment restriction lasted until a very short time ago.
The reform separated pension funds from health funds. Regarding the former, it meant the possibility of choosing between the classic pay-as-you-go system and a new one of capitalization. Regarding health services, it was based on two elements: a) decentralization of management and resources to 26 regional services and municipalization of primary care and, b) the possibility of opting-out pay to the compulsory contribution to the «old» or «state» health insurance, or to any of the various Institutions of Preventive Health (ISAPRES) which were set up. This possibility was included in the 1980 Constitution. The ISAPRES, which may be «open» (with beneficiaries of any type) or «closed» (with affiliates from just one company), operate as private independent insurers and manage and provide health services in accordance with their own rules. Since their creation, the percentage of affiliates to the ISAPRES has increased consistently. In 1981, six ISAPRES were established. By the end of 1992, 34 were functioning (20 open and 14 closed) and about 22 per cent of the population was affiliated to one of them.
Despite the principles established in the Constitution, the reform did not guarantee universal coverage (the public health care subsector covered 75 per cent of the population by mid 70s and around 80 per cent in 1992). Furthermore, as it was expected and as the ISAPRES Superintendency discovered, membership was made up of workers with higher incomes and whose average expenditure is several times higher than those who continued in the «old» or «state» system (e.g. by the end of 1991 they accounted for 50 per cent of public expenditure in health). Within the ISAPRES, the actuarial principle «that who pays most receives most» is prevalent. They do not compete against each other but collude to increase the premia, and they apply risk-selection against the elderly, the chronically ill and some members initially affiliated to the ISAPRES who are unable to pay increasing premiums, and have no other option than to remain in or return to the «state» system (WHO, 1993, pp. 31-32).
In view of this, an ISAPRES Reform Law was presented to Congress in 1992 and became effective in 1994. This law aims to give powers to the Superintendency to clarify ISAPRES operations, to restrain abuse of premia for bad risks, to take care of people in acute financial need and of the elderly. One of its proposals is to define a basic benefits package that all ISAPRES should offer to their members, above which each member should pay an additional, non-tax exempt premium. The scope for application of this package and the selection of basic benefits (including pharmaceuticals) are still being discussed (OPS, 1994a, pp. 57-59; OPS, 1994b; OPS, 1994c, Vol. II, pp. 164-166).