Colombia Faces Unprecedented Health Crisis as Major Insurer Exits

The health crisis in Colombia continues. In the week in which the legislative reform proposed by the government has failed and the State has intervened in the two main private companies in the sector, another of these private companies, Compensar, has called EPS in Colombia, requesting its voluntary liquidation. This has been explained by the company itself in a statement published on its social network accounts.

Compensar, Sanitas, and Sura had already warned, a few months ago, that if they did not receive solutions from the Ministry of Health, they would be forced to make decisions about their operations. As for Compensar, in 2022, its losses were 139,000 million pesos, with a negative forecast for 2023 of close to $100,000 million.

Financial crisis

To explain its decision in the communiqué, Compensar refers to the “complex financial situation that the health system in Colombia is going through”. According to the company, “this fact considerably affected the viability and sustainability of the program, to the point of not allowing it to guarantee the service to its affiliates in the conditions of quality and timeliness that have always characterized Compensar.”

EPS currently has around 2.2 million users, with a significant presence in Bogota and the rest of the Andean region. In recent years, the company suffered a significant decline, going from being one of the most highly valued by its users to accumulating thousands of complaints.

However, it is impossible to officially know Compensar’s exact financial situation as of today, since the data is not updated beyond September 2023, when it complied with the adequate equity indicator and the minimum capital required by law. However, in a letter that Compensar had sent together with Sanitas and Sura EPS to the Ministry of Health, it pointed out the difficulties they were going through. In 2022, their actual losses were $139 billion and they projected a negative $97 billion for 2023.

According to Carlos Mauricio Vasquez, president of Compensar, the economic problems have been dragging on at least since 2020, when the company had not been able to comply with the technical reserve investment regime. The term “technical reserves” refers to the savings that the EPSs must have to meet the obligations and difficulties generated by the provision of health services in the future. In reality, it is a saving that comes out of the money that the State transfers to the EPSs for each member.

Claims of non-payment by the State

According to Compensar and the other EPSs that approached the Ministry of Health last year, the non-payments by the State were aggravating the difficult financial situation of these companies. This point was always denied by the Ministry, which has affirmed on several occasions that it is up to date with its financial obligations to the EPSs.

The Compensar’s communiqué, explains that they will continue to attend to their users in the best possible way “until the last day they are in charge, carrying out an orderly delivery of the population to the entity defined by the government.”

In this regard, the company adds that the decision was taken due to a structural problem in the system that makes its operation unsustainable. However, it affirmed that if its request for liquidation is denied, it will continue to operate, but stressed the unfeasibility of its operation.

Compensar points out that the uncertainty about the future of the health system is one of the main arguments for requesting its liquidation. In fact, for some days now, and after the two interventions of the State on Sanitas and Nueva EPS, it was rumored that Compensar was also going to be intervened by the State in the next few days.

Announced borderline situation

Since 2023 the EPSs already knew that they would not be able to meet their financial goals. “Both EPS Sura and EPS Sanitas and Compensar EPS will not meet the financial indicators at the close of the current year (2023), since in the last two years they have exhausted a capital close to COP 400,000 million in the case of EPS SURA, 415,500 million in the case of EPS Sanitas and 278,700 for Compensar EPS, which were built during the 30 years and 23 years of their existence,” explained the joint statement of the three companies a few months ago.

In the letter, they add that “there are three relevant aspects that must be addressed as soon as possible to continue guaranteeing timely and quality access to health services, ensuring the sustainability of the system and not affecting the attention given to users.” Among these points, the EPSs affirmed that the economic amount paid by the State “is insufficient to cover the health benefits plan.”

The warning to the government eight months ago was clear. “If the pertinent measures are not taken, it will become increasingly difficult to continue with the provision of services and we see serious difficulty in moving forward with our operations after September of this year (2023), which is why we would have to convene our boards of directors to evaluate the possible scenarios that the government is presenting to us and take respective decisions in that case,” the EPSs told the Ministry of Health.

Despite the payments made by the State in December, denounced as insufficient by the companies, the agony of the last few months has exploded in all its rawness in the difficult month of April 2024, with the need to reconfigure the entire Colombian health system, which threatens to collapse.