Healthcare Plan Needs a Funding Source

By Sarah de Sainte Croix, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Congress has earmarked September 28th as the date to decide on the terms of a constitutional amendment, known as Amendment 29, which will determine a mandatory percentage of revenue to be spent on public healthcare at federal, state and municipal levels. The amendment will mean increased spending on state-funded healthcare throughout Brazil, but has no clear funding source, leaving some lawmakers hesitant.

Despite her election campaign promises to provide better healthcare for the population, even President Dilma Rousseff’s response was unenthusiastic, calling Amendment 29 a “presente de grego,” (or “Greek present” – a Brazilian expression referencing the historical story of the Trojan Horse, meaning a gift you really don’t want).

Rousseff’s concerns are that there hasn’t been any specific source of funding suggested for the proposed increase in spending. Even so, Paulo Teixeira (leader of the PT, or Workers Party, in the Chamber of Deputies) proposed going ahead with the amendment regardless of the lack of funding.

Teixeira said, “Let us treat this as two separate parts. The two parts are interconnected, but we will not have time to to resolve the financing by the 28th, so lets get through the amendment stage and afterwards we’ll look for a funding source.”

One idea is to increase taxes on activities which overload the healthcare system, namely drinking, smoking and driving. “Cigarettes and alcohol aggravate health problems. Cars are responsible for accidents,” Teixeira pointed out.

Another idea is to rehash the old CPMF tax under a new name – the CSS (or Social Contribution for Health). The CPMF (obsolete now since January 2008) was a 0.38 percent tax levied on all bank transactions, whose R$20 billion annual income was supposed to have been destined for the healthcare system. It was abolished when significant changes to the healthcare system failed to materialize.

Gustavo Marrone, self-regulation director at Febraban (Federação Brasileira de Bancos) in São Paulo, told Latin America Advisor, “I think it’s very unlikely that the return of the CPMF tax would be approved. I see the return of the CPMF as something harmful to the market as a whole, ultimately resulting in higher cost of credit and rising inflation without generating commensurate benefits to the health area.”

Marco Maia, President of the Chamber of Deputies, echoed these sentiments, saying “Conditions are not right” (“Não há clima”) for the reinstatement of such a tax against the background of an unstable world economy, creeping domestic inflation and the soaring cost of living.

A third possible revenue stream is the legalization of gambling, which has been outlawed in Brazil since the 1930s. However, this idea has met with considerable opposition. Gilberto Carvalho, Rousseff’s chief administrative aide, said, “The government is not happy with legalizing gambling. We just do not think it is a healthy idea to tax gambling in order to pay for health care.”

The government estimates that an additional R$30 billion needs to be found in order to implement the promises contained within Amendment 29.

Rousseff told Brazilian radio, “I would really like to guarantee quality health services for our people, but I must know where all the money to pay for it will come from. This is not a good time, in the middle of an international financial crisis, to approve more spending without saying exactly how it will be paid for.”