In 2012, Colombia’s public health system was headed for bankruptcy. The country had made significant progress on important public health priorities: expanding immunizations, reducing infant mortality, and attaining near-universal insurance coverage. But a Constitutional Court ruling that the government had to pay for almost all health services and technologies for those it subsidized, combined with rising pharmaceutical prices, was pushing the budget into deficit. Economist Alejandro Gaviria became minister of health and social protection amid that simmering crisis. To contain spiraling costs while enabling the sector to focus on some of its priorities, he worked to create new legislation that would limit the services the government would cover, regulate the drug market, and adjust an incentive structure that had lowered accountability and encouraged excess. In parallel, budget officials in the health ministry, the Ministry of Finance and Public Credit, and the National Planning Department tried to improve financial management of the system in order to increase efficiency and reduce costs. In the end, some of Gaviria’s efforts paid off and the ministry averted immediate insolvency, but as of 2018, the viability of Colombia’s health-care system remained in doubt even as health indicators improved.
Gordon LaForge drafted this case study based on interviews conducted in Bogota, Colombia in September 2018. Case published November 2018.