Government intervenes to halt private health scheme price surges
Free-market Milei administration uses state power to challenge firms, announces most prepaid health schemes are rolling back runaway price increases.
President Javier Milei’s government has won a price war with the so-called ‘prepagas,’ announcing that private health schemes will roll back their prices after it launched legal action to intervene against the soaring cost of the scheme.
Presidential Spokesperson Manuel Adorni on Wednesday declared that companies offering prepaid medicine coverage accounting for 75 percent of all such clients will roll back their increases to the levels of the end of last year, recalculating them on the basis of the official monthly inflation data.
The cost of the schemes will match their prices in December 2023, when a decree issued by President Milei – who often describes price caps as “an aberration” – removed controls and unleashed prices.
“By order of the Economy Ministry, a group of private medical companies, which represent almost 75 percent of the affiliates, will back the value of their fees to December 2023, adjusted by CPI [consumer price index] from there,” confirmed Adorni, who detailed that the seven companies in question would have to apply this index when updating their billing in the first six months of this year.
The resolution also obliges companies to stop swapping information and to supply data to the National Commission for the Defence of Competition (CNDC, in its Spanish acronym) on the number of members and the nominal prices of the health plans offered.
Prepaid medicine firms, which under previous regulations increased prices at a rate below inflation, have raised fees 150 percent since the publication of the DNU 70/2023 emergency mega-decree which deregulated the setting of prices.
“The Argentina of wise guys ended last December 10,” remarked Adorni, declaring that “the government of President Milei will not validate speculative manoeuvres from any viewpoint.”
The government trusts that it will be able to resolve a grievance mainly affecting the middle class, triggering an important clash with that social stratum.
Some days ago Economy Minister Luis Caputo had assured that “the prepaid are declaring war on the middle class” with their excessive increases, pointing out that the government would do “everything within their scope” to defend that sector of the population, even leaving open the possibility of taking the matter to court.
LEGAL PRESSURE
The Milei government’s challenge to the firms was backed up by legal threats.
On Wednesday the national government formally asked the courts to halt all the increases in the charges of the prepaid medicine companies in excess of general inflation since last December.
Through the Superintendencia de Servicios de Salud (Health Superintendency), it filed an injunction to oblige the companies concentrating some 90 percent of the market to roll back their charges and return to their clients the sums in excess of inflation collected since December.
“This organism does not control prices any longer but it does seek to guarantee free competition and the freedom to choose for the benefit of Argentines,” read a government statement.
The Milei administration targeted 18 firms in its move. They include such well-known names as Galeno Argentina SA, the British Hospital, the German Hospital, Medifé, Swiss Medical, Omint and OSDE (Organización de Servicios Directos Empresarios). The companies will have to recalculate the increases in the billing of their plans on the basis of general inflation, announced the government.
Adorni confirmed that the companies’ shift came in response to a “complaint of alleged cartelisation.”
‘CARTELISATION’
In a statement released to the local press on Wednesday, the Trade Secretariat explained that “in the framework of an investigation into alleged collusion, the National Commission for the Defence of Competition (CNDC) determined, on a preliminary basis, that there are solid indications of a collusive agreement between prepaid medicine companies.”
According to the official information, the CNDC had determined, in preliminary form, that “There exist solid indications of collusion between the prepaid medicine companies,” said the CNDC.
Despite professing liberal ideas against price-fixing, Caputo celebrated the ruling. This stance goes with his complaints against supermarkets and food producers for not including their promotions in their price lists.
He celebrated the news on Wednesday, calling it a “relief for the middle class” and highlighting the work of the officials who forced the firms into hefty rollbacks.
“Great work, Juan Pazo and Pablo Lavigne at the Trade Secretariat, using the corresponding institutional tools and, of course, a great relief for the middle class,” pointed out Caputo in a post on social media.
MILEI V. BELCOPITT
Until this week the face of the prepaid medicine companies had been Claudio Belocopitt, the owner of Swiss Medical and the head of the Unión Argentina de Salud chamber of the sector.
Facing a wave of criticism both online and in the press, he stepped down as UAS president on Monday while denying accusations of wrongdoing.
In the preceding days, President Milei endorsed a series of críticisms and insults against Belocopitt on the X (ex-twitter) social network calling him “garca” (“oligarch”) and “sorete” (“piece of shit”).
“As you all know, in recent days, the prívate health sector has received reproaches and observations from national government officials,” pointed out Belocopitt in his letter of resignation.
“With the need to preserve the possibility of all channels of dialogue being considered and understanding that perhaps the debate over my personality might be an obstacle to finding solutions, I have considered it appropriate and necessary to resign from the presidency of the Unión Argentina de Salud,” added the businessman.
According to Belocopitt, “it must be the priority of all associations in the Federation to be able to continue providing health services to over 70 percent of the Argentine population with the same quality into which so much effort has been invested for so many years.”
In a TV interview, he observed that many other sectors of the economy – such as fuel producers – hiked prices almost simultaneously, as did the healthcare providers associated with the UAS.