### **_<u>Health</u>_**

Social public spending on health care by the National Central Government was close to 2.8 percent of GDP and amounted to 21.5 percent of public social spending, making it the third item in importance. The Colombian Health System consists of two regimes, one contributory and one subsidized. The contributory health system is mandatory for all formal employees and pensioners, who contribute according to their ability to pay. Taxpayers and their beneficiaries are guaranteed access to the mandatory health plan (POS) and must join a Health Promotion Entity (EPS) that they can freely choose from a set of options. The EPS is responsible for managing financial and health risks. The rate for the contribution is 12.5 percent of salary, where the employer contributes 8.5 percent and the employee 4 percent; for their part, the selfemployed and independent contractors pay the full rate. The Firm Tax (CREE) helps finance this scheme to the extent that it replaced employer contributions for workers with less than 10 monthly minimum wages.<sup>25</sup> The subsidized regime enrolls people who do not have payment capacity; that is, they are categorized as poor or vulnerable by the SISBEN.<sup>26</sup> This population also joins an EPS and is guaranteed access to the POS.<sup>27</sup> The subsidized health care system is financed with resources from the National General Budget and with contributions from local administrations. The total coverage between subsidized and contributory scheme is 94.8 percent. The unenrolled without payment capacity, called Poor Uninsured Population (PPNA), can receive medical care in public hospitals for free.

# **III. Data, methodology, and assumptions**

## i. Data

### **_The National Household Budget Survey (ENPH)_**

The ENPH is a nationally representative survey conducted by the National Statistical Office (DANE). This survey captures information about the resources that Colombian households receive and how they spend them. It includes variables related to physical characteristics and fixtures of the homes, attributes of the people of the household such as age, gender, educational level, enrollment in the social security health care system, occupation, monetary income (permanent and occasional), non-monetary and other, goods and services acquired frequently and less frequently by urban and rural households, as well as those obtained on a personal basis, meals bought outside home, quantities purchased, amounts paid and estimated from the acquisition, forms of procurement, places of purchase, purchase frequency, among others.

The ENPH interviewed 87,201 households. Of this total, 81,438 households were interviewed in urban areas, and the remaining 5,736 correspond to households located in rural areas. The ENPH has national

> 25 The tax reform (Law 1607 of 2012) reduced the corporate income tax from 33 percent to 25 percent while exempting them from making contributions to SENA, ICBF and 8.5 percent for health care for employees who earn less than 10 monthly minimum wages. The CREE equity tax was created to compensate for this reduction in parafiscal costs, which seeks to guarantee social programs such as SENA, ICBF and health care.

> 26 In the case of the Subsidized Regime, people are classified in level I of the SISBEN III if their score is lower than: i) 47.99 and they live in the 14 main cities, ii) 44.79 and live in the other administrative seats, iii) 32.98 and live in a rural zone. Similarly, those who are classified as level II have scores: i) between 48 and 54.86 and live in the 14 main cities, ii) between 44.8 and 51.57 and live in the rest of the administrative seats and, iii) between 32.99 and 37.8 and live in rural areas.

> 27 The POS is the set of health care and technologies to which any member of the Colombian Health System is entitled, without distinction between contributory and subsidized regimes.

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